November
2010

 

By
Larry DeBoer
 
Professor of
Agricultural Economics
Purdue University

Visit Larry DeBoer's Indiana Local Government Information Web site

Download the audio files or subscribe to our podcast.

 

 

11-25-10

Download the audio of Capital Comments: MP3, WMV

School Referenda Results


The November election saw 18 school referenda in Indiana. Six passed; 12 were defeated. Why were there so many referenda? And what explains the results?

We have two kinds of school referenda in Indiana. Voters must approve property taxes for most big construction projects. This requirement came from the 2008 tax reform, and since that November there have been 32 school capital projects referenda. Eleven have passed. That's 34 percent. Two out of five passed on Nov. 2, a slightly higher 40 percent.

Indiana also permits school corporations to ask voters for added general-fund property taxes. The general fund pays for operating costs, which is mostly teacher pay and benefits. The general fund referendum option has been around for a long time, but we've seen a lot more of them lately. There were less than a dozen from 2002 to 2008. In 2009 there were six; in May 2010 there were nine; this November there were 13. Thirteen of these 28 general-fund referenda have passed, which is 46 percent. But only 31 percent, four of 13, passed on Nov. 2.

Why the increase in the number of general-fund referenda? It may be related to the big change in school finance passed by the General Assembly with the 2008 tax reform. The state eliminated property taxes for the school general fund and now pays the entire amount out of the state budget. Unfortunately, the policy took effect just as the recession hit state revenues. School funding increased very little in the current budget, and additional cuts had to be made. Schools may be turning to the referendum option to offset state funding declines.

We've now seen 60 referenda in three years. That's enough to look for trends in the results.

Research from other states shows that school referenda are less likely to pass when held during general elections in November. November elections bring out more voters with a variety of interests. Elections at other times tend to bring out parents, who are more likely to vote yes. We haven't seen that trend in Indiana yet. November referenda have passed at a slightly higher rate than other referenda.

The proposed property-tax rate matters, but the effect seems small. The higher the proposed rate, the greater is the no vote. Each extra dime on the rate appears to increase the percentage of no votes by about one-and-a-quarter points. In this past election, though, Brown County's referenda passed with a one-penny rate. But so did Lebanon's, with a 66-cent rate. The rate matters, but other factors matter, too.

There's a long list. In most school corporations most voters are homeowners. Referenda are more likely to pass where homeowners have seen bigger tax cuts since the property tax reform. But if business is just a small share of the tax base, homeowners will pay more of the added tax, and referenda are less likely to pass. School corporations with more renters see more yes votes. Renters don't pay property taxes directly. School corporations with a lot of farmland see more no votes. Farmers own a lot of taxable property.

Referenda in communities with higher incomes are more likely to pass. Maybe their voters can better afford the added taxes. But school corporations with more kids eligible for the federal school lunch program also see more yes votes. Perhaps voters see education as a way out of poverty.

Voters are more likely to approve referenda where the pupil-teacher ratio is high. They may be looking for smaller class sizes. School corporations with a lot of debt service taxes (to pay back borrowing for past construction) see more no votes. Maybe voters think enough is enough. School corporations with higher scores on statewide tests are more likely to pass referenda. Perhaps the apparent success of the schools drums up more support among voters.

You can see the results for all the referenda on the Center for Evaluation and Education Policy's website, at http://ceep.indiana.edu/DISR/.

There are exceptions to every one of these trends. No single factor explains -- let alone predicts -- school referenda results. Still, the more referenda we have, the more we learn. And we're likely to see a lot more school referenda in coming elections.

 

Writer: Larry DeBoer,
Editor: Olivia Maddox,