What Explains School Referenda Results?

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1 Purdue Cooperative Extension Service What Explains School Referenda Results? Larry DeBoer Department of Agricultural Economics Purdue University December 15, 2010 For more information DeBoer s Indiana Local Government Information website:

2 Indiana School Corporation Capital Projects and Tax Referenda Results, (Shaded entries passed; unshaded entries failed) Project Total Date Unit County Project Amount (mil) Tax Rate Votes For Votes Agnst Pct For Pct Agnst 11/4/2008 Bartholomew County School Corp. Bartholomew HS building rennovation ,981 8, % 31.9% 11/4/2008 Evansville-Vanderburgh Schools Vanderburgh New HS & mid school; renovation of buildings ,030 21, % 29.9% 11/4/2008 Flatrock-Hawcreek School Corp. Bartholomew HS/Mid School renovations; elem construction , % 34.9% 11/4/2008 Indianapolis Public Schools Marion School building renovations ,492 20, % 22.2% 11/4/2008 Richland Bean Blossom Monroe Renovation ,688 4, % 62.2% 1/9/2009 Noblesville School Corp. Hamilton New elementary school, renovation of ,799 1, % 51.1% 1/13/2009 Kankakee Valley School Corp. Jasper New middle school, renovation of buildings , % 29.3% 2/3/2009 Clinton Central School Corp. Clinton Renovation/additions to school buildings , % 85.8% 4/19/2009 Michigan City School Corp. LaPorte Career/tech ed center contruction ,223 2, % 67.8% 4/19/2009 Mooresville School Corp. Morgan Middle School construction ,674 2, % 61.6% 4/19/2009 Mooresville School Corp. Morgan High School renovation ,780 2, % 59.0% 4/19/2009 Nineveh-Hensley-Jackson Johnson New elementary school, other renovations , % 71.5% 4/21/2009 Southwest Allen County Schools Allen Tax referendum reauthorization ,003 1, % 29.5% 6/16/2009 Delphi School Corporation Carroll HS/Middle School renovation % 60.2% 6/16/2009 Lake Central School Corp. Lake HS renovation/expansion ,532 4, % 58.6% 6/16/2009 Porter Township Schools Porter Boone Grove HS remodel , % 74.4% 6/20/2009 Maconaquah Schools Miami HS/Middle School renovation % 56.7% 11/3/2009 Batesville School Corporation Franklin/Ripley Renovations of four school buildings ,185 1, % 56.6% 11/3/2009 Beach Grove School Corp. Marion Tax referendum , % 38.4% 11/3/2009 Franklin Township School Corp. Marion Tax referendum--general fund ,192 4, % 69.2% 11/3/2009 Franklin Township School Corp. Marion Tax referendum--transportation fund ,240 4, % 66.2% 11/3/2009 Perry Township School Corp. Marion Renovation/expansion of 17 facilities ,851 4, % 51.1% 11/3/2009 Southern Wells School Corp. Wells Tax referendum % 47.9% 11/3/2009 Southwest Dubois Sch. Corp. Dubois HS/Mid School Renovation/improvements % 44.8% 11/3/2009 Tell City-Troy Township Sch. Corp. Perry High School renovation/improvements % 50.8% 11/10/2009 Hamilton Southeastern School Corp. Hamilton Tax referendum ,309 1, % 18.1% 5/4/2010 Carmel Clay Schools Hamilton Tax referendum reauthorization ,417 7, % 42.1% 5/4/2010 Clarksville Com School Corp Clark Tax referendum % 55.0% 5/4/2010 Decatur County School Corp Decatur, Shelby Elementary, HS renovations ,360 1, % 56.5% 5/4/2010 Decatur County School Corp Decatur, Shelby Additions to 2 Jr/Sr High Schools ,159 1, % 63.1% 5/4/2010 Eastern Hancock Co Com Sch Corp Hancock Tax referendum , % 67.7% 5/4/2010 Mount Vernon Posey Tax referendum ,800 3, % 66.0% 5/4/2010 Noblesville Schools Hamilton Tax referendum ,070 4, % 37.5% 5/4/2010 Noblesville Schools Hamilton 10 buildings ,870 4, % 39.5% 5/4/2010 Northern Wells School Corp Wells HS renovation ,694 1, % 50.8% 5/4/2010 Pike Township Marion Elementary school construction ,747 2, % 30.9% 5/4/2010 Rensselaer Central School Corp Jasper Elementary school construction , % 46.8% 5/4/2010 Rossville Consolidated School C Carroll, Clinton Expansion of school building % 59.6% 5/4/2010 School Town of Speedway Marion Tax referendum , % 14.3% 5/4/2010 Washington Township Marion Tax referendum ,203 3, % 28.2% 5/4/2010 West Lafayette Com School Corp Tippecanoe Tax referendum ,729 1, % 34.5% 5/4/2010 Western Boone Co Com Sch Dist Boone Tax referendum , % 68.8% 1

3 Indiana School Corporation Capital Projects and Tax Referenda Results, November 2010 (Shaded entries passed; unshaded entries failed) Project Total Date Unit County Project Amount (mil) Tax Rate Votes For Votes Agnst Pct For Pct Agnst 11/2/2010 Anderson School Corporation Madison Tax referendum ,991 14, % 70.1% 11/2/2010 Brown County Schools Brown Tax referendum ,264 2, % 43.9% 11/2/2010 Cannelton City Schools Perry Tax referendum % 47.3% 11/2/2010 Center Grove School Corporation Johnson Tax referendum ,196 8, % 57.5% 11/2/2010 East Allen County Schools Allen Tax referendum ,853 11, % 70.2% 11/2/2010 Elwood School Corporation Madison Tax referendum , % 73.1% 11/2/2010 Hamilton Southeastern School Corp. Hamilton New buildings ,039 6, % 28.0% 11/2/2010 Lebanon School Corporation Boone Renovation of all buildings ,291 2, % 49.0% 11/2/2010 Monroe County School Corp. Monroe Tax referendum ,310 3, % 37.8% 11/2/2010 Mt. Vernon School Corporation Hancock Tax referendum ,538 3, % 59.5% 11/3/2010 Northwestern Consolidated School Corp. Shelby Tax referendum ,067 1, % 53.4% 11/2/2010 Randolph Central School Corp. Randolph Renovation/expansion of HS to Jr./Sr. HS ,288 1, % 53.5% 11/2/2010 Randolph Central School Corp. Randolph Winchester Fieldhouse ,080 1, % 62.0% 11/2/2010 Southern Hancock County School Corp. Hancock Tax referendum ,460 3, % 61.0% 11/2/2010 Tell City-Troy Township School Corp. Perry Renovation/expansion of HS to Jr./Sr. HS % 57.5% 11/2/2010 Westfield-Washington Schools Hamilton Tax referendum ,123 4, % 45.8% 11/2/2010 Whitko Schools Kosciusko Tax referendum , % 73.0% 11/2/2010 Zionsville School Corporation Boone Tax referendum ,767 5, % 60.6% Compiled by Larry DeBoer, Purdue University, from news reports, Indiana Secretary of State, Department of Local Government Finance and county clerk sources. 2

4 Number of Referenda Indiana School Referenda Results, All Referenda Capital Projects General Fund Tax Total Passed Defeated Total Passed Defeated Total Passed Defeated All Elections Percentages 40.0% 60.0% 34.4% 65.6% 46.4% 53.6% Nov none Jan-June Nov May Nov Sources for referenda results: Center for Evaluation and Education Policy, Database for Indiana School Referenda, Indiana Department of Local Government Finance, Referendum Information, Indiana School Referenda Results, Capital Projects General Fund Total Passed Passed Passed Passed Passed Nov Jan.-June 2009 Nov May 2010 Nov

5 What Explains School Referenda Results? Factors that appear to matter The Proposed Tax Rate o Each added 10 cents on the proposed tax rate appears to reduce the percentage of yes-votes by 1.25 points. Homeowners Tax Bill Changes Since 2007 o School corporations in counties where homeowners have seen bigger tax cuts since the tax reform have a higher yes-vote percentage. The Property Tax Base o Referenda in school corporations with more homeowner property and less business property are less likely to pass. o Referenda in school corporations with more rental housing property are more likely to pass. o Referenda in school corporations with more farm land are less likely to pass. Community Income Per Capita o School corporations in counties with higher per capita incomes see a higher percentage of yes-votes. Federal School Lunch Percentage and Limited English Percentage o Referenda in school corporations with more school lunch eligible students, or more limited English students, are more likely to pass. Debt Service Property Tax Levy per Pupil o School corporations with more debt service per pupil see a lower percentage of yes-votes. Pupil-Teacher Ratio o A higher pupil-teacher ratio increases the percentage of yes-votes. State ISTEP Test Pass Rates o Referenda in school corporations with higher ISTEP scores are more likely to pass. Factors that do not appear to matter (yet) November General Elections vs. May Primary Elections (or other special elections) Whether it s a capital projects referendum or a general fund tax referendum The unemployment rate at the time of the election Over-65 population or share of population that are parents Growth or decline in enrollment 4

6 November 2010 School Referenda Results By Larry DeBoer Professor of Agricultural Economics Purdue University 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 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. 5

7 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 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. An archive of Capital Comments columns is available from the Purdue Agricultural Communications website, at 6