Northwest Indiana schools have mostly had success with tax referendum process

In 2009, the state took over funding schools' general fund budgets with sales tax revenue. Before then, schools were supported through local property taxes.

For most districts in Northwest Indiana, the change resulted in less money each year. The same law, however, also allowed a referendum process for school districts seeking more money -- through the ballot box.

After six years, the Region's referendum report card has been mostly positive, with nine out of 13 communities voting to raise property taxes to support their public schools. And districts are becoming more strategic about how to assess -- and sway -- community sentiment.

How it works

A referendum allows a school district to ask voters for more money beyond what the state doles out. An operating fund referendum supports salary, benefits and some programs; a capital projects referendum raises money to build or renovate school buildings.

Since the Indiana law changed, there have been 128 referendum votes. About 53 percent have passed.

About 58 percent of general fund referendums have passed, while about 47 percent of construction referendums have passed.

In Northwest Indiana, districts that have successfully passed referendums in the past seven years include Crown Point Community School Corp., Lake Central School Corp., Duneland School Corp., MSD Boone Township, School Town of Munster, Union Township School Corp., Valparaiso Community Schools, Hanover Community Schools and River Forest Community School Corp.

Referendums have failed for Porter Township School Corp., Gary Community School Corp., Lake Station Community Schools and Michigan City Area Schools.

In May, Valparaiso voters approved two referendums, one for the general fund, the other for construction. Although Valparaiso Community Schools will not receive referendum money until late spring or early summer, Valparaiso Superintendent Ric Frataccia said the district has begun work on buildings. 

The $148 million construction referendum includes building a new elementary school south of U.S. 30; renovating seven of the eight elementary schools; building additions onto Memorial, Cooks Corners and Parkview elementary schools; renovating the high school and building a new high school pool.

Under the plan, Central Elementary will be downsized and Hayes Leonard Elementary will be closed.

The general fund referendum will raise $4.4 million per year for seven years. It will fund teacher salaries, technology and mental health workers.

"We are using about $1.2 million in leftover money from our building funds project that hadn't been used to begin some of the projects at the high school," Frataccia said.

"We are having regular meetings and including members of the community to talk about and develop the prototypical high school classroom and elementary classroom. We also believe we may be moving some ground for the new elementary school in December."

Frataccia said the community supports education, and he was proud the measure passed 2-to-1.

"My fear is that there are going to be some school districts who will not be able to pass a general fund referendum for a number of different reasons, either the community doesn't support education that way or they believe schools are already well funded," Frataccia said.

"It will create a haves and have-not situation. I feel for my colleagues."

Failure tough on school officials, programs

Lake Station Community Schools is the most recent district to have a general fund referendum. It failed in November with 72 percent of residents voting against it.

Lake Station Superintendent Thomas Cripliver said they were one of seven school districts in Indiana that placed the question on the ballot in November.

Of the seven, four passed. East Noble School Corp., Whitley County Consolidated Schools, Fremont Community Schools and Zionsville Community Schools were successful. In addition to Lake Station schools, Greater Clark County Schools and North Judson-San Pierre School Corp. were not successful.

"We felt, as perhaps those school districts felt, we needed to do the referendum in November and address our funding concerns sooner rather than later," Cripliver said.

"We are in the process of reviewing our funding for the remainder of 2015 and into 2016. We will continue to be very conservative in our spending and make spending adjustments as needed to further tighten our belts," he said. "We will have a better idea after the first of the year what cuts to the 2016 budget will need to be made."

He said maintaining state mandates for education is the top priority.

"If the state funding for public education and the philosophy of our state lawmakers remains the same, sooner or later all schools large and small will have to wrestle with the question of doing a referendum," Cripliver said.

"This will be the case, because the amount of money used to fund education is being spread around to non-public school initiatives," he said.

Cripliver said it's difficult for districts to seek and have a referendum passed.

"You are asking the community to pay a little more in property taxes that goes directly to the school," he said. "Poorer school district communities have less resources available, but that does not mean a referendum will not pass. It is simply a matter of priorities."

While the Merrillville Community School Corp. has a positive general fund balance, Merrillville interim Superintendent Tony Lux said that balance is being "eaten away significantly" each year since 2009.

He said the legislature's reduction in the complexity index this year did not help. The index determines how much additional per-pupil money schools with more socioeconomic-challenged students will receive.

The funds from that index were redirected to wealthier school communities that had passed a referendum or two

Traditionally, the complexity index was based on the number of students on free and reduced-cost lunch. Now, the state awards more money based on children whose families qualify for one of three federal low-income services – foster care, the Supplemental Nutritional Assistance Program (food stamps) or Temporary Assistance for Needy Families.

Lux said his district is concerned about reductions in school funding at the state level and more unfunded mandates such as new high school graduation requirements calling for additional teacher hiring. Along with those, they are concerned with increasing private school vouchers or additional charter schools within the Merrillville school boundaries.

"A loss of 150 students (due to vouchers or charters) would be a loss of more than $1 million resulting in diminishing support programs for our students. Any combination of these negative financial impacts could drive the need for a Merrillville referendum," Lux said.

He said the state's forcing, or expecting, a local referendum is an inequitable and discriminatory solution for replacing lost and diverted state funding due to the differences in wealth among various Northwest Indiana communities.

Few referendums elsewhere in state

Larry DeBoer, a Purdue University economics professor and expert in state financing, said many school systems across the state are in trouble. He said the property tax caps enacted in 2008 have probably cost schools in the neighborhood of $300 million to $400 million a year.

"The state essentially froze its budget from 2008 to 2012 as a response to the revenue shortfall of the Great Recession," DeBoer said.

"We have not made up the revenue shortfall since then. Half of the state's general fund budget goes to schools, and schools have fallen behind on their funding. A lot of school corporations are probably in a bind."

Stephen Hiller, project associate for the Center for Evaluation and Education Policy at Indiana University, said both general fund and construction referendums perform better in May when a majority pass, compared to November, when a majority fail. However, in May 2010, more than half of all construction referendums across the state failed.

Hiller said the number of districts that have had referendums has been small, compared to the total number of school corporations.

"Generally speaking, it's less than 5 percent, and probably mostly around 2 to 3 percent of school corporations have sought a referendum each year," he said.

Hiller said school corporations that have failed to get general fund referendums passed have cut budgets, with school corporations being forthcoming with their communities about what steps they may need to take if a referendum fails.

Right now, the Gary Community School Corp., which lost a referendum vote in May and has been declared a "high risk" district by the Indiana Department of Education, is working with the state's Distressed Unit Appeals Board. The school district will get a $15 million, no-interest loan from the Common School Fund to boost its operating budget.

Savvy strategies to raise cash

DeBoer said Indiana was late to the referendum game. State law allowed referendums prior to 2008, but it was seldom used, he said. Once the state began funding schools with sales taxes rather than local property taxes, school districts began going directly to voters to ask for more money.

"School districts and superintendents have become more sophisticated in their campaigns," DeBoer said. "It used to be they thought that if they just put the idea forward, people would vote for it.

"Now, they handle it like a political campaign, outfitted with lots of technology, and that works. Superintendents also talk to each other."

He noted West Lafayette Superintendent Rocky Killion communicates throughout the state on referendums.

Killion produced the short documentary film, "Rise Above the Mark," which has been shown across Indiana and in nearby states.

Retired Hebron Superintendent George Letz led his district to propose a referendum twice, the second time because it failed the first. In 2013, the Metropolitan School District of Boone Township asked for a property tax increase of 23 cents per $100 of assessed valuation to generate an additional $530,000 each year for seven years. The measure lost by a mere four votes, 547 to 543.

A year later, the school district hired Indianapolis-based Winston/Terrell Group, a public relations/public outreach group, to help navigate the process and was successful.

Letz said the school system did a better job of educating residents and reduced the amount it asked for. In 2014, the district asked for 21 cents per $100 of assessed valuation to generate $470,000 for seven years. It was approved.

"One of the first things we did was go to our supporters to make sure they got to the polls," Letz said. "During the second election, 622 more people went to the polls than voted during the previous year. We won by 23 voters."

Letz acknowledges the majority of people against the referendum were farmers, who own more land that would result in higher taxes for them than the general population.

"It was a very close vote. Having the (Indianapolis) company helped us ... there was an even greater intensity the second time around," he said.

"Putting forth a referendum is not easy, and the process is very divisive for the community."