Chesterton Tribune

Duneland School Board to decide tax referendum Monday

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The Duneland School Board will decide Monday whether to ask local property taxpayers to offset years of state education cuts by adding up to 22 cents on the local property tax rate in each of the next seven years.

Duneland Superintendent Dirk Baer confirmed at the end of a public input session Thursday that his recommendation to plug a growing school deficit will be for the board to consider the lowest of three tax rate options under consideration and to ask voters to approve the additional tax rate in a referendum in the May 8 primary.

If the school board agrees to hold the referendum, and if the referendum passes, the added tax rate would first appear on property tax bills payable in 2013. Last year’s tax rate for the Duneland Schools totaled 85.5 cents; this year’s rates should be finalized next week.

For a taxpayer with a home assessed at $200,000 with homestead and mortgage deductions, a 22-cent tax rate would add $215 a year to the tax bill.

Unlike the rest of one’s property tax bill, funds raised through a voter-approved referendum are not subject to the state’s tax caps. That would mean the Duneland Schools would receive all the funding that the new tax rate would generate without having to cut, as it must in other funds, when the tax caps kick in.

Exactly how much the rate would generate each year would be determined in part by the annual net assessed value. Based on last year’s net AV of $2.4 billion, the added tax rate would generate up to $5.6 million a year.

Baer said the 22-cent rate would be the maximum each year and could be set lower.

On Thursday, school officials hosted the second public input forum of the week at Chesterton High School, attracting roughly 150 people. As with the first session on Monday, school officials began with a presentation outlining the funding problems facing Duneland, followed by a question session in the cafeteria.

State Blasted

Baer held nothing back in describing just why Duneland and other public schools are in the financial crisis they’re in, as he lay the blame directly on Gov. Mitch Daniels and Indiana lawmakers.

“The current administration is not an advocate for public education,” he said.

Baer added that he has little confidence in state lawmakers to correct the funding shortfalls facing schools like Duneland. The 10 top fastest growing school systems are represented by 13 lawmakers and the 10 fastest declining are represented by 26 lawmakers, he said. “They control the legislature,” he said.

The problems can be traced to the 2008 state law that dramatically changed Indiana’s property tax system.

The tax reforms shifted school general funds, which typically had been the largest portion of one’s tax bill, from local property taxpayers to the state. To pay for the $3 billion in school costs, the state hiked the state’s sales tax by 16 percent, increasing the rate from 6 to 7 percent, and eliminated two important state credits that helped cut property taxes. The latter alone saved the state $2 billion per budget cycle. The law also gave homeowners a new supplemental deduction and established the state tax caps as well as the 2010 tax cap constitutional amendment.

The short-term impact of the 2008 law was a drop in local property tax rates due to the removal of the school general fund. In the Chesterton taxing district, for example, the total rate fell from 2.57 in 2008 to 2.13 in 2009 – or double what Duneland is now trying to add back.

The law gave schools the ability to turn to voters to make up for any operating shortfalls. The importance of that provision soon became clear: As Baer pointed out, in late 2009, with less than a 30 day notice, the state announced nearly $300 million in cuts for schools, which came on the heels of cuts in the normal school funding formula.

To schools now struggling with shortfalls, state leaders might say “we’ve given you a tool” through the referendum, Baer said. It’s not a popular tool, “but that’s the option we have.”

Currently, 15 school corporations in Indiana have voter approved tax levies.

Impact on Duneland

The presentation by Baer, Assistant Superintendent Dave Pruis and financial consultant Curt Pletcher from Umbaugh and Associates painted the financial situation facing Duneland as moving from grim to worse.

The state’s tuition support averages $5,664 per student, but Duneland is below the average at $4,971. With declines in enrollment and state funding cuts, Duneland’s general fund has dropped from $40 million in 2009 to $35.5 million the next year.

Duneland responded with a series of budget cutting moves, including the elimination of 34 staff members through attrition, a restructuring that closed the alternative education school, a freeze on salaries at the 2008-09 level, a loss of school subsidy for full day kindergarten and summer school, the elimination of 61 coaching and other athletic positions in the middle and high school levels, and a new contract with teachers that freezes the base salary through 2016.

Pletcher presented projections through the year 2019 that assumed state funding for the school general fund will remain flat each year. But due to rising costs for expenses like insurance and utilities, the projections show expenditures increasingly exceeding revenues each year through 2019, when the shortfall would hit $8.4 million, or a cumulative deficit of $40 million.

“They’re really at a crossroads to balance the budget,” he said of the Duneland Schools.

Pletcher outlined three options with different objectives: One that would offset the annual projected deficit, requiring a tax rate of 33 cents and a levy of nearly $8.4 million; one to maintain a 10 percent operating balance, requiring a tax rate of 25 cents and a $6.4 million levy; and one that would provide the average levy needed, requiring a tax rate of 22 cents and a $5.6 million levy.

He also noted that the state average school tax rate is 1.118. A 22-cent rate added to the school rate would bring Duneland in line with the state’s average.

Questions, Comments

As with Monday’s session, audience questions and comments were shared in individual group sessions after the formal presentation. The comments were then read aloud by the school officials at the end of the meeting.

A repeated concern dealt with whether the 22-cent rate would be enough to sustain the schools over the next seven years. Another concern raised several times dealt with state lawmakers – specifically, the participants wanted to know who the lawmakers are who created the funding mess and how they would explain themselves today.

Other concerns questioned current Duneland School spending, and why school board members receive the school corporation health care coverage and whether teacher stipends can be cut.

Other questions and concerns read: Why do the Gary Schools get so much more in state support, at $8,777 per pupil; what will be the consequences be if the referendum does not pass; can parents volunteer to replace the positions cut; since businesses pay more in taxes than homeowners, will downtown businesses leave; are there other funding options instead of property taxes; and if the state increases school funding, will Duneland give back the funding through the higher tax rate.

Now What?

School Board President Janice Custer urged the public to contact her and other school board members with their concerns or comments. The Duneland School’s website is Baer’s email is

All the comments raised at the two public input sessions this week, along with the answers, will be posted online in the form of a FAQ in the coming weeks.

The Duneland School Board will hold its regular monthly meeting at 6 p.m. Monday in the Administration Center, 601 W. Morgan Ave., during which it will be asked to approve the referendum for the May 8 ballot.

Referendum statistics

Thirty-one Indiana schools have turned to a provision in state law that allows them to ask local voters to approve an additional property tax rate to fund school operating costs.

Fifteen succeeded.

According to online statistics, most of the schools that sought a voter approved tax levy sought an added tax rate, though a few sought to raise a specific dollar amount.

The approved tax rates range from a high of 59 cents to a low of 1 cent.

The breakdown by year is:

2009: Five referenda held, three passed.

2010: 20 referernda held, nine passed.

2011: Six referenda held, three passed.

The only Northwest Indiana school that has held a referendum for its operating funds has been Crown Point, where voters last year approved an additional tax rate of 21 cents.

A separate provision in state law requires a voter-approved referendum on major new school projects and other public works projects. The Boone Grove and Michigan City schools have been among those that have held such referendum for school building projects; both failed.



Posted 2/10/2012