School Referenda More Likely to Pass the Second Time Around
Published: Friday, December 7, 2018
The following is from Larry DeBoer, professor of agricultural economics at Purdue University.
Indiana school districts can propose referenda to ask their voters for added property tax revenue. Twelve referenda were proposed on election day, and eight passed. That's 67 percent, just a bit more than the 63 percent pass rate since 2008. Move along, folks, nothing to see here.
But there's been an upward trend toward passing school referenda. From November 2008 to May 2011, only 40 percent of school referenda passed. From November 2011 to November 2015, 67 percent passed. Then, in the five elections from May 2016 to May 2018, 88 percent passed. The results this time look like a throwback to the first half of the decade.
What interrupted the upward trend? Maybe other trends asserted themselves.
Referenda held during November elections used to pass less frequently than those held in May. Through 2015, school districts passed 44 percent of referenda held in November, while 67 percent passed in May. Perhaps the difference was in turnout. November elections bring out voters for state and national elections, who may be unaware of the school questions on the ballot. Those voters may be more likely to vote no.
But in the five elections from May 2016 to May 2018, 88 percent passed in both May and November. There was no difference.
This year, 2018, 12 out of 12 passed in May; 8 out of 12 in November. Perhaps the May/November difference reasserted itself.
Here's another trend. Through May 2018, school districts proposing their first referenda passed 51 percent of them. School districts which had asked before passed 84 percent. Experience counts. It seems that school officials learn how to run a campaign—or how not to run one—and do better the second time around.
This election day, five of the referenda were proposed by school districts which had asked before. Four passed. Seven were proposed by rookies. Four passed. So the veterans passed 80 percent, and the rookies 57 percent. That's pretty close to the 10-year average.
Then there are the tax rates. Each referendum proposes a property tax rate to be levied on property within the school district. Tax rates are measured as dollars per $100 assessed value. Surely, any economist would think, referenda with higher tax rates would pass less frequently than referenda with lower tax rates.
And that's been true—but not by much. Through May 2018, referenda proposing tax rates under 30 cents per $100 assessed value passed 65 percent of the time, while those at 30 cents or more passed 59 percent of the time. Rates didn't matter than much.
This November, six referenda were proposed with rates under 30 cents, and they all passed. Six were proposed with higher rates, and four were defeated. The Lake Ridge school corporation in Lake County proposed two referenda, one for a capital project and one for operating costs, both with tax rates above one dollar. No one had ever asked for rates that high before. They both lost. Hamilton Community Schools in DeKalb and Steuben counties proposed a 71 cent rate, which was the eighth highest in the past 10 years. It lost, too.
Perhaps particularly high rates matter to voters. There have been 17 referenda proposing rates above 60 cents. Only seven have passed, which is 41 percent.
Which leads to one more trend. A reason Lake Ridge asked for such high rates is that the district has so little property value to tax. Lake Ridge has taxable assessed value of about $135,000 per pupil, which puts it in the lowest 10 percent of school districts. Low assessed value means higher rates are needed to raise any revenue for salaries or construction.
Sure enough, assessed value matters for referenda results. Over the whole 10 years, districts with more than $300,000 assessed value per pupil passed 79 percent of their referenda, while those with less passed only 51 percent. Is this a developing equity problem? If wealthier districts pass referenda more frequently, they'll have newer buildings, smaller class sizes and higher paid teachers than less-wealthy districts.
It was an election in November, with more rookies, some high tax rates and some less wealthy school districts. That was enough to interrupt the upward trend in passing school referenda.
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