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News Release

Last modified: Wednesday, March 19, 2008

Lawmakers split on property tax bill impact on education

Panel of Republicans and Democrats offer views in CEEP Education Policy Chat

FOR IMMEDIATE RELEASE
March 19. 2008

BLOOMINGTON, Ind. -- A group of four members of the Indiana General Assembly disagreed on what should be done, but each offered suggestions for additional consideration on school funding and other policies during today's CEEP Education Policy Chat at the Indiana Memorial Union.

The panel, split evenly with a Democrat and a Republican from both the House and Senate, spoke this morning at the final policy chat of the spring series, sponsored by the Center for Evaluation and Education Policy (CEEP) and the Indiana University School of Education.

The property tax bill Gov. Mitch Daniels signed this afternoon dominated the discussion, which focused on the impact the recently-concluded legislative session will have on public schools and higher education in Indiana. The law raises the sales tax and cuts property tax bills by about 30 percent for average Hoosier homeowners. School funding will shift away from property tax revenues. The change will mean an estimated taxpayer savings of $524 million in 2010, but also that much less will go into the budgets of schools and local governments. To soften the blow of reduced revenue, the legislature approved payments to public schools over the next two years totaling $120 million.

Democrats raised alarms about the impact on school budgets, particularly for urban school districts. Rep. Greg Porter, D-Indianapolis, called the property tax bill a "good first step" to solving the property tax problem that has hit Marion County particularly hard. But he warned that the coming years may be particularly difficult for school corporations in his district if the flagging economy gets worse.

"We're in trouble," Porter said. "I think it's a travesty that we're going to change the rules in the middle in regards to school funding, particularly with construction costs. I don't see Indianapolis Public Schools having $4 million football stadiums. It just doesn't happen in a starving school district."

State Sen. Vi Simpson, D-Ellettsville, said schools will face a "significant shortfall" of $95 million dollars under the property tax bill. "The removal of levies, particularly the school general fund, especially at a time when we're entering a recession, brings about the question as to whether we'll be able to sustain this program over a long period of time," Simpson said. She added that the largest part of the shortfall is concentrated in the largest school districts.

Republican Rep. Randy Borror, R-Fort Wayne, said he wasn't as pessimistic about how schools will fare in the coming years. He said the referendum on public building projects placed in the property tax bill will help curb unnecessary spending.

"I would point to bipartisanship, the fact that all four of us voted for it, which is unusual in itself," he said. "I don't believe any of us would say it is the perfect solution to the problem. "

State Sen. Brent Steele, R-Bedford, said the referendums are good for Indiana taxpayers. "Our schools in Indiana have been built 39 percent larger and 40 percent more expensive that the national average," Steele said. "And this gives local control to the people." He also called the cap placed on property taxes, no more than 1 percent of a home's assessed value, crucial to Hoosier homeowners having a sense of "permanence" in the property tax solution.

As far as higher education is concerned, Simpson said it may be "the real loser." She expressed concern that if state revenues don't increase at the rate forecast over the next two years, public schools will get more from the smaller revenue base because they "touch more lives."

In next year's session, Porter promised to continue to fight for complete funding of full-day kindergarten. Borror said he'd like to work toward streamlining local government more, particularly reducing elected assessors to just 92 statewide. Steele offered that he'd like legislators to consider changing the name of the "Free and Reduced Fee Lunch" program. He said that many of his constituents who are eligible simply don't sign up because of a stigma associated with that name.

CEEP, Indiana's leading non-partisan education policy research center, promotes and supports rigorous program evaluation and education policy research primarily, but not exclusively, for educational, human services, and nonprofit organizations. Center projects address state and national education questions. CEEP is part of the IU School of Education. To learn more about CEEP, go to https://ceep.indiana.edu.

Media Outlets: the following comments are available as mp3 files on the IU School of Education Web site at https://www.education.indiana.edu. Look for this news release under "News" on the home page. The sound bites below will have a clickable link to hear and to save the files.

Simpson says schools will feel a hit from the property tax legislation:

"The removal of levies, particularly the school general fund, especially at a time when we're entering a recession, brings about the question as to whether we'll be able to sustain this program over a long period of time. "

Borror says the property tax bill was a good achievement that sets the stage for next year's budget session:

"I do think it was a landmark session. Again, I would point to bipartisanship, the fact that all four of us voted for it, which is unusual in itself. I don't believe any of us would say it is the perfect solution to the problem. We will be addressing this in the future, especially as we address in the Ways and Means Committee and in Senate Finance the budget for next year. It will be a difficult budget. Obviously, states around the country are struggling with revenue, and Indiana's no different. I believe we're a little bit different in the fact that if you look at the economic performance of Indiana we might be a little bit better than those contiguous states around us. But that's still not good enough, quite frankly. So we're going to have a challenge moving forward, and this will be something that will be on the table for the next session and probably for sessions to come."

Porter says the property tax agreement and the referendum on public building projects that is part of the bill will hurt school districts:

"We're in trouble, with education and figuring out where we're going to do with our children, with our general education and the general dollars coming off of it, it's going to be tough to handle. Do I like $45 million dollar school buildings? No. But do I like equalization so that children have the ability to learn in a good educational environment? Yes."

The change in taking schools from the property tax rolls is one Porter says will adversely affect urban districts. He says the legislature will have to reconsider the matter depending on whether the state meets revenue growth targets of 4 percent:

"I think it's a travesty that we're going to change the rules in the middle in regards to school funding, particularly with construction costs. I don't see Indianapolis Public Schools having $4 million football stadiums. It just doesn't happen in a starving school district. I'd just like to see as time goes on that next year, after we've done this, that we have to look at the funding for all public education that we look at the four percent for those schools."

Steele says the law gives local communities more control over what school districts are spending with mechanisms for projects over and under $12 million:

"So it's a referendum for over 12 and you can have the petition-remonstrance for under 12. These referendums are good. Our schools in Indiana have been built 39 percent larger and 40 percent more expensive that the national average. And this gives local control to the people. They have the right to foist upon themselves the local option income tax. If they want more, they can have it and implement it with a local tax which has to be re-voted on periodically. So it gives people a chance to get involved and actually select how much government they want to pay for and how to pay for it."

For more information, contact Chuck Carney at 812-856-8027 or ccarney@indiana.edu.

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