News From Terre Haute, Indiana

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May 11, 2014

STATE OF THE STATEHOUSE: Struggling schools look for funding relief

Numbers, perception spelled defeat for ballot referendum for brick-and-mortar upgrades

INDIANAPOLIS — Ball State University economist Michael Hicks had some unwelcome news when he met with leaders of the scenic Ohio River town of Madison last summer, after they asked his advice on growing their community.

Despite a long list of assets, ranging from a strong manufacturing base to an abundance of recreational opportunities, he found the community had a weak link: Its under-performing schools, measured by metrics and perception.

Hicks, who crunches those kind of numbers in his role as head of BSU’s Center for Business and Economic Research, warned the lack of confidence had consequences.

Last Tuesday, that prediction came to pass: Madison voters overwhelming turned down a $40 million referendum request from its school district. The money, to be raised with an increase on property taxes, would have gone toward major construction projects, including a new high school gymnasium.

Out of the 10 school referenda on the ballot Tuesday across the state, Madison was the only one that lost. The vote wasn’t close: 73 percent of voters said no, including one local Democratic activist who told the local newspaper that she asked everyone she knew to do the same.

Post-election, Hicks’ analysis found that most of the successful referenda were in districts with schools rated high for academic performance and/or moving up on their benchmarks. Only two wanted more money for construction projects; the rest were to boost school operating or transportation funds – both areas hit by past cuts from the state.

Hicks’ conclusion: Taxpayers are ready to invest more in schools, but they want to see value – especially when it comes to putting more money into bricks-and-mortar.

“It’s easy to go to taxpayers and say, ‘We’re doing a good job and we’ll get better if we have extra resources,’” said Hicks. “It’s hard to go to taxpayers and say, ‘We’re not doing well, but we need this money to get better.’ But it’s extraordinarily hard to make the argument, ‘We can’t get the classroom right, but we’re going to ask for a lot more money to build a new gymnasium.’”

The odds against the Madison referendum were long going in, as the district administrators admitted in the lead-up to the vote and in their expressions of disappointment afterwards.

Up until Tuesday’s election, school districts have struggled to convince voters of the merits of raising their own property taxes to fund expenses beyond what the state doles out and what existing local taxes bring in. With the defeat of its referendum, Madison joins a long list of school corporations that have fallen short in their first referendum attempt.

Since 2008, when the state overhauled education funding and created the referendum mechanism for school districts to raise money, two-thirds of the first-time referenda failed. Before Tuesday’s election, half of the 92 school referenda questions held since 2008 failed.

And $40 million is a lot for a small school corporation to request. With double the student body, the Decatur Township School in Marion County won its $27 million referendum with 64 percent of the vote.

But as Hicks notes, value has different meaning to voters. In the small farming community of Eminence in Morgan County, voters said yes to a referendum that will generate just over $4 million to keep its single K-12 school from having to consolidate with a neighboring school.

The Eminence school is struggling to keep up with the aggressive academic standards set by the state, but taxpayers there feel invested in its success. The tax hike won with 87 percent of the vote – the highest percentage of “yes” votes since the inception of school referenda in 2008.

Schools may still be on a learning curve when it comes to campaigning for referenda. But Hicks thinks there’s a lesson in Tuesday’s results. “Voters need to be persuaded of the net benefits to taxation,” Hicks said. “And that is purely a matter of successful local leadership.”

Maureen Hayden covers the Statehouse for the CNHI newspapers in Indiana. She can be reached at maureen.hayden@indianamediagroup.com.

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