February 11, 2008
The School Referendum Debate
Should Indiana’s taxpayers vote on school construction? This seemingly simple question is a vexing issue for the legislature. The debate surrounding referendum is surprisingly misguided and emotional. A few ill-informed editorials have not added value to the debate. Let me add a bit of data to the discussion to enlarge our understanding.
Under Indiana’s current system government, no elected official reviews the complete budgetary process for local government spending. This perhaps more than anything else has caused our property tax mess.
Proponents of local referendums argue that by permitting taxpayers to choose the level of new construction costs, school building will be placed into the hands of citizens most directly affected. Opponents of the plan argue that Indiana voters will not support the level of school construction needed. Let’s examine the experience in surrounding Great Lakes States.
Illinois, Michigan and Ohio all have local school levies. Indiana does not. Per student educational spending in Illinois, Michigan and Ohio are all higher than in Indiana. Taxpayers in surrounding states are willing to spend more for each student than Hoosier taxpayers. Though this may not affect outcomes it certainly does not mean that residents in these states are not willing to support education. (Interestingly, educational outcomes, by graduation rates or test scores are better in Illinois, Ohio and Michigan than in Indiana.)
Opponents of the referendum argue that with the aging of baby boomers, fewer Hoosier residents have kids in school, so new spending won’t be supported. That is not the experience in our surrounding states. In Illinois, Michigan and Ohio, school spending per resident is higher than in Indiana. So, on both a per student and a per resident basis school spending in our surrounding states are higher than in Indiana. Tellingly, the average age of residents in the surrounding states are – with the exception of Illinois – higher than in Indiana. Also, the average age of mother at birth in Indiana is the lowest of these four states.
The age argument just does not scour. In both Michigan and Ohio, where the age of residents are older than in Indiana, school referendums have passed at 60 and 62 percent respectively over the past five years. Property taxes in both states are already much higher than in Indiana. Referendums (or something akin to them) are widely viewed by economists as critical to the success of local government spending efforts. The reason is that such factors as school performance influence property values. Without the local link, the bond between the costs and benefits of government spending are severed.
There are arguments against referendums. Elections are messy; attract special interests and recent polls show that about half of registered voters have below average intelligence.
I trust Hoosiers to make the right local choices on schools. In fact, if school boards become more responsive to costs, I predict Hoosiers to entrust them with more money, like residents have done in Illinois, Ohio and Michigan.
About the Author
Educational Attainment, the 21st Century Fund and the Future of SchoolingIndiana ranks 42nd in educational attainment.
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Re-Thinking Economic Development A large share of the most mobile families—perhaps half—no longer need to live near where they work.
Money Illusion and InflationPrice fluctuation could cause inflation to last longer, but it didn’t cause the inflation, it simply extends the pain.View archives