Jason Michael White, Daily Journal of Johnson County Staff Writer
Indiana voters should get accustomed to a growing trend: school districts asking for property tax increases to make up for state funding shortfalls.
At least seven school districts in the Indianapolis area this year plan to ask their voters to approve property tax hikes by using the referendum process.
With a referendum, eligible voters get to say yes or no during an election to decide whether their school district can collect more taxes.
This process has existed for more than 10 years but was mostly unused until recent years, when the state changed the way schools are funded. Until 2009, schools used property tax dollars for their general funds, used for daily expenses such as salaries and utility bills.
Now schools use state tax revenue instead, which is not as stable a funding source. School districts across the state are having to cut millions this year because state revenue fell short, and the governor decided to cut education funding as a result.
This is why the referendum is becoming more common. With a referendum, a school district can impose a property tax rate to collect money for the general fund to make up for state funding losses, and the new rate is not subject to property tax caps.
"This is a phenomenon that we are going to see more and more of," said Dennis Costerison, executive director of the Indiana Association of School Business Officials.
2 yes, 1 no
Last year, three Indiana school districts asked voters for permission to collect property tax dollars for salaries and operating costs such as utility bills.
The requests were approved in two school districts - Southern Wells and Hamilton Southeastern - and denied in Franklin Township.
Beech Grove and Perry Township also asked voters for more property tax dollars but for different reasons. Beech Grove's referendum for transportation and capital projects money passed, and Perry Township's referendum for buildings failed.
This year, Indianapolis-area school districts asking for property tax increases for operating expenses include Center Grove, Carmel, Noblesville, Speedway, Washington Township and Western Boone and possibly Zionsville.
Elsewhere in the state, school districts including Tippecanoe County, West Lafayette and North Posey County in the Mount Vernon area and possibly Monroe County plan referendums, too.
As these districts campaign - something they legally can use school time and money to do, unlike with referendums for building projects - one thing they're learning is that campaigns organized by the public have the greatest chance of being successful, school officials said.
Also, the public needs to know how money from a referendum will be used if they are going to support the property tax increase, officials said. The actual ballot questions provide no information about how the dollars will be used and instead focus on the property tax impact only.
The law says the question is to read:
"For the next seven calendar years immediately following the holding of the referendum pursuant to Indiana Code 20-46-1-8(a)(1), shall the ________ School Corporation impose a property tax rate that does not exceed ________ cents ($0.____) on each one hundred dollars ($100) of assessed valuation and that is in addition to the school corporation's normal tuition support tax rate?"
Washington Township
Washington Township in Marion County is one of the few school districts in the state that had experience with a general fund referendum before last year.
A referendum there passed in 2003, and additional dollars were used to make teacher and staff salaries competitive with surrounding school districts.
School officials imposed a new property tax rate of 10 cents per $100 of assessed valuation for the general fund. In exchange, they lowered the capital projects property tax rate by 10 cents, said Superintendent Jim Mervilde, a former Center Grove High School principal.
This means the referendum was property tax neutral; the school's overall property tax rate didn't go up because of the referendum, he said.
About 80 percent of voters supported the general fund property tax, he said.
After a referendum, a school district can collect additional property tax dollars for seven years only, according to law. Then, if the school wants to continue collecting additional property tax dollars, it has to conduct another referendum.
Washington Township's seven-year time limit for the additional property tax dollars is up, and the district plans a referendum in May.
If the referendum fails, the district will need to cut about $4 million in spending.
Already, the district has had to cut about $1.1 million, which included leaving between three and 4.5 teaching positions vacant.
This time the district is asking for a property tax rate of 8 cents per $100 of assessed valuation and promising to lower the capital projects fund by 8 cents to make the referendum property tax neutral again, he said.
School officials were able to get support from the community because residents took the lead in explaining why the special election was important to education, Mervilde said.
In 2003, Washington Township residents formed a political action committee to accept donations from the public and educate the community about the referendum, Mervilde said.
"They basically ran it as a campaign, everything from yard signs to postcards," he said.
Many parents in the school district moved to the area because of the quality of the schools and they were likely to support the referendum because it benefited the schools and their children's education, Mervilde said.
Southern Wells
Last year, Southern Wells Community Schools near Bluffton conducted a successful referendum for an additional $300,000.
The school district, which has about a $5 million budget and 767 students, needed the additional money to prevent teacher layoffs, Superintendent James Craig said.
In 2008, the district cut 3.5 positions, its high school building-and-trades program and about half its automotive classes.
Future cuts would have sliced into core academic areas, which is why the general fund referendum was needed, Craig said.
Southern Wells relied on community support to pass its referendum, but most efforts to get support were organized by school officials.
The Southern Wells school district organized 12 public meetings to inform the community about the special election and sent mailings out in two waves - once early on in the process and a second time a couple weeks before the election. Craig said he also recorded a short video to post on the district's Web site to talk about the importance of the referendum.
The referendum passed by 50 votes.
In hindsight, he thinks more voters would have supported the referendum had he relied more on community members to stress the importance of the special election and its impact on the school district, he said.
"We did have some opposition," Craig said. "No one is against education, but certainly, people are out there saying, 'Look, this is the worst time in the world to be asking us for more money.'"
Franklin Township
In Franklin Township, the school district had a political action committee and a separate referendum steering committee to gather support for the school district's plans, but voters still rejected the referendum by a two-to-one margin in November.
Now the district plans to close two elementary schools and require students to pay to participate in sports to help reduce spending.
In at least one case, the residents themselves asked the school district to consider a general fund referendum to avoid cuts to extracurricular programs, cuts to teaching positions and the consolidation of elementary schools.
Speedway
Speedway would need to trim about $2 million in spending from its $11.5 million general fund without extra property tax dollars from a referendum, Superintendent Kenneth Hull said.
But the district is limited in what it can cut. Administrators already pay the same amount for health insurance as teachers. The school district does not have travel expenses related to professional development. And energy reductions will save only so much.
When administrators told the public cuts would have to be made to personnel or that schools would have to consolidate, parents were against any such cuts, he said.
"They said 'No way,'" Hull said. "The public asked: 'Don't cut, look at a referendum.'"