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
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.
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
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
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.
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
“They’re really at a crossroads to balance the budget,” he said of the
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
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
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.
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 duneland.k12.in.us. Baer’s email is firstname.lastname@example.org.
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
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.