Back on Election Day, May 6, nine out of 10 Indiana school
referendums passed. Eight were tax referendums, where voters approved new taxes
for school operating costs.
Two were for capital projects, to raise money to renovate
school buildings. One of those passed, and one failed.
Indiana has required referendums to approve big capital
projects since November 2008. That was one of the changes enacted with the big
property tax reform that year.
Since then, school corporations have proposed 48 capital
referendums, and voters have approved 21, which is 44 percent.
What makes school corporations propose capital referendums?
Perhaps schools compare the facilities they need to the facilities they have. If
reality falls too far short of need, voters are asked to approve new
Enrollment growth probably creates need. More kids need more
If a school corporation outgrows its existing buildings, new
construction might be necessary. Sure enough, about two-thirds of the capital
referendums have been proposed by growing school corporations.
Ability to pay probably counts, too. Places with higher
incomes can better afford to buy new facilities.
Again, sure enough, about two-thirds of the capital
referendums have been proposed in counties in the top half of per capita
Only seven of 48 capital referendums have been proposed by
school corporations with falling enrollment in lower-income counties. All seven
This means, though, that there are about 150 school
corporations with enrollment growth or higher income that have not proposed
capital referendums. It seems like the number of capital projects referendums is
Illinois, Michigan and Wisconsin make their school
referendum data easily available, so let’s compare Indiana’s proposals and
results to those states. From November 2008 to November 2013, Illinois school
districts proposed 98 capital referendums and passed 49 — that’s 50 percent.
Illinois has twice as many pupils as Indiana and twice the
number of referendums. Not much difference there.
Michigan school districts have proposed 293 capital
referendums since the second half of 2008 and passed 186, or 63 percent.
Michigan has about 50 percent more pupils than Indiana does, but proposed six
times as many referendums.
Wisconsin school districts proposed 277 capital referendums
during that time, passing 130, or 57 percent. Wisconsin has about 15 percent
fewer pupils than Indiana, but many more referendums.
Michigan and Wisconsin hold a lot of capital projects
referendums. Indiana and Illinois hold fewer.
Michigan and Wisconsin districts not only propose many more
capital referendums than those in Indiana, they pass a higher share. Michigan
voters have passed 63 percent, and Wisconsin voters 57 percent, compared to 44
percent in Indiana.
One reason might be that Indiana’s referendum proposals are
bigger. The average capital project proposed in Indiana has been $47 million.
The averages in Michigan and Wisconsin have been $20 million
and $12 million, respectively. Bigger projects require higher tax rates, and
higher tax rates cut the odds that voters will approve.
All three of our neighbors used to have many more capital
referendums than they’ve had recently. From 1996 to 2002, Illinois averaged 84
per year. Since then, it has averaged 21 per year.
In Michigan, the 1996 to 2002 average was 60 per year; since
then it’s been 30. And in Wisconsin, the earlier period saw 120 per year, and
since then, 44.
Economic growth fell off in the 2000s in the entire Great
Lakes region. That may be more evidence that lower ability to pay reduces the
number of referendums proposed.
One of the purposes of requiring referendums for bigger
capital projects in Indiana was to put a check on capital spending growth.
It seems to have worked. From 2000 to 2008, property taxes
for school corporation debt service grew 8.7 percent per year.
Since the referendum requirement came along, debt service
taxes have grown only 2.6 percent per year. The referendum requirement seems to
have discouraged school corporations from proposing capital projects, and voters
have approved less than half of those proposals.
That’s good for taxpayers.
Of course, on the other side of the budget, less spending on
construction may mean older, more-crowded, less-advanced school buildings. And
if lower-income districts are reluctant to propose capital projects, and their
voters are reluctant to pass them, we may find ourselves with a school equity