THE IMPACT OF PROPERTY TAX CAPS ON FUNDING EQUITY FOR PUBLIC SCHOOLS IN INDIANA
A DISSERTATION SUBMITTED TO THE GRADUATE SCHOOL IN PARTIAL FULFILLMENT OF THE REQUIREMENTS FOR THE DEGREE DOCTOR OF EDUCATION BY J. SCOTT BOWLING DR. LORI BOYLAND – ADVISOR
BALL STATE UNIVERSITY MUNCIE, IN MAY 2017
THE IMPACT OF PROPERTY TAX CAPS ON FUNDING EQUITY IN INDIANA PUBLIC SCHOOLS 1
ABSTRACT
DISSERTATION: The Impact of Property Tax Caps on Funding Equity for Public Schools in Indiana
STUDENT: J. Scott Bowling
DEGREE: Doctor of Education
COLLEGE: Teachers College
DATE: May 2017
PAGES: 112
In 2008, the state of Indiana implemented a system to limit the amount of property taxes paid by various constituents. Residential property taxes were capped at 1% of assessed value.
Agricultural and commercial property was capped at 2% of assessed value. Business property was capped at 3% of assessed value. The caps caused varying losses of tax revenue across the state for units that relied on the property tax as a source of revenue (Bradner, 2010). School corporations lost revenue as a result of the caps, but the losses were not uniform across the state
(Indiana Department of Local Government Finance, 2015b). Some districts lost very small dollar amounts and some lost so much money that boards had to consider eliminating their entire student transportation system (Starks, 2014). This study sought to examine the relationship of these differential losses across an array of school corporation characteristics, including: student enrollment, district property wealth, location type (rural, urban/city, suburban), the percentage of
English learners served, the percentage of special education students served, the percentage of students who received free or reduced priced lunches, and the percentage of nonwhite students served. The results of this study indicated several important relationships. Significant positive correlations were found between the amount of revenue lost due to property tax caps and the THE IMPACT OF PROPERTY TAX CAPS ON FUNDING EQUITY IN INDIANA PUBLIC SCHOOLS 2 following factors: student enrollment (r = 0.696), the percentage of English learners served (r =
0.322), and the percentage of nonwhite students served (r = 0.576). The findings of this study were discussed and ideas for future research in this area were suggested.
THE IMPACT OF PROPERTY TAX CAPS ON FUNDING EQUITY IN INDIANA PUBLIC SCHOOLS 3
Dedication
First, I want to thank God for guiding and directing me towards a career in education.
When I was younger, I turned away from what my heart was telling me: that a life that was just about me and not about caring for others was ultimately devoid of deep meaning. I am so glad that my faith ultimately moved me in the right direction.
I also want to thank Kelli Bowling, my beautiful and intelligent wife. Going through the process of completing my education in the midst of raising three small children and through several major career changes for both of us has been the greatest challenge of my life. I could not have done it without her support, encouragement, and love. I owe Kelli a debt I can never repay, and I am so appreciative of her dedication to our entire family.
Lastly, I would like to dedicate this work to my children, Elizabeth, Thomas, and
Caroline. I have told you before that there is no feeling on earth that can compare to watching your child succeed in their endeavors. Even at a young age you each have given me that gift time and again by excelling in your academic work, by giving your best effort in sports, by writing a beautiful essay, by delivering an outstanding performance, or, most importantly, by caring for others. I hope my work on this project will encourage you to set and reach big goals in whatever direction life takes you.
THE IMPACT OF PROPERTY TAX CAPS ON FUNDING EQUITY IN INDIANA PUBLIC SCHOOLS 4
Acknowledgements
I would like to acknowledge my parents for their lifetime of support. They never failed to find a way to fund and believe in my aspirations, even when I did not appreciate it. They have always been my biggest cheerleaders. I would also like to thank my grandmother Lucille Snow for the support that she provided for me before she passed away in 2005. She never failed to mention the importance of education as I was growing up. She believed that it was the key to living a full and productive life, and she instilled this value in me from a very early age. I always think of her and her encouragement whenever I achieve a milestone in my life.
I cannot thank Dr. Lori Boyland enough for her steadfast support of this project. She never gave up on me, even when at times I was ready to give up on myself. In addition, Kianre
Eouanzoui provided critical support under a tight timeframe, for which I will be forever grateful.
I would also like to thank my entire committee, Dr. McKinney, Dr. Quick, and Dr. Hall, for their time and input on this research.
Lastly, I would like to acknowledge the school board members and administrators that have guided and mentored me throughout this process and my administrative career.
Crawfordsville is a special place where the importance of education has been held as a primary value for well over one-hundred years. I was always encouraged and supported by the school community throughout this process. Their belief in me is humbling.
THE IMPACT OF PROPERTY TAX CAPS ON FUNDING EQUITY IN INDIANA PUBLIC SCHOOLS 5
Table of Contents
ABSTRACT……………………………………………………………………….. 1
DEDICATION…………..………………………………………………………… 3
ACKNOWLEDGMENTS………………………………………………………… 4
TABLE OF CONTENTS…………………………………………………………. 5
LIST OF TABLES………………………………………………………………… 7
LIST OF FIGURES……………………………………………………………….. 8
CHAPTER 1. INTRODUCTION………………………………………………………... 9 Statement of the Problem………………………………...... 10 Purpose of the Study….…………………………………...... 10 Significance of the Study………………………………………………… 11 Research Questions………………………………………………………. 11 Delimitations……………………………………………...... 12 Definitions……………………………………………………………….. 12 Summary…………………………………………………………………. 13
2. REVIEW OF LITERATURE……………………………………………. 15 Overview………………………………….……………………………… 17 Early History of School Funding………………………...... 17 Major Lawsuits Drive Equity Issues in School Funding…..…………….. 19 Previous Equity Studies……………………………………….…………. 24 Does Money Matter…………………….………………...... 24 Property Taxes and School Funding Equity……………………………... 26 Policy Issues Related to Funding Inequity………………………………. 30 School Funding in Indiana………………………………………………. 31 Indiana’s Foundation Program…………………………………………... 33 An Overview of the Fund Accounting System in Indiana……...... 34 2008: Monumental Shift in School Funding and the Advent of Property Tax Caps……………………………………………………………….... 36
3. RESEARCH METHODOLOGY……………………………………….. 38 Purpose of the Study……………………………………...... 38 Research Questions……………………………………………………… 39 Research Design………………………………………………………… 39 Description of the Sample………………...... 40 Data Collection and Analysis…………………………………………… 40 Limitations of the Study……….………………………………………... 40 Summary………………………………………………………………... 41 THE IMPACT OF PROPERTY TAX CAPS ON FUNDING EQUITY IN INDIANA PUBLIC SCHOOLS 6
4. RESULTS AND DISCUSSIONS…………………….………………… 43 Data……………………………………………………...... 44 Findings Related to the Research Questions……………...... 89 Research Question 1……..……………………………………………….. 89 Research Question 2……………………………………………………… 92 Research Question 3……………………………………………………… 94 Cross-correlational Results……………………………………………….. 96 Summary………………………………………………………………….. 98
5. SUMMARY AND CONCLUSIONS ………...... 99 Summary of Study……………………………………………………….. 99 Findings and Discussion…………………………………………………. 100 Research Question 1……………………………………...... 100 Research Question 2……………………………………...... 101 Research Question 3……………………………………...... 102 Conclusions……………………………………………………………… 103 Recommendations……………………………………………………….. 105 Further Research…………………………………………………………. 106 Summary………………………………………………………………….. 107
REFERENCES……………………………………………………………………. 109
THE IMPACT OF PROPERTY TAX CAPS ON FUNDING EQUITY IN INDIANA PUBLIC SCHOOLS 7
List of Tables
Table 1: Total Enrollment……………………………………………………… 44
Table 2: Property Tax Cap Losses…………………………………………….. 52
Table 3: Assessed Valuation Per Pupil………………………………………… 60
Table 4: Property Tax Levy Per Pupil…………………………………………. 67
Table 5: Classification of School Corporations as City/Urban, Rural, and
Suburban………………………………………………………………………. 75
Table 6: School Corporations that Received Protected Debt Service Waiver… 79
Table 7: Student Demographic Data…………………………………………… 82
Table 8: Percentage of Schools Receiving Protected Debt Waiver……………. 92
Table 9: Cross-correlation of Key School Characteristics……………………. 97
Table 10: Summary of Property Tax Cap Loss Correlations……………………. 100
THE IMPACT OF PROPERTY TAX CAPS ON FUNDING EQUITY IN INDIANA PUBLIC SCHOOLS 8
List of Figures
Figure 1: Scatter Plot Comparing Property Tax Cap Losses and Student
Enrollment……………………………………………………………………... 90
Figure 2: Scatter Plot Comparing Property Tax Cap Losses and Student
Enrollment…………………………………………………………………….. 91
Figure 3: Scatter Plot Comparing Property Tax Cap Losses and Property
Tax Levy Per Pupil …………………………………………………………… 92
Figure 4: Percentage of Schools Receiving Protected Debt Service Waiver by
Location Type…………………………………………………………………. 93
Figure 5: Scatter Plot Comparing Property Tax Cap Losses and Percentage of
English Learners Served ……………………………………………………… 94
Figure 6: Scatter Plot Comparing Property Tax Cap Losses and the Percentage of Special Education Students Served………………………………………… 95
Figure 7: Scatter Plot Comparing Property Tax Cap Losses and the Percentage of Nonwhite Students Served…………………………………………………. 96
CHAPTER 1
INTRODUCTION
In 2008, Indiana voters approved ballot language that would forever alter public school funding in the state. In one crucial vote, they placed language into the state constitution that permanently limited property taxes to 1% for homeowners, 2% for commercial/rental property, and 3% for businesses, forever changing the funding structure for schools in the state (Bradner,
2010). The vote was a culmination of an effort that had its roots in changes that were made to the property tax assessment system in 2002 (Rogers, 2005).
Prior to 2002, Indiana had been using a “true tax value” approach to assessment. This method calculated the value of real estate by estimating the amount of money it would take to rebuild the structure and then subtracting an amount for depreciation based on the age of the building. Under this system, older homes that were well-maintained and in desirable locations were valued for tax purposes at amounts far below the actual market value of the property. A series of Indiana Supreme decisions ruled the true tax value method to be unconstitutional, essentially mandating a change to the property tax assessment system (Rogers, 2005).
In response, the state adopted a fair market value approach to assessing property beginning in the year 2002. This method calculated property values by estimating the open market sale price of the real estate. The predictable result was that property values, and therefore property tax bills, increased and in some cases skyrocketed. In response, taxpayers descended upon the statehouse and held public protests to make their concerns known (Associated Press,
2010b).
The legislative response to this situation was a law passed in 2008 to limit property taxes to 1% for residential property, 2% for farmland and rental property, and 3% for business THE IMPACT OF PROPERTY TAX CAPS ON FUNDING EQUITY IN INDIANA PUBLIC SCHOOLS 10 property. That same year, legislators began the process of placing these caps into the Indiana
Constitution, making the change very difficult to undo. The last step to achieve this was to bring the issue to Indiana voters. The issue was placed on the ballot in 2010 and passed, winning 71% of the vote (Bradner, 2010).
Statement of the Problem
With the caps firmly ensconced in the Indiana Constitution, the legislative issue of property caps is settled. However, this monumental change in the property tax system has fundamentally altered the funding of public education in Indiana. To date, the revenue changes caused by property tax caps have not been analyzed from an equity standpoint. The algorithm for the caps is simple – 1%, 2%, and 3%. However, school finance is complex. Certainly, the prospect of unintended consequences exists when an easy formula is used to solve a difficult problem. Were “winners” and “losers” created in school corporations across Indiana? Are all
Indiana schools fiscally viable under the caps currently? Will they remain fiscally viable as losses accumulate year after year? This study analyzed the data to see if these questions could be answered.
Purpose of the Study
School funding equity is generally recognized as a key component of providing a free, appropriate education. The recent legislative changes that have capped property taxes in Indiana have resulted in varying degrees of funding loss for school corporations across the state (Indiana
Department of Local Government Finance, 2015b). To preserve the equity ideal, this new property tax system must be examined to determine if a relationship exists between the implementation of property tax caps and school funding equity in Indiana. If such a relationship exists, this study will attempt to discern both the magnitude of the effect and its impact on rural, THE IMPACT OF PROPERTY TAX CAPS ON FUNDING EQUITY IN INDIANA PUBLIC SCHOOLS 11 suburban, and urban communities. In addition, this analysis will examine the equity impact that
Indiana’s property tax caps have had on schools that serve varying numbers of students with low socio-economic status, students with disabilities, students who are considered English language learners, and students of various ethnicities.
Significance of the Study
The results of this study could affect tax policy throughout the United States. Currently,
19 states have property tax caps. Demographically, Indiana is representative of the Great Lakes region in general (U.S. Census Bureau, 2010b). Other states in the region that are considering tax caps can use this study to look at the pros and cons of implementing such a system. More broadly, the results could be used throughout the United States because all states rely on a mixture of tax revenues to support public education, and the concept of capping one or more tax revenue streams could apply in any number of funding scenarios. In addition, Indiana has come to be regarded as a model, especially among republican policymakers, of both educational reform (American Legislative Exchange Council, 2015) and fiscal restraint (Leonhardt, 2011).
The results of this study could serve as a source of hard data to either bolster or refute these arguments as lawmakers in the Midwest and across the nation make tough decisions about tax policy and school funding.
Research Questions
The research questions that guided this study were as follows:
1. What is the relationship between property tax caps and school funding equity in Indiana?
2. What is the relationship between property tax caps and school funding equity in rural,
urban, or suburban Indiana school systems? THE IMPACT OF PROPERTY TAX CAPS ON FUNDING EQUITY IN INDIANA PUBLIC SCHOOLS 12
3. What is the relationship between property tax caps and school funding equity in Indiana
schools that serve differential proportions of students with low socio-economic status,
students with disabilities, students who are considered English language learners, and
students of various ethnicities?
Delimitations
For this study I chose to use financial data from the state of Indiana. As was stated previously, Indiana is representative demographically of the Midwest and of nation as a whole
(U.S. Census Bureau, 2010b). I also chose to utilize only financial data rather than designing a mixed methods study that would have included qualitative data. Using quantitative data allows for objectivity in analysis and allows for easy comparisons of district financial data. However, quantitative research also delimits the depth in which topics can be explored and does not allow for the rich context that can be discovered by using qualitative methods.
Definitions
Property Tax Caps – a property tax limit that restricts the total tax bill to 1% of the assessed value for residential property, 2% of the assessed value for commercial and agricultural property, and 3% for business property (Faulk, 2013).
Assessed Valuation - the total dollar value assigned to all real property and improvements plus personal property subject to taxation (Indiana Department of Local Government Finance, 2015a)
Equity – a concept in school finance which holds that students should receive equal amounts of funding regardless of where they attend school (Toutkoushian, 2007)
Adequacy – a concept in school finance which holds that public education must be funded in a manner that provides a certain substantive level of educational quality (Augenblick, 1997) THE IMPACT OF PROPERTY TAX CAPS ON FUNDING EQUITY IN INDIANA PUBLIC SCHOOLS 13
General Fund – a school fund used to record all receipts and disbursements for current operating purposes except pupil transportation (Indiana State Board of Accounts, 2010)
Debt Service Fund – a school fund used to record all receipts and disbursements for all debt and other obligations arising out of funds borrowed by a school corporation (Indiana State Board of
Accounts, 2010)
Pension Debt Service Fund – a school fund used to reduce the school corporation's unfunded contractual liability for retirement or severance payments as it existed on June 30, 2001 (Indiana
State Board of Accounts, 2010)
Capital Projects Fund – a school fund used for planned construction, repair, replacement, or remodeling of school facilities (Indiana State Board of Accounts, 2010)
Transportation Fund – a school fund used for the payment of costs attributable to the transportation of school children to and from school (Indiana State Board of Accounts, 2010)
Bus Replacement Fund – a school fund used for the purchase of school buses (Indiana State
Board of Accounts, 2010)
Rainy Day Fund – a school fund that can be used for any expense the school board deems appropriate (Indiana State Board of Accounts, 2010)
Summary
Property taxes have traditionally been a political flashpoint in Indiana. The legislature has had to balance constituents’ desires to minimize their tax burdens with the very real needs that local property taxes fund. The Constitutional amendment that established property tax caps in Indiana has dramatically changed funding for schools. This study has the ability to provide an THE IMPACT OF PROPERTY TAX CAPS ON FUNDING EQUITY IN INDIANA PUBLIC SCHOOLS 14 analysis of how this change is affecting school corporations from an equity and adequacy standpoint.
THE IMPACT OF PROPERTY TAX CAPS ON FUNDING EQUITY IN INDIANA PUBLIC SCHOOLS 15
CHAPTER 2
REVIEW OF LITERATURE
The concept of equity has consumed the school finance literature for decades. The quest for this ideal stems from the inequities that existed across the country for years due to racism, segregation, and differences in wealth across communities (Warren, 2012). Beginning with the end of the Civil War and continuing to the present day states have, reluctantly at times, sought to equalize funding for their educational programs (Walters, 2001). Underlying this perceived need for equity was the thought that the level of school funding had a large impact on student achievement. However, researchers who have examined this perception have produced mixed results (Hanushek, 1989; Harter, 1999). Despite the conflicting evidence of funding equity’s effect on student achievement, it continues to be a major policy issue. State legislatures across the country continue to strive to provide equal resources for schools. This need for equality in school funding stems from a national ethos which holds that education is the key to opportunity in our country and that every student deserves an equal chance to achieve success (Hochschild &
Scovronick, 2000).
One of the key drivers of inequity in school funding in the United States is the method by which schools receive revenue. Schools receive money from three primary sources: the federal government, state government, and local government. The federal government spends less than ten cents of every dollar provided for education – far less than most other developed nations - leaving the bulk of education spending to come from state and local dollars. On average, contributions from states and localities are roughly equal. States collect revenues from income, sales, corporate, and other taxes and distribute a large portion of these funds to K-12 schools using a funding formula. In many states this distribution represents more than half of the entire state government budget. Local governments raise revenue for schools utilizing the property tax. THE IMPACT OF PROPERTY TAX CAPS ON FUNDING EQUITY IN INDIANA PUBLIC SCHOOLS 16
It is the property tax, which on average provides 45% of total revenue for each school corporation (U.S. Census Bureau, 2010a), that has driven equity issues in public school finance.
To use the state of Indiana as an example, data collected in 2004 showed that the range of property value per pupil ranged from $159,026 in the poorest district to over double that amount
($345,449) in the wealthiest district. These differences in property wealth can be seen across the country and represent the primary source of funding disparities between school districts. These differences also provide the impetus for the equity lawsuits that will be examined as a part of this review (Toutkoushian & Michael, 2005).
To address the desirability of equity, researchers have sought to develop concrete means of measuring the concept mathematically (Toutkoushian & Michael, 2007). However, most equity measures focus on state funding formulae. This study will attempt to identify the equity effects that occur when states implement property tax controls that are not specifically designed to achieve equity, namely the property tax limits imposed in the state of Indiana in 2008. The idea for a cap on property taxes came from Governor Mitch Daniels who stated that “fairness requires that Hoosier homeowners should never pay more than one cent of every dollar of their homes’ value on property taxes” (Indiana Governor’s Office Website, 2012). Therefore, the original basis for the property tax cap concept was based on an abstract philosophy that any property tax levied on homeowners that exceeds 1% of the property value is fundamentally unfair. A thorough review of media coverage returned nothing that would indicate that school funding inequities were considered by major supporters of the legislation. Indiana was chosen as the subject for this study because it is one of the few states that have adopted strict property tax controls. In addition, total per pupil spending in Indiana ($9611) is very close to the national average of $10,615 (U.S. Census Bureau, 2010a). THE IMPACT OF PROPERTY TAX CAPS ON FUNDING EQUITY IN INDIANA PUBLIC SCHOOLS 17
Overview
The literature review portion of this study will first examine major lawsuits that have driven the examination of equity issues by both state legislators and researchers and the policy issues raised by funding inequities. Then, the review will cover research that has already been done concerning equity in school funding. This will be followed by a thorough discussion of the school funding system in the state of Indiana, including changes that have occurred through the years with an emphasis on the property tax caps of 2008. Finally, the literature review will examine various mathematical methods that can be used to measure equity in school funding with the goal of selecting an appropriate model for this study.
Early History of School Funding
In the colonial period, schools were few and far between and education was considered a private affair. The schools that did exist were funded by tuition or charitable contributions. The one-room schoolhouses of Little House on the Prairie fame were built by volunteers with donated materials, and the teacher was paid through charitable contributions from the local townsfolk (Cubberley, 1948). As territory was added to the new country, the federal government clearly saw a need to establish schools for the education of the citizenry. Lawmakers addressed this need by making provisions in the Land Ordinances of 1785 and 1787 which required territories to demonstrate to Congress that they had established civic institutions that were needed in order to qualify for statehood. A system of schools, no matter how basic, was considered one of these key institutions (Cubberley, 1948).
In 1795, the state of New York began to offer a flat grant to cities and towns that would build schools and hire teachers. By the first few decades of the 19th century, the “Common
School Movement was on its way, and the idea of schools supported by tax dollars took hold in THE IMPACT OF PROPERTY TAX CAPS ON FUNDING EQUITY IN INDIANA PUBLIC SCHOOLS 18 many parts of the country” (Ramirez, 2002, p. 55). A huge influx of immigrants into the United
States forced school systems to add capacity at a very quick pace. In the last quarter of the 19th century, enrollments nationwide grew by 100 percent (Tyack, 1974).
In the early part of the 20th century, Ellwood Cubberley conducted a study that examined school funding in Massachusetts and revealed vast funding disparities between school districts
(Cubberley, 1975). In addition, Cubberley determined a theoretical amount of money that would be needed on a per pupil basis to fund a very basic education. Cubberley’s work, along with work done by several researchers on the fundamental concepts of equity and adequacy, served as the basis for a new way of determining school funding – the foundation method (Ramirez, 2002).
The foundation approach is embedded in most state funding formulas throughout the nation. The idea is to set a minimum amount (foundation) that should be allocated to educate a student. School districts that cannot raise this minimum amount locally through the property tax are then given money by the state to make up for the shortfall. In this manner, every student is guaranteed to have at least the foundation amount provided for their education (Ramirez, 2002).
Beginning in the 1970’s, litigation began to impact school funding. The highly influential Serrano v. Priest case, which will be examined in detail later, declared funding disparities as illegal for the first time in the nation’s history (Brown et. al, 1978). This ruling sent shockwaves through statehouses across the country and sent legislators scrambling to equalize their school formulae. In a basic sense, this lawsuit caused schools to move away from the idea of simply ensuring a minimum amount of funding for education to the concept of providing equal funding for every student across the state (Ramirez, 2002).
Concurrent with the advent of these lawsuits in the court system, the federal government began to become more involved with school finance. In 1965, the Elementary and Secondary THE IMPACT OF PROPERTY TAX CAPS ON FUNDING EQUITY IN INDIANA PUBLIC SCHOOLS 19
Education Act provided grants to schools across the country targeted to students with low socio- economic status. The aim of this legislation was to funnel more money to underserved students, in other words the federal government was trying to improve equity in school funding across the country. Title 1 funds are the most recognizable example of the funding provided by the
Elementary and Secondary Education Act (Ramirez, 2002). While these federal funds provided an important source of new funds targeted to lower-income students, the amounts provided paled in comparison to revenues received from state and local sources. These larger funding streams and the laws which governed them became the target of equity lawsuits across the nation
(Dayton, 1996).
Major Lawsuits Drive Equity Issues in School Funding
The concept of funding equity in schools has its roots in the civil rights movement.
Though not explicitly about funding equity, the 1954 Supreme Court decision in the Brown vs.
Board of Education (1954) case declared that the concept of “separate but equal” schools was unconstitutional, heralding the end of school segregation.
In 1951, Oliver Brown and twelve other defendants filed a class action lawsuit against the
Board of Education of the city of Topeka, Kansas calling for the school system to end is policy of segregating students by race. Prior to filing suit each of the defendants had attempted to enroll their children at the schools closest to their homes. They were each denied enrollment by the school district and directed to the segregated schools. These schools were allowable under
Kansas law for cities that had a population greater than 15,000. The district court ruled in favor of the school using the precedent established by the Plessy vs. Ferguson case which established that segregation was allowable as long as the education being offered was equal, popularly known as the “separate but equal” doctrine. THE IMPACT OF PROPERTY TAX CAPS ON FUNDING EQUITY IN INDIANA PUBLIC SCHOOLS 20
The Brown case was referred to the United States Supreme Court, which reversed the lower court decision unanimously. A key argument by the plaintiffs was that segregated schools create adverse psychological and social effects in students such as feelings of inferiority and a loss of motivation. Chief Justice Earl Warren’s opinion states, in part, that “segregation of white and colored children in public schools has a detrimental effect upon the colored children. The impact is greater when it has the sanction of the law, for the policy of separating the races is usually interpreted as denoting the inferiority of the Negro group. A sense of inferiority affects the motivation of a child to learn” (Brown vs. Board of Education, 1954, p. 494). Prior to this ruling, schools had operated under the “separate but equal” doctrine established in Plessy vs.
Ferguson. In ending this practice, Warren argues that separation of schools by race creates a de facto sense of inferiority, a concern that could reverberate to the present day if one equates separation by financial resources to separation by race.
While the Brown ruling was a major civil rights triumph, much work still needed to be done to create equal schools in terms of funding. Schools were very slow to integrate even after this ruling as school boards adopted various obstructionist rules and procedures meant to make integration as difficult as possible, keeping black students and other minorities in underfunded schools. In addition, the Supreme Court ruling in Keyes vs. School District No. 1 (1983) held that school segregation caused by natural housing patterns and not intentional state actions were not subject to forced integration. The combination of school district inaction and rulings by the judiciary meant that students living in poverty – many of them blacks and other minorities – attended schools that were underfunded and inadequate (Sonstelie, Brunner, & Ardon, 2000).
Equity lawsuits. In the wake of the tarnished promise offered by Brown, reformers recognized that a disparity in property wealth was the key reason that schools with large numbers THE IMPACT OF PROPERTY TAX CAPS ON FUNDING EQUITY IN INDIANA PUBLIC SCHOOLS 21 of blacks and other minorities were crumbling and inferior to schools that served white students.
With property taxes being the primary source of revenue for school districts, large differences in property wealth produced large differences in available funds. In the 1973 Rodriguez vs. San
Antonio Independent School District case, the parents who brought suit resided in the Edgewood
Independent School District which neighbored the Alamo Heights Independent School District.
Because of the extreme difference in property wealth between the two districts, residents in
Edgewood were only able to provide $356 per student to fund education while residents in the
Alamo Heights district were able to provide almost $6oo per student, despite having a tax rate that was 20% lower than Edgewood (Sonstelie, Brunner, & Ardon, 2000).
The plaintiff argued that a funding system with such inequity violated the equal protection clause contained in the United States Constitution. A district court in Texas ruled for the plaintiff, and the case was appealed to the United States Supreme Court. The Supreme Court ultimately reversed the lower court ruling in a 5-4 decision. Justice Powell writing for the majority noted that previous discrimination cases dealt with an “absolute deprivation” of rights and not a “relative deprivation” (Rodriguez vs. San Antonio Independent School District, 1973, p. 283). The majority also pointed out that the Constitution makes no provision for education.
Justice Thurgood Marshall authored a dissent which stated in part that “the close nexus between education and our established constitutional values with respect to freedom of speech and participation in the political process require education to be recognized as a constitutional issue that should not simply be left to the states” (Rodriguez vs. San Antonio Independent School
District, 1973, p. 127). Powell, writing for the majority, recognized Marshall’s point concerning the need for an educated electorate by stating that “the electoral process, if reality is to conform to the democratic ideal, depends on an informed electorate: a voter cannot cast his ballot THE IMPACT OF PROPERTY TAX CAPS ON FUNDING EQUITY IN INDIANA PUBLIC SCHOOLS 22 intelligently unless his reading skills and thought processes have been adequately developed”
(Rodriguez vs. San Antonio Independent School District, 1973, p. 285). This statement left the door open for future legal challenges that could prove that a minimally adequate education was not being provided (Sonstelie, Brunner, &Ardon, 2000; Heise, 1995).
Serrano v. Priest (1971). The impetus for the Serrano plaintiff was similar to the reasoning in the Rodriguez case. At the time the case was brought, California schools were generating more than half of their income from local property taxes. Differences in property wealth meant that schools in wealthy districts were able to provide more funding at lower rates than schools in poor districts that served a majority of the black and Hispanic students throughout the state. The plaintiff in Serrano essentially sued the state of California by naming
Ivy Priest, the state treasurer, as the defendant. The plaintiff argued that funding system for public schools in the state of California violated the California state constitution as well as the equal protection clause of the fourteenth amendment of the United States constitution (Hirji,
1999).
The California Supreme Court ruled in favor of the plaintiff and ordered the state legislature to construct a more equitable system of funding for public schools. The fact that the plaintiff used the California constitution in addition to the United States constitution insulated the case from a Rodriguez-based challenge in the United States Supreme Court because the state constitution clearly set education as a fundamental interest (Brunner & Ardon, 2000).
The California court’s ruling in the Serrano case set off a firestorm of similar legislation in states across the nation. By the mid-1990’s, lawsuits challenging the constitutionality of public school funding had been brought in 43 states, with 19 of those states declaring the existing funding system unconstitutional and ordering the legislature to make reforms (Hirji, 1999). THE IMPACT OF PROPERTY TAX CAPS ON FUNDING EQUITY IN INDIANA PUBLIC SCHOOLS 23
Indiana school funding equity litigation. In 1987, the Lake Central School Corporation filed a lawsuit claiming that Indiana’s funding system for schools was unconstitutional due to inequities in funding across the state. The governor and state legislature engaged the school corporation in an attempt to avoid a protracted legal battle. As a result, the legislature enacted major reforms in 1993 to the state school funding formula, including the establishment of target per-pupil dollar amount, an upward adjustment in funding for school corporations who served low-income student populations, and a ceiling on property tax rates. Lake Central agreed to drop the case after these reforms were implemented (Toutkoushian & Michael, 2005).
In 2010, three Indiana school corporations, Hamilton Southeastern Community Schools,
Franklin Township Community Schools, and Middlebury Community Schools, brought suit against the state of Indiana claiming that the formula which governed state distributions of revenue was unconstitutional. The suits argued that the per-student amounts received by public school corporations were too disparate. When the suit was filed the three plaintiff school corporations were receiving about $5000 per student. In contrast, schools on the upper end of the per-student funding spectrum such as Indianapolis Public Schools received about $7800 per student (Associated Press, 2010a). The cause of this difference came from two factors in the state funding formula meant to blunt, but not eliminate, loss of revenue to schools whose enrollments were dropping. The first factor, called a reghoster, provided partial funding to schools for students who had moved to other districts. The other factor, called a restoration grant, provided funds to schools with declining enrollment by comparing prior year funding levels to the present funding year to partially fill in the gap or “restore” the revenue difference between those two time periods. The lawsuit was dropped in 2011 in the wake of legislative THE IMPACT OF PROPERTY TAX CAPS ON FUNDING EQUITY IN INDIANA PUBLIC SCHOOLS 24 changes that eliminated the reghoster factor and the restoration grant, bringing all schools to a more equal level of per-student funding (Indiana Economic Digest, 2011).
Previous Equity Studies
Before we dive into the existing equity research, we must take a closer look at what we mean by “equity.” The concept of equity in school finance is frequently divided into two different domains: horizontal equity and vertical equity. The research that will be examined uses both of these terms, so it is important to understand their meanings. The fact that there are two domains complicates the simple formula that was discussed above. Horizontal equity is the concept that children with similar educational needs are funded at the same level. Put another way, horizontal equity is “the equal treatment of equals.” The concept of vertical equity is that children with different educational needs are treated differently. For example, students with disabilities are more expensive to educate than the general student population. Vertical equity occurs when funding is increased to meet the greater needs that some student groups have. Put another way, vertical equity is the “unequal treatment of unequals” (Odden & Picus, 2004).
The vast majority of school equity research is focused on simple horizontal equity.
Researchers have looked at funding differences between school districts and states with a particular interest in answering a key question: does differential funding impact student achievement? Stated another way, researchers have sought to answer the question of whether students who are funded at lower levels receive an inferior education.
Does Money Matter?
In 1997, Eric Hanushek, a prominent researcher in this field, conducted a meta-analysis of ninety previous works that looked at this question. To qualify for Hanushek’s summary, the study must have been published in a book or journal, must have included measures of family THE IMPACT OF PROPERTY TAX CAPS ON FUNDING EQUITY IN INDIANA PUBLIC SCHOOLS 25 background and school funding, and must have provided a measure of statistical reliability concerning the estimated effect of monetary resources on student performance. In addition,
Hanushek expressed a preference for what he calls “real classroom resources.” By this, he meant teacher education, experience and teacher-pupil ratios. Hanushek claimed that these measures were superior to financial aggregate measures like expenditure per student (Hanushek, 1997).
Hanushek combined the results of the studies to see if, as a group, they were able to assess the effect of resources on student performance. His data showed that differential resources do not have an appreciable effect on student performance, essentially thwarting the argument that providing more money to schools will increase student achievement (Hanushek,
1997).
A key component of Hanushek’s study that must be pointed out is his preference for real classroom resources, which for Hanushek included only money spent on items such as teachers’ salaries and curricular resources. While this preference did enable him to effectively drill down into student achievement data, it tended to exclude the large sums of property tax money that were dedicated to facilities and maintenance costs. Therefore, studies that examined spending on facilities, transportation, and other support services were likely not included in this work.
Hanushek’s research in this area is not universally accepted. Greenwald, Hedges, and
Lain conducted their own metastudy to look at the same question that Hanushek attempted to address. They also argued that some of the studies Hanushek used were weak and therefore
Greenwald, et al. did not use them in their study while at the same time other studies outside of
Hanushek’s universe were used. Greenwald, et al. asserted that Hanushek’s method of “vote counting” in his summary of research was not sensitive enough to truly interpret the message embedded in his data (Greenwald, Hedges, & Laine, 1996). THE IMPACT OF PROPERTY TAX CAPS ON FUNDING EQUITY IN INDIANA PUBLIC SCHOOLS 26
Vote counting is a method used in meta-analyses that synthesizes results across studies by counting the number of times a result is found in the literature that either confirms or contradicts a hypothesis. Vote counting treats each study (vote) as being equal. No consideration is given to sample size. In addition, a vote from a study in which the magnitude of the observed effect is very large is equal to a vote from a study in which the magnitude of the observed effect is very small. Conversely, “effect magnitude analysis” is a method of statistical analysis which weights both sample sizes and the magnitude of the effect found in the target studies to paint a more realistic picture of what the data is showing (Greenwald, Hedges, &
Laine, 1996).
Using effect magnitude analysis, as opposed to vote counting, the results of the
Greenwald, et al. study contradicted Hanushek’s findings even though the bulk of their source data was the same. Greenwald, et al. found that “school resources are systematically related to student outcomes (Greenwald, Hedges, and Laine, 1996).” They found that the relationship between resources and outcomes was especially strong for per-pupil expenditures, classroom size, and teacher quality.
Property Taxes and School Funding Equity
Due to the ongoing debate regarding the effect of resources on student performance, researchers have continued to study school funding equity. In 1978 Brown, Ginsburg, Killalea,
Rosthal, and Tron published a study that measured resource equity across all fifty states. The seventies were a time of reform in school finance, spurred by a large amount of legal activity in this area. One of the main stated purposes of this study was to compare and contrast the various reform states to see if a pattern of success emerged from a state or group of states that had adopted specific types of reforms (Brown, et. al, 1978). THE IMPACT OF PROPERTY TAX CAPS ON FUNDING EQUITY IN INDIANA PUBLIC SCHOOLS 27
This study compared total operational expenditures spent on a per student basis from
1970, the year before many reforms took place, and from 1975, the year after many reforms were implemented. The authors chose to subject this data to four different statistical measures of equity. The results of the study showed that the reforms of the early seventies were a mixed bag in terms of success. Some states showed an increase in funding equity and some showed a decrease. Brown, et al. also analyzed data concerning disparities related to the ability to pay. To do this they divided each state’s school districts into three groups: the schools that were in the lowest 25% of assessed valuation per pupil, the schools with the middle 50% of assessed valuation per pupil, and the schools in the highest 25% of assessed valuation per pupil. This analysis showed that little had changed between 1970 and 1975. On average, a student in a wealthy district in 1970 had 33% more dollars spent on his education than a student in a low- wealth district. In 1975, the student in the wealthy district had 30% more dollars spent on his education. Brown, et al. concluded the study by dealing with the costs associated with achieving equity across all fifty states. Their research indicated that $5.4 billion would be needed to end funding disparity in the United States. The authors attribute much of the lack of change in equity
“not only to inertia but also to a desire to provide relief of property tax burdens” (Brown, et. al,
1978, p. 212). In making this statement the authors insinuated that these two ideas – equity in school funding and property tax relief – have a difficult time coexisting and may actually be in conflict with each other.
A 1990 study by Wood, Honeyman, and Bryers sought to assess equity in Indiana following a decade of property tax reform. The authors examined all 303 school districts that existed at the time to determine horizontal equity for the year preceding property tax reforms and THE IMPACT OF PROPERTY TAX CAPS ON FUNDING EQUITY IN INDIANA PUBLIC SCHOOLS 28 compared that to equity after the reforms. They included funding from all sources – state, local, and federal. Several statistical measures of variance were used in the study (Wood et. al, 1990).
Their results showed that horizontal equity decreased over the study period, indicating that disparities in school funding had worsened with the implementation of property tax reforms.
The study also found a positive, direct relationship between district wealth and expenditures per pupil, meaning the more wealth that was present in a district the more robustly that districts students were supported financially. The author’s state unequivocally that “within Indiana, fiscal inequity exists for pupils and taxpayers” (Wood et. al, 1990, p. 92). Of particular interest to my study, Wood et al. stated that “the public policy in Indiana of limiting local property tax levies in order to support public education has led to greater fiscal inequity over time” (Wood et. al, 1990, p. 92). Since this study was conducted, major changes have occurred in Indiana’s property tax system without any corresponding research on the possible effects on school funding equity in the state.
A major study of all fifty states was conducted in 1994 by Hertert, Busch, and Odden using financial data from 1989-90. This study was massive, covering 14,907 school districts with a total student population of over 40 million. The authors examined revenue on a per-pupil basis to analyze equity among and within states. Their findings revealed that funding differences across the nation were quite large. For example, average per pupil spending in Alaska was
$8,201 compared to $2618 in Mississippi. Six states (Illinois, Michigan, Missouri, Montana,
New Hampshire, and Vermont) were funding students in their wealthiest districts at more than double the rate of their poorest districts. Such disparities carried over to the regional analysis done by the authors. Districts in the Mideast received an average of $6,690 per pupil compared to $3,653 in the Southwest. The authors estimated that the cost to equalize funding across the THE IMPACT OF PROPERTY TAX CAPS ON FUNDING EQUITY IN INDIANA PUBLIC SCHOOLS 29
United States would have been somewhere between 8.8 and 17 billion dollars, depending on whether the equalization would have been done regionally, nationally, or on a state-by-state basis
(Hertert, Busch, & Odden, 1994).
A Kentucky study conducted in 1997 examined equity impacts of property tax and school funding reform that resulted from a 1989 landmark court ruling that struck down the existing school finance system (Adams & White, 1997). The Kentucky state legislature responded to the court ruling by adopting a radically different system of school finance from the one that was in place. The new program provided a guaranteed base amount of support for every student in the state. This base amount was not the same for every student. It was adjusted upward for at-risk students, students with exceptionalities, students who were hospitalized, and students who needed transportation to school. The new program required each local school district to levy a tax of $0.30 per $100 of assessed valuation. In addition, local school boards could vote to raise an additional 15% of the base through local property taxes. To counteract the potential of this additional local effort to produce disparities, the state provided equalization funds to districts whose assessed valuation was less than 150% of the average per-pupil property value in the state.
These equalization funds ensured that districts would raise the same amount of money with the same amount of local tax effort. The final component of the new finance program allowed school district to hold a referendum to raise tax levies up to 30% above the amounts detailed previously (Adams & White, 1997).
Adams and White utilized financial data obtained for every school district in the state.
They used several different methods of statistical equity measures to determine if Kentucky’s school finance reforms had improve funding equity in the state. Their results showed that these reforms worked. Equity improved in Kentucky across all statistical measures. The authors THE IMPACT OF PROPERTY TAX CAPS ON FUNDING EQUITY IN INDIANA PUBLIC SCHOOLS 30 stated that a key component of the success of these reforms was the recognition by the Kentucky legislature that “the allocation of aid to school districts without regard to property wealth had a disequalizing impact on the state system” (Adams & White, 1997, p. 176).
Policy Issues Related to Funding Inequity
In 1991, the seminal book Savage Inequalites provided a searing look into America’s urban public schools. In it, Kozol argued that much has remained unchanged in regard to inequity since the time of the Brown case. Kozol began by detailing his experiences teaching in an inner city, fourth grade Boston classroom in 1964. His crumbling classroom had over 35 students who had been exposed to 13 different teachers in a single year. These students had not had a permanent teacher since kindergarten. Mr. Kozol was fired from this position for teaching the Langston Holmes poem “A Dream Deferred” and moved on to a wealthy suburban Boston school where the conditions were quite different – cheerful facilities, 21 students, and a stable teaching staff (Kozol, 1991).
In 1991, Kozol travelled across the country to see if these educational differences between rich and poor communities had changed or if discrepancies continued to linger. He visited schools with both the lowest per pupil expenditures in the nation and the highest, ranging from $3000 in Camden, New Jersey to $15,000 in Great Neck, New York. In the book, Kozol used interviews and observations to document the instructional, physical, and emotional environments that exist in his subject schools. His main assertions in this text were that schools are nearly as segregated today as they were during the time of Plessy vs. Ferguson and that money is diverted from poor inner city schools to rich suburban schools in order to create
“private schools within the public system” (Kozol, 1991). THE IMPACT OF PROPERTY TAX CAPS ON FUNDING EQUITY IN INDIANA PUBLIC SCHOOLS 31
Kozol’s book was a best seller in the early nineties and now appears in many college syllabi (Winters, 2006). It has been cited well over 1000 times in journal articles according to the Web of Science. The popularity of Kozol’s work in both popular and academic literature demonstrates the power of the idea that America should not have schools that are starkly different from one another from the standpoint of funding, even if equalizing this spending does not have a major impact on student outcomes.
School Funding in Indiana
Since 1949, Indiana has used a Foundation Program as a basis for revenue distribution to schools. A foundation program is a school finance theory that holds that schools should receive a set amount of money for each student that is educated in that particular school corporation
(Odden & Picus, 2004). Converting this ideal into a funding formula would be a rather simple task if other factors did not complicate the procedure. One would simply need to take the number of students and multiply it by the dollar amount provided by the state on a per pupil basis. However, Indiana has used various methods over the years to supplement this simple formula in an attempt to achieve equity (Michael, Spradlin, & Carson, 2009). The detailed calculations that make up this program have changed radically through the years, but the core idea has remained to provide an appropriate amount of per pupil funding to every school corporation in the state provided that the school corporation raises a designated portion of that amount locally.
Over the years, changes were continually made to the foundation program in Indiana.
These changes were designed to “eliminate the traditional dependence of per-pupil funding on property wealth, reduce variability in per-pupil funding, increase per-pupil funding, and reduce variability in property tax rates across school corporations” (Toutkoushian & Michael, 2005, p. THE IMPACT OF PROPERTY TAX CAPS ON FUNDING EQUITY IN INDIANA PUBLIC SCHOOLS 32
2). Beginning in the 1970’s, school funding equity lawsuits sprang up all over the United States highlighted by the Serrano vs. Priest case in California which held that “the quality of education may not be a function of wealth other than the wealth of the state as a whole” (Serrano v. Priest,
1971, p. 96).
In response to these lawsuits, states began to address the equity issue in regard to school funding (Odden & Picus, 2004). During this era of change, Indiana began reforming its foundation program to respond to the real or perceived threat of such lawsuits and to improve both horizontal and vertical equity (Michael, Spradlin, & Carson, 2009).
Many notable changes to the foundation program also occurred in 1993. In this year, the state legislature changed the school funding formula to equalize the foundation amount of per pupil spending, set limits on property tax rates to equalize the amount of revenue that could be brought in to districts across the state that schools could raise, and increase the amount that schools would receive for students who were deemed to have low socio-economic status
(Toutkoushian & Michael, 2005).
Public school corporations depend on federal, state, and local tax revenue to provide education to their students. The source of these funds comes from various taxes, including sales, income, and property taxes. Traditionally, the majority of school funds have come from the property tax. The property tax places a large portion of the tax burden for schools onto property owners while lessening the financial responsibility for citizens who possess lesser amounts of tangible assets. The 1993 changes were designed to shift the taxing mechanism for school funding in such a manner that the role of the property tax would decrease while the role of income and sales taxes would increase. The fact that income and sales taxes are, for the most part, collected on a statewide basis while property taxes are based on local real estate wealth THE IMPACT OF PROPERTY TAX CAPS ON FUNDING EQUITY IN INDIANA PUBLIC SCHOOLS 33 provides a way to equalize school funding in a manner that decreases the impact of property wealth on the money a given school system receives (Toutkoushian & Michael, 2005).
The concerns over the impact of community wealth on educational funding efforts are not new. In 1852, Indiana established now-defunct “boards of equalization” throughout the state which had the power to increase or decrease property assessments to equalize the taxes that were levied across the school districts (Stoneburner, 1940).
The changes that have occurred over time to Indiana’s foundation program have largely had the effect of shifting the cost of school funding away from the local property tax and toward statewide funding sources. The obvious advantage of this shift in regard to equity is that funding is easier to equalize when controlled at the state level as opposed to the local property tax because the local property tax is so dependent on community wealth. Without this shift, horizontal equity is virtually impossible to achieve (Toutkoushian & Michael, 2005).
Indiana’s Foundation Program
Under Indiana’s foundation program, the state first determines the target revenue that is needed to provide an adequate education for a given school district’s students. Target revenue is determined by taking the largest dollar amount calculated from three different formulae: the foundation grant, the variable grant, and the minimum guarantee grant. The foundation grant is calculated by using an adjusted number of students that the school is serving. The adjustment is made to make the funding impact more gradual on schools with declining enrollments. This adjusted enrollment number is then multiplied by a per-pupil foundation amount and a factor called the complexity index. The complexity index is based on the several socioeconomic factors such as the percent of students eligible for free and reduced lunches and the percent of THE IMPACT OF PROPERTY TAX CAPS ON FUNDING EQUITY IN INDIANA PUBLIC SCHOOLS 34 families with a single parent. The complexity index increases funding for schools who serve communities with lower socioeconomic status (Toutkoushian & Michael, 2005).
An Overview of the Fund Accounting System in Indiana
Schools in Indiana raise monies in self-contained funds. The source of revenue for each of these funds is tightly controlled by state law and varies depending on the type of fund. The following are the main funds that are used to provide educational services in Indiana: general fund, debt service fund, pension debt fund, capital projects fund, transportation fund, and bus replacement fund. Monies in these funds cannot be mingled. For example, money received into the capital projects fund cannot be transferred into the general fund, nor can items like teachers’ salaries be paid for with capital projects fund money. Each of these funds has a specific source of revenue and can only be used for specific expense defined by the state. The thought behind these funding silos is to control school spending to make sure that the money raised for these particular funds is used for the correct purpose. Although this does limit the flexibility that schools have to carry out their mandate, this control does eliminate the possibility of schools spending instructional money on, for example, ornate facilities or expensive fleets of school vehicles (Michael, Spradlin, & Carson, 2009).
The general fund is, for most corporations, the largest fund. It is used for all of the direct instructional and operational costs – teacher salaries, custodial salaries, and instructional supplies – all are paid from the general fund. Until 2008, the general fund was financed both by the local property tax and state revenues. The state relied on a complex formula to equalize the effects of property wealth in the general fund by providing differential levels of support depending on the amount of local effort that could be raised. Currently, the general fund receives THE IMPACT OF PROPERTY TAX CAPS ON FUNDING EQUITY IN INDIANA PUBLIC SCHOOLS 35 revenue solely from the state, eliminating the effect of property wealth on the districts’ instructional fund (Michael, Spradlin, & Carson, 2009).
The debt service fund is used by corporations to make payments on debt incurred by the school system. The most likely sources of this debt are new facilities or major renovations to existing facilities. A smaller but nonetheless important use of the debt service fund is to refund the costs incurred by the school corporation for textbooks for free and reduced students. The debt service fund receives all revenue from local property tax collections. Levies for the debt service fund are only approved when a school can show a valid amortization schedule for the debt they have incurred (Michael, Spradlin, & Carson, 2009).
The pension debt service fund was established to provide schools with a method to pay for unfunded retirement benefits that were contained in many collective bargaining agreements across the state that provided payments to teachers who retired at age 55. Most of these plans were put in place without any provision to set aside monies to fund the benefit. Legislation was enacted that allowed schools to borrow money to “buy out” these benefits. The pension debt service fund receives all revenue from local property tax collections. Schools must “neutralize” the amount of money that they raise for this fund by cutting an equal amount of money from one of the other funds that utilizes property taxes as the source of revenue. Schools may only raise the amount of money needed to make their annual debt payments associated with this fund
(Michael, Spradlin, & Carson, 2009).
The capital projects fund has several different allowable uses. As its name implies, the fund may be used to repair and maintain school facilities. However, the fund can also be used to pay for property insurance and a limited amount of utility bills. In addition, technology equipment and staff can be funded using capital projects money. The capital projects fund THE IMPACT OF PROPERTY TAX CAPS ON FUNDING EQUITY IN INDIANA PUBLIC SCHOOLS 36 receives all revenue from local property taxes. The state of Indiana has set a maximum tax rate for the capital projects fund. This rate is customized for each school corporation and may not be exceeded (Michael, Spradlin, & Carson, 2009).
The transportation fund is used to pay for bus driver’s salaries, fuel for buses, and maintenance and repair costs associated with the bus fleet. However, buses themselves may not be purchased with this fund. The transportation fund receives all revenues from local property taxes. The state of Indiana has set a maximum dollar amount that can be raised in the transportation fund. The maximum dollar amount may not be exceeded and is customized for each school corporation (Michael, Spradlin, & Carson, 2009).
The bus replacement fund is used to purchase new buses. The bus replacement fund receives all revenues from local property taxes. The state of Indiana has set a maximum dollar amount that can be raised in the bus replacement fund. The maximum dollar amount may not be exceeded and is customized for each school corporation (Michael, Spradlin, & Carson, 2009).
2008: Monumental Shift in School Funding and the Advent of Property Tax Caps
In 2008, the Indiana state legislature made two radical changes in school funding. First, they took over sole responsibility for the instructional fund (general fund) for schools.
Previously, this fund was supported by a combination of local property taxes and state support.
This action greatly expanded the control of the state legislature over the funding of schools and decreased the role of local tax revenues as a source of support for education, giving the state a great deal of power over the equitable funding of schools across the state (Jarman & Boyland,
2011).
In addition, legislation was passed that capped the amount of local property taxes that could be raised at 1% for residential homeowners, 2% for rental and agricultural property, and
3% for business property (Toutkoushian & Michael, 2005). The property tax caps were not THE IMPACT OF PROPERTY TAX CAPS ON FUNDING EQUITY IN INDIANA PUBLIC SCHOOLS 37 implemented as an attempt to change the nature of school funding. They were implemented to lower property taxes and control the amount of future property tax increases (Thaiprasert, et. al,
2010).
While the tax caps limited the amount of revenue that could be raised by local school districts, the state legislature did afford schools the opportunity to pass property tax referenda to address local needs for construction and for the general fund. Money raised by these referenda was exempt from the caps (Hiller & Spradlin, 2010). In order to raise this money, school corporations had to go directly to their constituents by placing the question on a ballot for either a May or November election. All voters in the district then had the opportunity to pass or defeat the measure. If the referendum passed, schools would be permitted to raise the amount specified on the ballot question over and above the amount set by the property tax caps (Hiller & Spradlin,
2010). Since this legislation was implemented, 56.7% of general fund referenda have passed and
43.3% have failed. For construction, the results have been worse with 42.6% passing and 57.4% failing (Center for Evaluation & Education Policy, 2014).
THE IMPACT OF PROPERTY TAX CAPS ON FUNDING EQUITY IN INDIANA PUBLIC SCHOOLS 38
CHAPTER 3
RESEARCH METHODOLOGY
In 2008, Indiana voters placed property tax caps into the state constitution, effectively ensuring that property taxes would be fixed at 1% for residential property, 2% for agricultural and commercial property, and 3% for business property for the foreseeable future. This limitation has led to a loss of revenue for schools in all funds that rely on property taxes as their source of funding (Indiana Department of Local Government Finance, 2015b). However, schools are not losing these funds equally. Some school corporations are losing a great deal of revenue while others are losing very little. Some school corporations have no losses at all due to property tax caps (Indiana Department of Local Government Finance, 2015b). This study examines these loss differentials to see if there is a relationship between important school corporation characteristics and the loss of revenue created by the tax caps.
Purpose of the Study
School funding equity is generally recognized a key component of providing a free, appropriate education. The recent legislative changes that have capped property taxes in Indiana have resulted in varying degrees of funding loss for school corporations across the state. To preserve the equity ideal, this new property tax system must be examined to determine if a relationship exists between the implementation of property tax caps and school funding equity in
Indiana. It is important to note that this study will only examine these relationships from a horizontal equity point of view, or the extent to which school districts are losing raw dollars due to property tax caps without accounting for vertical equity concepts such as the need to provide more funding for student populations who may have greater needs. If such a relationship exists, this study will attempt to discern both the magnitude of the effect and its impact on rural, suburban, and urban communities. In addition, this analysis will examine the equity impact that THE IMPACT OF PROPERTY TAX CAPS ON FUNDING EQUITY IN INDIANA PUBLIC SCHOOLS 39
Indiana’s property tax caps have had on students with low socio-economic status, students with disabilities, students who are considered English language learners, and students of various ethnicities. The purpose of this chapter is to describe the design of this study and the instruments that will be used to analyze the data and form conclusions. The research questions that guided this study were as follows:
Research Questions
1. What is the relationship between property tax caps and school funding in Indiana?
2. What is the relationship between property tax caps and school funding in rural,
urban, or suburban Indiana school systems?
3. What is the relationship between property tax caps and school funding in Indiana
schools that serve differential proportions of students with low socio-economic status,
students with disabilities, students who are considered English language learners, and
students of various ethnicities?
Research Design
I used quantitative design to complete this study. The research design was a non- experimental descriptive correlational study. Correlational studies examine the relationships between two or more variables and provide insight into patterns and the solidity of relationships present in the data (Creswell, 2014). A correlational relationship does not necessarily imply causation but, rather, indicates that an association between the variables exists. I chose to use a non-experimental design for this study as it deals with fixed financial data that cannot be manipulated experimentally. The study used the quantitative methods described above to determine if a statistical correlation existed between the amounts of revenue lost due to property tax caps across the characteristics detailed in the research questions above. THE IMPACT OF PROPERTY TAX CAPS ON FUNDING EQUITY IN INDIANA PUBLIC SCHOOLS 40
Description of the Sample
This study used actual property tax revenue data for all funds for the most current calendar year (2016) and several other pertinent school district demographics and characteristics.
Actual revenue is a much more accurate measure of financial support than the official budgets approved through the Indiana Department of Local Government Finance, which do not include revenue losses from property tax caps. The data of all 292 public school corporations in the state of Indiana was used to conduct this study. All data used in this study was publicly available.
Data Collection and Analysis
This study made use of both financial and demographic data obtained from both the
Indiana Department of Education and Indiana Department of Local Government Finance.
District-level data was collected for assessed valuation, student enrollment, property tax revenue, schools that were eligible for the protected debt service waiver, the percentage of students receiving free or reduced price lunches, the percentage of students requiring special education services, the percentage of students classified as English learners, and the percentage of nonwhite students served. The property tax revenue data used for the study combined the amounts received for all property-tax-rated funds during the most recent year for which revenue data was available (2016) in all school corporations. All property tax revenue and demographic data for this study was collected online or through a public records request and entered into a spreadsheet for import into SPSS. Multiple correlations were conducted using this data to examine the variables indicated in the research questions.
Limitations of the Study
While this study attempted to examine the relationship between several important school factors and property tax caps by looking at actual revenue from publicly available sources, it has some important limitations. The data used does not adequately gauge service levels of facilities THE IMPACT OF PROPERTY TAX CAPS ON FUNDING EQUITY IN INDIANA PUBLIC SCHOOLS 41 and equipment that were in place prior to the implementation tax caps. For example, a school system may not have a need to build or substantially remodel any buildings, and thus be able to keep taxes low. This reduced tax rate would then obviously be due to an internal decision and have nothing to do with property tax caps. In a similar manner, schools with significant facility needs could push tax rates up as a result. Without any way to differentiate the needs of each school corporation, it is difficult to draw conclusions from the relationships examined in the per pupil property wealth section of the study.
Lastly, this study did not examine the effect of grant-based funding. For example, schools corporations could have attempted to write grants to capture technology dollars. If successful, these expenditures could have offset capital projects funds expenditures and created less need for increased tax revenue.
Summary
School funding equity is a key component to ensuring that all students across the United
States receive a proper education (Payne & Biddle, 1999; U.S. Department of Education, 2011).
This study will attempt to analyze data across all 292 Indiana school districts to see if any relationships can be discovered regarding school funding in the era of property tax caps. This study holds real significance for the state of Indiana. Schools with especially severe funding impacts due to property tax caps are considering drastic measures such as the elimination of their student transportation programs, citing a lack of funding due to tax caps (Starks, 2014). More broadly, Indiana is heralded as a leader in both educational reform and fiscal restraint (Roff,
2013). Given this status, it only makes sense to thoroughly examine one of the key components of the broad policy changes that have recently been implemented in Indiana. Before other states use Indiana as a model, a thorough analysis needs to be conducted to determine if there have THE IMPACT OF PROPERTY TAX CAPS ON FUNDING EQUITY IN INDIANA PUBLIC SCHOOLS 42 been unintended consequences resulting from Indiana’s recent drive to impose strict limits on school spending through the use of property tax caps.
THE IMPACT OF PROPERTY TAX CAPS ON FUNDING EQUITY IN INDIANA PUBLIC SCHOOLS 43
CHAPTER 4
RESULTS AND DISCUSSIONS
The goal of this study was to examine property tax income across Indiana’s school districts and apply statistical measures of equity to examine the effects of property tax caps. The purpose of this chapter was to report on three key facets of school funding equity in this new era of property tax caps. The first area dealt with a broad view of equity across subject school districts when property tax caps are considered. The next area looked at the relationship between property tax caps and equity across rural, urban, and suburban school systems, and the final aspect of the study considered the relationship of property tax caps to various demographic factors such as socio-economic status, ethnicity, students who are English learners, and students with disabilities.
Financial data from all public school districts in Indiana were utilized to perform these analyses. This data is publicly available and was gathered from several different agencies. In particular, the Indiana Department of Local Government Finance maintains a database of property tax levies and property tax cap losses by school district. In addition, the Indiana
Department of Education houses directory information on public school districts that was also useful for gathering data. By using archival property tax and directory data, every district in
Indiana is a data point for this study.
Three research questions guided this study:
1. What is the relationship between property tax caps and school funding in Indiana?
2. What is the relationship between property tax caps and school funding in rural, urban,
or suburban Indiana school systems?
THE IMPACT OF PROPERTY TAX CAPS ON FUNDING EQUITY IN INDIANA PUBLIC SCHOOLS 44
3. What is the relationship between property tax caps and school funding in Indiana
schools that serve differential proportions of students with low socio-economic status,
students with disabilities, students who are considered English language learners, and
students of various ethnicities?
Although this chapter examined these three questions, the different demographics associated with Indiana’s public schools provide needed context for this study.
Data
Tables 1-7 in this chapter provide a snapshot of school districts across Indiana. The specific district characteristics cogent to this study were: (1) the total enrollment for each school district; (2) total property tax cap losses for each school district; (3) assessed valuation per pupil;
(4) property tax levy per pupil; (5) the classification of school corporations into urban, rural, and suburban districts; (6) school corporations eligible for a waiver from the protected debt service levy; and (7) student demographic data. Prior to addressing the research questions, the above data are reported in Tables 1-7.
Table 1
Total Enrollment
2016 K-12 Student School Corporation Enrollment
Adams Central Community 1259 Schools
Alexandria Community School 1561 Corp
Anderson Community School Corp 7088 Argos Community Schools 632 Attica Consolidated School Corp 730 Avon Community School Corp 9392 Barr-Reeve Community Schools 820 Inc THE IMPACT OF PROPERTY TAX CAPS ON FUNDING EQUITY IN INDIANA PUBLIC SCHOOLS 45
Bartholomew Con School Corp 11562 Batesville Community School Corp 2160 Baugo Community Schools 1892 Beech Grove City Schools 3107 Benton Community School Corp 1871 Blackford County Schools 1708 Bloomfield School District 839 Blue River Valley Schools 665 Bremen Public Schools 1488 Brown County School Corporation 2001 Brownsburg Community School 8737 Corp Brownstown Cnt Com Sch Corp 1582 C A Beard Memorial School Corp 1160 Cannelton City Schools 259 Carmel Clay Schools 16082 Carroll Consolidated School Corp 1110 Caston School Corporation 689 Center Grove Community School 8180 Corp Centerville-Abington Com Schs 1717 Central Noble Com School Corp 1220 Clark-Pleasant Community Sch 6571 Corp Clarksville Community School 1402 Corp Clay Community Schools 4228 Clinton Central School Corporation 926 Clinton Prairie School Corporation 1202 Cloverdale Community Schools 1223 Community Schools of Frankfort 3193 Concord Community Schools 5394 Covington Community School 941 Corp Cowan Community School Corp 791 Crawford County Community Sch 1555 Corp Crawfordsville Community 2566 Schools Crothersville Community Schools 492 Crown Point Community School 8389 Corp Culver Community Schools Corp 779 Daleville Community Schools 924 Danville Community School Corp 2463 THE IMPACT OF PROPERTY TAX CAPS ON FUNDING EQUITY IN INDIANA PUBLIC SCHOOLS 46
Decatur County Community 1980 Schools DeKalb Co Ctl United Sch Dist 3725 DeKalb Co Eastern Com Sch Dist 1318 Delaware Community School Corp 2622 Delphi Community School Corp 1411 Duneland School Corporation 5842 East Allen County Schools 9569 East Gibson School Corporation 902 East Noble School Corporation 3678 East Porter County School Corp 2480 East Washington School Corp 1438 Eastbrook Community Sch Corp 1613 Eastern Greene Schools 1230 Eastern Hancock Co Com Sch Corp 1211 Eastern Howard School 1501 Corporation Eastern Pulaski Community Sch 1254 Corp Edinburgh Community School 911 Corp Elkhart Community Schools 12993 Elwood Community School Corp 1657 Eminence Community School Corp 376 Evansville Vanderburgh School 22801 Corp Fairfield Community Schools 2150 Fayette County School Corporation 3562 Flat Rock-Hawcreek School Corp 863 Fort Wayne Community Schools 29377 Franklin Community School Corp 5004 Franklin County Community Sch 2484 Corp Franklin Township Com Sch Corp 9151 Frankton-Lapel Community 3152 Schools Fremont Community Schools 908 Frontier School Corporation 684 Garrett-Keyser-Butler Com Sch 1777 Corp Gary Community School Corp 5823 Goshen Community Schools 6610 Greater Clark County Schools 10544 Greater Jasper Consolidated Schs 3190 Greencastle Community Schools 1927 THE IMPACT OF PROPERTY TAX CAPS ON FUNDING EQUITY IN INDIANA PUBLIC SCHOOLS 47
Greenfield-Central Com Schools 4521 Greensburg Community Schools 2248 Greenwood Community Sch Corp 3902 Griffith Public Schools 2488 Hamilton Community Schools 328 Hamilton Heights School Corp 2334 Hamilton Southeastern Schools 21367 Hanover Community School Corp 2201 Huntington Co Com Sch Corp 5265 Indianapolis Public Schools 28767 Jac-Cen-Del Community Sch Corp 847 Jay School Corporation 3376 Jennings County School 4400 Corporation John Glenn School Corporation 1946 Kankakee Valley School Corp 3423 Knox Community School Corp 1932 Kokomo School Corporation 6172 Lafayette School Corporation 7694 Lake Central School Corporation 9656 Lake Ridge New Tech Schools 1873 Lake Station Community Schools 1289 Lakeland School Corporation 1985 Lanesville Community School 748 Corp LaPorte Community School Corp 6676 Lawrenceburg Community School 2028 Corp Lebanon Community School Corp 3434 Liberty-Perry Community Sch 1210 Corp Linton-Stockton School 1418 Corporation Logansport Community Sch Corp 4254 Loogootee Community Sch Corp 807 M S D Bluffton-Harrison 1573 M S D Boone Township 1159 M S D Decatur Township 6452 M S D Lawrence Township 15936 M S D Martinsville Schools 4645 M S D Mount Vernon 2087 M S D North Posey Co Schools 1489 M S D of New Durham Township 887 THE IMPACT OF PROPERTY TAX CAPS ON FUNDING EQUITY IN INDIANA PUBLIC SCHOOLS 48
M S D Pike Township 11369 M S D Shakamak Schools 816 M S D Southwest Allen County 7190 Schls M S D Steuben County 2805 M S D Wabash County Schools 2065 M S D Warren County 1225 M S D Warren Township 12297 M S D Washington Township 11482 M S D Wayne Township 16111 Maconaquah School Corp 2320 Madison Consolidated Schools 2887 Madison-Grant United School Corp 1227 Manchester Community Schools 1572 Marion Community Schools 3898 Medora Community School Corp 205 Merrillville Community School 6512 Corp Michigan City Area Schools 5601 Middlebury Community Schools 4579 Milan Community Schools 1150 Mill Creek Community Sch Corp 1528 Mississinewa Community School 2534 Corp Mitchell Community Schools 1613 Monroe Central School Corp 1072 Monroe County Community Sch 11122 Corp Monroe-Gregg School District 1543 Mooresville Con School Corp 4452 Mt Vernon Community School 3933 Corp Muncie Community Schools 5690 Nettle Creek School Corporation 1115 New Albany-Floyd Co Con Sch 11420 New Castle Community School 3302 Corp New Prairie United School Corp 2998 Nineveh-Hensley-Jackson United 1828 Noblesville Schools 10426 North Adams Community Schools 1809 North Central Parke Comm Schl 1223 Corp North Daviess Com Schools 1166 THE IMPACT OF PROPERTY TAX CAPS ON FUNDING EQUITY IN INDIANA PUBLIC SCHOOLS 49
North Gibson School Corp 2047 North Harrison Com School Corp 2259 North Judson-San Pierre Sch Corp 1026 North Knox School Corp 1324 North Lawrence Com Schools 4928 North Miami Community Schools 958 North Montgomery Com Sch Corp 1903 North Newton School Corp 1387 North Putnam Community Schools 1453 North Spencer County Sch Corp 2044 North Vermillion Com Sch Corp 745 North West Hendricks Schools 1889 North White School Corp 853 Northeast Dubois Co Sch Corp 925 Northeast School Corp 884 Northeastern Wayne Schools 1324 Northern Wells Com Schools 2455 Northwest Allen County Schools 7362 Northwestern Con School Corp 1490 Northwestern School Corp 1799 Oak Hill United School Corp 1724 Oregon-Davis School Corp 583 Orleans Community Schools 819 Paoli Community School Corp 1445 Penn-Harris-Madison School Corp 10994 Perry Central Com Schools Corp 1266 Perry Township Schools 16128 Peru Community Schools 2116 Pike County School Corp 1869 Pioneer Regional School Corp 911 Plainfield Community School Corp 5466 Plymouth Community School Corp 3680 Portage Township Schools 7717 Porter Township School Corp 1360 Prairie Heights Community Sch 1269 Corp Randolph Central School Corp 1545 Randolph Eastern School Corp 894 Randolph Southern School Corp 525 Rensselaer Central School Corp 1679 Richland-Bean Blossom C S C 2808 Richmond Community Schools 4998 THE IMPACT OF PROPERTY TAX CAPS ON FUNDING EQUITY IN INDIANA PUBLIC SCHOOLS 50
Rising Sun-Ohio Co Com 770 River Forest Community Sch Corp 1544 Rochester Community School Corp 1836 Rossville Con School District 993 Rush County Schools 2111 Salem Community Schools 1919 School City of East Chicago 4520 School City of Hammond 13868 School City of Hobart 4004 School City of Mishawaka 5328 School City of Whiting 1193 School Town of Highland 3176 School Town of Munster 4002 School Town of Speedway 1796 Scott County School District 1 1162 Scott County School District 2 2715 Seymour Community Schools 4704 Shelby Eastern Schools 1188 Shelbyville Central Schools 4069 Shenandoah School Corporation 1397 Sheridan Community Schools 1036 Shoals Community School Corp 588 Smith-Green Community Schools 1198 South Adams Schools 1298 South Bend Community School 18110 Corp South Central Com School Corp 953 South Dearborn Community Sch 2534 Corp South Gibson School Corporation 1983 South Harrison Com Schools 3120 South Henry School Corp 822 South Knox School Corp 1241 South Madison Com Sch Corp 4481 South Montgomery Com Sch Corp 1680 South Newton School Corp 852 South Putnam Community Schools 1135 South Ripley Com Sch Corp 1142 South Spencer County Sch Corp 1225 South Vermillion Com Sch Corp 1753 Southeast Dubois Co Sch Corp 1284 Southeast Fountain School Corp 1070 THE IMPACT OF PROPERTY TAX CAPS ON FUNDING EQUITY IN INDIANA PUBLIC SCHOOLS 51
Southeastern School Corp 1339 Southern Hancock Co Com Sch 3532 Corp Southern Wells Com Schools 839 Southwest Dubois Co Sch Corp 1728 Southwest Parke Com Sch Corp 1017 Southwest School Corp 1736 Southwestern Con Sch Shelby Co 597 Southwestern-Jefferson Co Con 1335 Spencer-Owen Community Schools 2586 Springs Valley Com School Corp 851 Sunman-Dearborn Com Sch Corp 3812 Switzerland County School Corp 1524 Taylor Community School Corp 1288 Tell City-Troy Twp School Corp 1467 Tippecanoe School Corp 13021 Tippecanoe Valley School Corp 1840 Tipton Community School Corp 1629 Tri-Central Community Schools 793 Tri-County School Corporation 738 Tri-Creek School Corporation 3297 Triton School Corporation 885 Tri-Township Cons School Corp 379 Twin Lakes School Corp 2392 Union Co/Clg Corner Joint Sch 1400 Dist Union School Corporation 256 Union Township School Corp 1455 Union-North United School Corp 1135 Valparaiso Community Schools 6261 Vigo County School Corp 14689 Vincennes Community School 2687 Corp Wabash City Schools 1507 Wa-Nee Community Schools 2970 Warrick County School Corp 10272 Warsaw Community Schools 7024 Washington Community Schools 2583 Wawasee Community School Corp 3045 Wes-Del Community Schools 817 West Central School Corp 824 West Clark Community Schools 4761 West Lafayette Com School Corp 2347 THE IMPACT OF PROPERTY TAX CAPS ON FUNDING EQUITY IN INDIANA PUBLIC SCHOOLS 52
West Noble School Corporation 2402 West Washington School Corp 794 Western Boone Co Com Sch Dist 1709 Western School Corp 2692 Western Wayne Schools 1031 Westfield-Washington Schools 7590 Westview School Corporation 2259 White River Valley School District 800 Whitko Community School Corp 1455 Whitley Co Cons Schools 3529 Yorktown Community Schools 2534 Zionsville Community Schools 6931
Total property tax cap loss by school district is the second data set. The results are listed below and illustrate the range of losses experienced by school districts, with some districts losing only a few thousand dollars and others losing up to seventeen million dollars.
Table 2
Property Tax Cap Losses
2016 Property Tax Cap School Corporation Losses Adams Central Community Schools $2,675.94 Alexandria Community School Corp $180,835.70 Anderson Community School Corp $7,858,577.58 Argos Community Schools $69,362.91 Attica Consolidated School Corp $23,002.92 Avon Community School Corp $5,535,889.18 Barr-Reeve Community Schools Inc $1,206.33 Bartholomew Con School Corp $1,285,035.05 Batesville Community School Corp $8,412.87 Baugo Community Schools $50,891.99 Beech Grove City Schools $3,276,390.62 Benton Community School Corp $65,686.06 Blackford County Schools $621,360.34 Bloomfield School District $15,468.03 Blue River Valley Schools $81,045.86 Bremen Public Schools $60,884.41 Brown County School Corporation $2,943.71 THE IMPACT OF PROPERTY TAX CAPS ON FUNDING EQUITY IN INDIANA PUBLIC SCHOOLS 53
Brownsburg Community School Corp $2,927,473.87 Brownstown Cnt Com Sch Corp $50,528.90 C A Beard Memorial School Corp $276,881.08 Cannelton City Schools $206,065.26 Carmel Clay Schools $2,209,910.13 Carroll Consolidated School Corp $25,441.70 Caston School Corporation $7,335.82 Center Grove Community School Corp $630,628.76 Centerville-Abington Com Schs $602,002.31 Central Noble Com School Corp $25,548.86 Clark-Pleasant Community Sch Corp $3,967,158.72 Clarksville Community School Corp $807,927.49 Clay Community Schools $8,127.22 Clinton Central School Corporation $4,904.03 Clinton Prairie School Corporation $22,902.03 Cloverdale Community Schools $47,782.74 Community Schools of Frankfort $727,705.41 Concord Community Schools $2,928,014.19 Covington Community School Corp $44,265.32 Cowan Community School Corp $3,322.40 Crawford County Community Sch Corp $572,352.07 Crawfordsville Community Schools $663,587.22 Crothersville Community Schools $3,326.79 Crown Point Community School Corp $11,511.40 Culver Community Schools Corp $8,698.14 Daleville Community Schools $28,951.93 Danville Community School Corp $659,432.73 Decatur County Community Schools $4,933.23 DeKalb Co Ctl United Sch Dist $61,725.80 DeKalb Co Eastern Com Sch Dist $14,526.86 Delaware Community School Corp $227,860.44 Delphi Community School Corp $107,305.07 Duneland School Corporation $586,078.42 East Allen County Schools $720,066.35 East Gibson School Corporation $53,544.13 East Noble School Corporation $227,179.67 East Porter County School Corp $73,048.57 East Washington School Corp $8,471.28 Eastbrook Community Sch Corp $15,165.77 Eastern Greene Schools $288,460.35 Eastern Hancock Co Com Sch Corp $23,904.77 THE IMPACT OF PROPERTY TAX CAPS ON FUNDING EQUITY IN INDIANA PUBLIC SCHOOLS 54
Eastern Howard School Corporation $476,462.12 Eastern Pulaski Community Sch Corp $965.64 Edinburgh Community School Corp $285,845.65 Elkhart Community Schools $3,501,366.87 Elwood Community School Corp $819,871.01 Eminence Community School Corp $3,417.99 Evansville Vanderburgh School Corp $5,270,530.39 Fairfield Community Schools $22,330.34 Fayette County School Corporation $1,084,628.61 Flat Rock-Hawcreek School Corp $6,415.46 Fort Wayne Community Schools $7,355,218.04 Franklin Community School Corp $3,192,719.70 Franklin County Community Sch Corp $36,838.60 Franklin Township Com Sch Corp $7,224,623.63 Frankton-Lapel Community Schools $700,372.04 Fremont Community Schools $2,716.37 Frontier School Corporation $437.75 Garrett-Keyser-Butler Com Sch Corp $110,858.23 Gary Community School Corp $12,753,692.19 Goshen Community Schools $3,843,566.43 Greater Clark County Schools $2,984,669.27 Greater Jasper Consolidated Schs $615,770.17 Greencastle Community School Corp $232,997.29 Greenfield-Central Com Schools $718,932.24 Greensburg Community Schools $230,696.91 Greenwood Community Sch Corp $49,250.98 Griffith Public Schools $66,815.40 Hamilton Community Schools $2,304.21 Hamilton Heights School Corp $203,180.10 Hamilton Southeastern Schools $2,048,122.68 Hanover Community School Corp $20,034.62 Huntington Co Com Sch Corp $1,018,019.11 Indianapolis Public Schools $17,813,296.08 Jac-Cen-Del Community Sch Corp $2,023.94 Jay School Corporation $180,194.54 Jennings County School Corporation $227,614.37 John Glenn School Corporation $53,794.32 Kankakee Valley School Corp $3,005.82 Knox Community School Corp $220,456.71 Kokomo School Corporation $3,639,424.29 Lafayette School Corporation $970,932.89 THE IMPACT OF PROPERTY TAX CAPS ON FUNDING EQUITY IN INDIANA PUBLIC SCHOOLS 55
Lake Central School Corporation $6,592.10 Lake Ridge New Tech Schools $637,726.29 Lake Station Community Schools $424,269.41 Lakeland School Corporation $36,080.23 Lanesville Community School Corp $1,316.16 LaPorte Community School Corp $1,386,453.04 Lawrenceburg Community School Corp $296,817.65 Lebanon Community School Corp $31,287.68 Liberty-Perry Community Sch Corp $15,215.91 Linton-Stockton School Corporation $363,588.26 Logansport Community Sch Corp $1,943,450.58 Loogootee Community Sch Corp $21,640.48 M S D Bluffton-Harrison $19,822.48 M S D Boone Township $536,419.05 M S D Decatur Township $6,495,695.28 M S D Lawrence Township $7,427,872.81 M S D Martinsville Schools $13,101.22 M S D Mount Vernon $230,435.64 M S D North Posey Co Schools $16,564.90 M S D of New Durham Township $56,379.07 M S D Pike Township $3,135,035.34 M S D Shakamak Schools $34,174.37 M S D Southwest Allen County Schls $2,089,008.17 M S D Steuben County $5,864.52 M S D Wabash County Schools $33,069.20 M S D Warren County $2,256.72 M S D Warren Township $2,894,643.52 M S D Washington Township $632,115.09 M S D Wayne Township $14,077,924.03 Maconaquah School Corp $16,265.68 Madison Consolidated Schools $416,825.03 Madison-Grant United School Corp $23,707.38 Manchester Community Schools $10,821.57 Marion Community Schools $1,072,414.29 Medora Community School Corp $116,573.15 Merrillville Community School Corp $4,646.54 Michigan City Area Schools $3,194,470.38 Middlebury Community Schools $443,097.32 Milan Community Schools $2,969.55 Mill Creek Community Sch Corp $8,393.22 Mississinewa Community School Corp $178,631.94 THE IMPACT OF PROPERTY TAX CAPS ON FUNDING EQUITY IN INDIANA PUBLIC SCHOOLS 56
Mitchell Community Schools $161,484.72 Monroe Central School Corp $67,998.98 Monroe County Community Sch Corp $175,587.97 Monroe-Gregg School District $4,797.00 Mooresville Con School Corp $10,754.74 Mt Vernon Community School Corp $1,685,980.73 Muncie Community Schools $7,263,311.14 Nettle Creek School Corporation $102,222.97 New Albany-Floyd Co Con Sch $1,402,012.97 New Castle Community School Corp $1,489,841.84 New Prairie United School Corp $446,382.26 Nineveh-Hensley-Jackson United $4,871.37 Noblesville Schools $2,580,944.21 North Adams Community Schools $238,758.54 North Central Parke Comm Schl Corp $3,870.86 North Daviess Com Schools $19,817.62 North Gibson School Corp $940,365.00 North Harrison Com School Corp $3,684.69 North Judson-San Pierre Sch Corp $17,463.24 North Knox School Corp $55,113.65 North Lawrence Com Schools $759,218.56 North Miami Community Schools $1,602.12 North Montgomery Com Sch Corp $43,134.30 North Newton School Corp $33,986.01 North Putnam Community Schools $3,663.28 North Spencer County Sch Corp $17,110.29 North Vermillion Com Sch Corp $25,340.38 North West Hendricks Schools $1,235,803.19 North White School Corp $17,545.04 Northeast Dubois Co Sch Corp $1,500.96 Northeast School Corp $28,975.73 Northeastern Wayne Schools $21,450.82 Northern Wells Com Schools $9,711.20 Northwest Allen County Schools $1,899,580.99 Northwestern Con School Corp $4,436.05 Northwestern School Corp $179,061.95 Oak Hill United School Corp $167,839.44 Oregon-Davis School Corp $10,423.57 Orleans Community Schools $3,702.48 Paoli Community School Corp $6,767.54 Penn-Harris-Madison School Corp $1,412,029.93 THE IMPACT OF PROPERTY TAX CAPS ON FUNDING EQUITY IN INDIANA PUBLIC SCHOOLS 57
Perry Central Com Schools Corp $1,537.88 Perry Township Schools $2,918,888.64 Peru Community Schools $594,219.62 Pike County School Corp $155,242.02 Pioneer Regional School Corp $10,959.49 Plainfield Community School Corp $349,356.41 Plymouth Community School Corp $290,676.40 Portage Township Schools $1,286,734.78 Porter Township School Corp $1,155.20 Prairie Heights Community Sch Corp $2,541.03 Randolph Central School Corp $241,318.82 Randolph Eastern School Corp $301,548.61 Randolph Southern School Corp $13,934.06 Rensselaer Central School Corp $1,208.51 Richland-Bean Blossom C S C $125,002.94 Richmond Community Schools $1,352,504.70 Rising Sun-Ohio Co Com $1,314.85 River Forest Community Sch Corp $172,618.15 Rochester Community School Corp $120,545.55 Rossville Con School District $4,834.90 Rush County Schools $363,465.78 Salem Community Schools $213,240.58 School City of East Chicago $1,712,085.93 School City of Hammond $2,117,274.92 School City of Hobart $160,762.33 School City of Mishawaka $532,863.69 School City of Whiting $267,767.45 School Town of Highland $30,344.85 School Town of Munster $492,509.18 School Town of Speedway $65,972.76 Scott County School District 1 $316,600.60 Scott County School District 2 $201,824.82 Seymour Community Schools $269,404.53 Shelby Eastern Schools $3,962.54 Shelbyville Central Schools $749,741.80 Shenandoah School Corporation $35,594.76 Sheridan Community Schools $147,906.75 Shoals Community School Corp $10,948.01 Smith-Green Community Schools $8,987.46 South Adams Schools $119,878.30 South Bend Community School Corp $6,749,172.17 THE IMPACT OF PROPERTY TAX CAPS ON FUNDING EQUITY IN INDIANA PUBLIC SCHOOLS 58
South Central Com School Corp $8,651.21 South Dearborn Community Sch Corp $215,845.20 South Gibson School Corporation $35,562.16 South Harrison Com Schools $6,587.01 South Henry School Corp $9,582.72 South Knox School Corp $1,159.22 South Madison Com Sch Corp $1,251,316.26 South Montgomery Com Sch Corp $43,700.34 South Newton School Corp $53,794.27 South Putnam Community Schools $1,577.61 South Ripley Com Sch Corp $3,390.54 South Spencer County Sch Corp $18,748.46 South Vermillion Com Sch Corp $345,689.36 Southeast Dubois Co Sch Corp $9,874.84 Southeast Fountain School Corp $3,013.05 Southeastern School Corp $63,509.79 Southern Hancock Co Com Sch Corp $271,666.63 Southern Wells Com Schools $815.02 Southwest Dubois Co Sch Corp $128,092.98 Southwest Parke Com Sch Corp $5,267.79 Southwest School Corp $195,263.07 Southwestern Con Sch Shelby Co $24,347.24 Southwestern-Jefferson Co Con $58,187.60 Spencer-Owen Community Schools $89,433.90 Springs Valley Com School Corp $23,833.18 Sunman-Dearborn Com Sch Corp $29,582.74 Switzerland County School Corp $5,895.86 Taylor Community School Corp $796,870.19 Tell City-Troy Twp School Corp $526,218.39 Tippecanoe School Corp $472,659.79 Tippecanoe Valley School Corp $27,429.62 Tipton Community School Corp $200,990.34 Tri-Central Community Schools $35,377.22 Tri-County School Corporation $7,007.21 Tri-Creek School Corporation $4,955.17 Triton School Corporation $49,156.43 Tri-Township Cons School Corp $9,793.84 Twin Lakes School Corp $57,560.85 Union Co/Clg Corner Joint Sch Dist $121,259.22 Union School Corporation $4,544.80 Union Township School Corp $1,798.81 THE IMPACT OF PROPERTY TAX CAPS ON FUNDING EQUITY IN INDIANA PUBLIC SCHOOLS 59
Union-North United School Corp $24,081.75 Valparaiso Community Schools $1,402,960.33 Vigo County School Corp $5,058,868.95 Vincennes Community School Corp $1,886,163.03 Wabash City Schools $97,863.57 Wa-Nee Community Schools $504,826.30 Warrick County School Corp $338,592.03 Warsaw Community Schools $433,401.12 Washington Community Schools $598,905.88 Wawasee Community School Corp $9,329.36 Wes-Del Community Schools $107,348.69 West Central School Corp $79.95 West Clark Community Schools $304,681.96 West Lafayette Com School Corp $870,457.78 West Noble School Corporation $83,797.76 West Washington School Corp $5,598.66 Western Boone Co Com Sch Dist $6,141.19 Western School Corp $813,408.24 Western Wayne Schools $103,838.32 Westfield-Washington Schools $7,092,011.77 Westview School Corporation $26,915.65 White River Valley School District $12,235.99 Whitko Community School Corp $80,830.45 Whitley Co Cons Schools $144,494.37 Yorktown Community Schools $859,742.68 Zionsville Community Schools $1,376,054.20
Assessed valuation per pupil is detailed in Table 3. Assessed valuation is total worth of all taxable property in the school district. When divided by student enrollment it represents the amount of property wealth that is available to support each student in the school system. The results show a wide range for this measure. Students in some districts have a high amount of property wealth on a per pupil basis, as high as one million dollars per student. Those in the poorest districts have a property tax base that provides less than one hundred thousand dollars per pupil. THE IMPACT OF PROPERTY TAX CAPS ON FUNDING EQUITY IN INDIANA PUBLIC SCHOOLS 60
Table 3
Assessed Valuation Per Pupil
2016 Assessed Valuation Per School Corporation Pupil Adams Central Community Schools $346,344 Alexandria Community School Corp $197,715 Anderson Community School Corp $214,563 Argos Community Schools $255,415 Attica Consolidated School Corp $323,298 Avon Community School Corp $237,665 Barr-Reeve Community Schools Inc $362,051 Bartholomew Con School Corp $333,888 Batesville Community School Corp $309,102 Baugo Community Schools $205,588 Beech Grove City Schools $125,003 Benton Community School Corp $654,917 Blackford County Schools $250,524 Bloomfield School District $248,293 Blue River Valley Schools $233,696 Bremen Public Schools $283,475 Brown County School Corporation $620,590 Brownsburg Community School Corp $232,742 Brownstown Cnt Com Sch Corp $258,888 C A Beard Memorial School Corp $249,056 Cannelton City Schools $86,170 Carmel Clay Schools $427,432 Carroll Consolidated School Corp $344,732 Caston School Corporation $466,252 Center Grove Community School Corp $279,108 Centerville-Abington Com Schs $163,826 Central Noble Com School Corp $326,182 Clark-Pleasant Community Sch Corp $182,475 Clarksville Community School Corp $259,196 Clay Community Schools $223,760 Clinton Central School Corporation $463,246 Clinton Prairie School Corporation $336,019 Cloverdale Community Schools $209,263 Community Schools of Frankfort $173,417 Concord Community Schools $190,298 Covington Community School Corp $279,488 THE IMPACT OF PROPERTY TAX CAPS ON FUNDING EQUITY IN INDIANA PUBLIC SCHOOLS 61
Cowan Community School Corp $158,458 Crawford County Community Sch Corp $194,827 Crawfordsville Community Schools $156,021 Crothersville Community Schools $276,122 Crown Point Community School Corp $287,535 Culver Community Schools Corp $1,071,676 Daleville Community Schools $178,215 Danville Community School Corp $288,870 Decatur County Community Schools $380,621 DeKalb Co Ctl United Sch Dist $271,756 DeKalb Co Eastern Com Sch Dist $579,673 Delaware Community School Corp $205,706 Delphi Community School Corp $317,158 Duneland School Corporation $444,500 East Allen County Schools $250,344 East Gibson School Corporation $311,857 East Noble School Corporation $280,344 East Porter County School Corp $361,276 East Washington School Corp $214,178 Eastbrook Community Sch Corp $229,273 Eastern Greene Schools $156,813 Eastern Hancock Co Com Sch Corp $252,832 Eastern Howard School Corporation $180,581 Eastern Pulaski Community Sch Corp $376,246 Edinburgh Community School Corp $182,740 Elkhart Community Schools $213,989 Elwood Community School Corp $140,332 Eminence Community School Corp $433,360 Evansville Vanderburgh School Corp $290,999 Fairfield Community Schools $280,600 Fayette County School Corporation $195,013 Flat Rock-Hawcreek School Corp $243,855 Fort Wayne Community Schools $232,745 Franklin Community School Corp $246,856 Franklin County Community Sch Corp $282,160 Franklin Township Com Sch Corp $222,574 Frankton-Lapel Community Schools $153,514 Fremont Community Schools $1,122,628 Frontier School Corporation $531,180 Garrett-Keyser-Butler Com Sch Corp $196,926 Gary Community School Corp $324,379 THE IMPACT OF PROPERTY TAX CAPS ON FUNDING EQUITY IN INDIANA PUBLIC SCHOOLS 62
Goshen Community Schools $175,921 Greater Clark County Schools $230,703 Greater Jasper Consolidated Schs $366,942 Greencastle Community School Corp $259,652 Greenfield-Central Com Schools $270,942 Greensburg Community Schools $285,695 Greenwood Community Sch Corp $225,304 Griffith Public Schools $204,399 Hamilton Community Schools $1,126,199 Hamilton Heights School Corp $323,168 Hamilton Southeastern Schools $296,059 Hanover Community School Corp $316,933 Huntington Co Com Sch Corp $273,435 Indianapolis Public Schools $336,052 Jac-Cen-Del Community Sch Corp $270,016 Jay School Corporation $275,416 Jennings County School Corporation $192,728 John Glenn School Corporation $206,911 Kankakee Valley School Corp $396,850 Knox Community School Corp $217,940 Kokomo School Corporation $280,180 Lafayette School Corporation $275,006 Lake Central School Corporation $396,089 Lake Ridge New Tech Schools $137,498 Lake Station Community Schools $140,825 Lakeland School Corporation $403,654 Lanesville Community School Corp $213,267 LaPorte Community School Corp $215,805 Lawrenceburg Community School Corp $368,681 Lebanon Community School Corp $382,118 Liberty-Perry Community Sch Corp $180,722 Linton-Stockton School Corporation $133,460 Logansport Community Sch Corp $128,025 Loogootee Community Sch Corp $241,263 M S D Bluffton-Harrison $254,469 M S D Boone Township $201,398 M S D Decatur Township $198,932 M S D Lawrence Township $293,577 M S D Martinsville Schools $267,089 M S D Mount Vernon $739,208 M S D North Posey Co Schools $330,940 THE IMPACT OF PROPERTY TAX CAPS ON FUNDING EQUITY IN INDIANA PUBLIC SCHOOLS 63
M S D of New Durham Township $237,990 M S D Pike Township $392,041 M S D Shakamak Schools $182,387 M S D Southwest Allen County Schls $365,790 M S D Steuben County $434,641 M S D Wabash County Schools $350,936 M S D Warren County $411,419 M S D Warren Township $190,954 M S D Washington Township $487,398 M S D Wayne Township $158,033 Maconaquah School Corp $178,400 Madison Consolidated Schools $342,815 Madison-Grant United School Corp $366,683 Manchester Community Schools $246,157 Marion Community Schools $244,654 Medora Community School Corp $209,094 Merrillville Community School Corp $439,486 Michigan City Area Schools $467,886 Middlebury Community Schools $251,865 Milan Community Schools $187,215 Mill Creek Community Sch Corp $332,468 Mississinewa Community School Corp $83,668 Mitchell Community Schools $230,294 Monroe Central School Corp $188,439 Monroe County Community Sch Corp $522,961 Monroe-Gregg School District $227,784 Mooresville Con School Corp $231,740 Mt Vernon Community School Corp $237,492 Muncie Community Schools $284,446 Nettle Creek School Corporation $259,553 New Albany-Floyd Co Con Sch $258,614 New Castle Community School Corp $177,946 New Prairie United School Corp $282,432 Nineveh-Hensley-Jackson United $314,740 Noblesville Schools $254,834 North Adams Community Schools $357,330 North Central Parke Comm Schl Corp $448,100 North Daviess Com Schools $376,485 North Gibson School Corp $389,109 North Harrison Com School Corp $203,402 North Judson-San Pierre Sch Corp $293,178 THE IMPACT OF PROPERTY TAX CAPS ON FUNDING EQUITY IN INDIANA PUBLIC SCHOOLS 64
North Knox School Corp $433,632 North Lawrence Com Schools $212,341 North Miami Community Schools $304,311 North Montgomery Com Sch Corp $436,295 North Newton School Corp $393,873 North Putnam Community Schools $407,314 North Spencer County Sch Corp $347,990 North Vermillion Com Sch Corp $508,805 North West Hendricks Schools $295,053 North White School Corp $555,220 Northeast Dubois Co Sch Corp $329,815 Northeast School Corp $419,308 Northeastern Wayne Schools $180,185 Northern Wells Com Schools $291,165 Northwest Allen County Schools $242,816 Northwestern Con School Corp $306,808 Northwestern School Corp $343,758 Oak Hill United School Corp $196,030 Oregon-Davis School Corp $372,013 Orleans Community Schools $280,975 Paoli Community School Corp $203,491 Penn-Harris-Madison School Corp $222,230 Perry Central Com Schools Corp $183,955 Perry Township Schools $196,609 Peru Community Schools $153,884 Pike County School Corp $382,386 Pioneer Regional School Corp $304,229 Plainfield Community School Corp $378,521 Plymouth Community School Corp $228,006 Portage Township Schools $224,031 Porter Township School Corp $374,386 Prairie Heights Community Sch Corp $555,656 Randolph Central School Corp $251,483 Randolph Eastern School Corp $217,708 Randolph Southern School Corp $381,891 Rensselaer Central School Corp $449,863 Richland-Bean Blossom C S C $281,029 Richmond Community Schools $289,151 Rising Sun-Ohio Co Com $292,408 River Forest Community Sch Corp $97,425 Rochester Community School Corp $324,051 THE IMPACT OF PROPERTY TAX CAPS ON FUNDING EQUITY IN INDIANA PUBLIC SCHOOLS 65
Rossville Con School District $250,411 Rush County Schools $449,480 Salem Community Schools $227,148 School City of East Chicago $379,302 School City of Hammond $157,928 School City of Hobart $180,633 School City of Mishawaka $130,951 School City of Whiting $373,239 School Town of Highland $333,650 School Town of Munster $370,943 School Town of Speedway $315,257 Scott County School District 1 $130,914 Scott County School District 2 $198,192 Seymour Community Schools $273,828 Shelby Eastern Schools $422,522 Shelbyville Central Schools $237,943 Shenandoah School Corporation $231,788 Sheridan Community Schools $355,963 Shoals Community School Corp $305,169 Smith-Green Community Schools $241,297 South Adams Schools $312,116 South Bend Community School Corp $226,350 South Central Com School Corp $279,995 South Dearborn Community Sch Corp $211,834 South Gibson School Corporation $502,715 South Harrison Com Schools $334,690 South Henry School Corp $245,941 South Knox School Corp $456,976 South Madison Com Sch Corp $180,992 South Montgomery Com Sch Corp $508,210 South Newton School Corp $551,793 South Putnam Community Schools $307,300 South Ripley Com Sch Corp $298,764 South Spencer County Sch Corp $586,532 South Vermillion Com Sch Corp $251,548 Southeast Dubois Co Sch Corp $276,936 Southeast Fountain School Corp $395,793 Southeastern School Corp $310,807 Southern Hancock Co Com Sch Corp $209,772 Southern Wells Com Schools $396,612 Southwest Dubois Co Sch Corp $203,363 THE IMPACT OF PROPERTY TAX CAPS ON FUNDING EQUITY IN INDIANA PUBLIC SCHOOLS 66
Southwest Parke Com Sch Corp $209,534 Southwest School Corp $384,634 Southwestern Con Sch Shelby Co $476,377 Southwestern-Jefferson Co Con $197,177 Spencer-Owen Community Schools $234,489 Springs Valley Com School Corp $280,478 Sunman-Dearborn Com Sch Corp $264,010 Switzerland County School Corp $306,487 Taylor Community School Corp $197,770 Tell City-Troy Twp School Corp $201,248 Tippecanoe School Corp $306,686 Tippecanoe Valley School Corp $292,573 Tipton Community School Corp $372,705 Tri-Central Community Schools $413,255 Tri-County School Corporation $844,220 Tri-Creek School Corporation $356,281 Triton School Corporation $313,413 Tri-Township Cons School Corp $596,074 Twin Lakes School Corp $426,055 Union Co/Clg Corner Joint Sch Dist $278,147 Union School Corporation $715,894 Union Township School Corp $375,987 Union-North United School Corp $257,074 Valparaiso Community Schools $350,877 Vigo County School Corp $247,827 Vincennes Community School Corp $264,412 Wabash City Schools $133,122 Wa-Nee Community Schools $321,585 Warrick County School Corp $286,436 Warsaw Community Schools $307,523 Washington Community Schools $214,141 Wawasee Community School Corp $749,057 Wes-Del Community Schools $339,883 West Central School Corp $491,930 West Clark Community Schools $240,254 West Lafayette Com School Corp $398,604 West Noble School Corporation $221,076 West Washington School Corp $327,073 Western Boone Co Com Sch Dist $384,835 Western School Corp $176,417 Western Wayne Schools $190,654 THE IMPACT OF PROPERTY TAX CAPS ON FUNDING EQUITY IN INDIANA PUBLIC SCHOOLS 67
Westfield-Washington Schools $303,265 Westview School Corporation $441,882 White River Valley School District $451,427 Whitko Community School Corp $330,035 Whitley Co Cons Schools $300,272 Yorktown Community Schools $189,810 Zionsville Community Schools $347,503
Another important set of data to examine as a part of this study is the total property tax levy per pupil. This information is presented in Table 4 and represents the net amount of levy per student, meaning the amount of support that is received for each student after deducting cap losses.
Table 4
Property Tax Levy Per Pupil
School Corporation 2016 Property Tax Levy Per Pupil Adams Central Community Schools $2,536 Alexandria Community School Corp $1,291 Anderson Community School Corp $3,430 Argos Community Schools $2,764 Attica Consolidated School Corp $2,202 Avon Community School Corp $4,138 Barr-Reeve Community Schools Inc $2,906 Bartholomew Con School Corp $2,860 Batesville Community School Corp $2,392 Baugo Community Schools $2,958 Beech Grove City Schools $3,190 Benton Community School Corp $3,643 Blackford County Schools $2,932 Bloomfield School District $2,264 Blue River Valley Schools $3,053 Bremen Public Schools $2,033 Brown County School Corporation $3,535 Brownsburg Community School Corp $3,432 Brownstown Cnt Com Sch Corp $2,228 C A Beard Memorial School Corp $3,301 Cannelton City Schools $2,088 THE IMPACT OF PROPERTY TAX CAPS ON FUNDING EQUITY IN INDIANA PUBLIC SCHOOLS 68
Carmel Clay Schools $3,603 Carroll Consolidated School Corp $2,247 Caston School Corporation $2,778 Center Grove Community School Corp $2,764 Centerville-Abington Com Schs $2,321 Central Noble Com School Corp $2,810 Clark-Pleasant Community Sch Corp $3,451 Clarksville Community School Corp $3,310 Clay Community Schools $2,044 Clinton Central School Corporation $3,323 Clinton Prairie School Corporation $2,534 Cloverdale Community Schools $1,668 Community Schools of Frankfort $2,695 Concord Community Schools $3,827 Covington Community School Corp $2,354 Cowan Community School Corp $1,823 Crawford County Community Sch Corp $2,614 Crawfordsville Community Schools $2,777 Crothersville Community Schools $2,573 Crown Point Community School Corp $3,820 Culver Community Schools Corp $4,774 Daleville Community Schools $1,931 Danville Community School Corp $3,958 Decatur County Community Schools $2,287 DeKalb Co Ctl United Sch Dist $2,255 DeKalb Co Eastern Com Sch Dist $5,391 Delaware Community School Corp $2,353 Delphi Community School Corp $2,684 Duneland School Corporation $4,449 East Allen County Schools $2,177 East Gibson School Corporation $2,343 East Noble School Corporation $2,748 East Porter County School Corp $3,391 East Washington School Corp $2,171 Eastbrook Community Sch Corp $1,710 Eastern Greene Schools $2,573 Eastern Hancock Co Com Sch Corp $2,504 Eastern Howard School Corporation $2,973 Eastern Pulaski Community Sch Corp $2,550 Edinburgh Community School Corp $1,956 Elkhart Community Schools $2,577 THE IMPACT OF PROPERTY TAX CAPS ON FUNDING EQUITY IN INDIANA PUBLIC SCHOOLS 69
Elwood Community School Corp $1,896 Eminence Community School Corp $4,394 Evansville Vanderburgh School Corp $2,720 Fairfield Community Schools $2,699 Fayette County School Corporation $2,209 Flat Rock-Hawcreek School Corp $3,131 Fort Wayne Community Schools $2,288 Franklin Community School Corp $3,884 Franklin County Community Sch Corp $2,462 Franklin Township Com Sch Corp $3,449 Frankton-Lapel Community Schools $2,358 Fremont Community Schools $7,131 Frontier School Corporation $4,054 Garrett-Keyser-Butler Com Sch Corp $2,386 Gary Community School Corp $5,141 Goshen Community Schools $3,018 Greater Clark County Schools $2,288 Greater Jasper Consolidated Schs $4,127 Greencastle Community School Corp $3,113 Greenfield-Central Com Schools $3,538 Greensburg Community Schools $2,591 Greenwood Community Sch Corp $1,926 Griffith Public Schools $2,063 Hamilton Community Schools $9,701 Hamilton Heights School Corp $3,381 Hamilton Southeastern Schools $3,410 Hanover Community School Corp $4,801 Huntington Co Com Sch Corp $2,401 Indianapolis Public Schools $4,762 Jac-Cen-Del Community Sch Corp $1,962 Jay School Corporation $2,790 Jennings County School Corporation $2,223 John Glenn School Corporation $1,953 Kankakee Valley School Corp $3,268 Knox Community School Corp $2,734 Kokomo School Corporation $2,865 Lafayette School Corporation $2,400 Lake Central School Corporation $3,253 Lake Ridge New Tech Schools $3,509 Lake Station Community Schools $2,046 Lakeland School Corporation $2,362 THE IMPACT OF PROPERTY TAX CAPS ON FUNDING EQUITY IN INDIANA PUBLIC SCHOOLS 70
Lanesville Community School Corp $1,340 LaPorte Community School Corp $1,988 Lawrenceburg Community School Corp $2,972 Lebanon Community School Corp $3,878 Liberty-Perry Community Sch Corp $1,664 Linton-Stockton School Corporation $1,871 Logansport Community Sch Corp $2,093 Loogootee Community Sch Corp $2,140 M S D Bluffton-Harrison $3,201 M S D Boone Township $4,146 M S D Decatur Township $4,164 M S D Lawrence Township $3,141 M S D Martinsville Schools $1,576 M S D Mount Vernon $5,585 M S D North Posey Co Schools $2,479 M S D of New Durham Township $2,687 M S D Pike Township $3,258 M S D Shakamak Schools $1,465 M S D Southwest Allen County Schls $3,362 M S D Steuben County $2,352 M S D Wabash County Schools $3,019 M S D Warren County $2,763 M S D Warren Township $2,413 M S D Washington Township $2,503 M S D Wayne Township $3,360 Maconaquah School Corp $1,696 Madison Consolidated Schools $2,952 Madison-Grant United School Corp $2,932 Manchester Community Schools $1,895 Marion Community Schools $2,180 Medora Community School Corp $3,936 Merrillville Community School Corp $4,145 Michigan City Area Schools $3,929 Middlebury Community Schools $3,263 Milan Community Schools $2,034 Mill Creek Community Sch Corp $3,150 Mississinewa Community School Corp $1,184 Mitchell Community Schools $2,853 Monroe Central School Corp $2,268 Monroe County Community Sch Corp $3,475 Monroe-Gregg School District $2,392 THE IMPACT OF PROPERTY TAX CAPS ON FUNDING EQUITY IN INDIANA PUBLIC SCHOOLS 71
Mooresville Con School Corp $1,825 Mt Vernon Community School Corp $4,210 Muncie Community Schools $3,041 Nettle Creek School Corporation $2,125 New Albany-Floyd Co Con Sch $2,863 New Castle Community School Corp $2,161 New Prairie United School Corp $3,512 Nineveh-Hensley-Jackson United $2,431 Noblesville Schools $3,425 North Adams Community Schools $4,079 North Central Parke Comm Schl Corp $3,415 North Daviess Com Schools $2,959 North Gibson School Corp $4,916 North Harrison Com School Corp $1,260 North Judson-San Pierre Sch Corp $2,531 North Knox School Corp $2,507 North Lawrence Com Schools $2,160 North Miami Community Schools $2,141 North Montgomery Com Sch Corp $3,622 North Newton School Corp $3,429 North Putnam Community Schools $2,671 North Spencer County Sch Corp $2,874 North Vermillion Com Sch Corp $4,175 North West Hendricks Schools $5,402 North White School Corp $4,058 Northeast Dubois Co Sch Corp $2,630 Northeast School Corp $3,448 Northeastern Wayne Schools $1,805 Northern Wells Com Schools $2,513 Northwest Allen County Schools $3,187 Northwestern Con School Corp $2,455 Northwestern School Corp $3,495 Oak Hill United School Corp $2,745 Oregon-Davis School Corp $3,857 Orleans Community Schools $2,359 Paoli Community School Corp $1,782 Penn-Harris-Madison School Corp $2,293 Perry Central Com Schools Corp $1,605 Perry Township Schools $2,986 Peru Community Schools $1,860 Pike County School Corp $3,643 THE IMPACT OF PROPERTY TAX CAPS ON FUNDING EQUITY IN INDIANA PUBLIC SCHOOLS 72
Pioneer Regional School Corp $2,556 Plainfield Community School Corp $3,724 Plymouth Community School Corp $2,128 Portage Township Schools $2,068 Porter Township School Corp $3,654 Prairie Heights Community Sch Corp $3,123 Randolph Central School Corp $2,381 Randolph Eastern School Corp $2,371 Randolph Southern School Corp $2,828 Rensselaer Central School Corp $2,783 Richland-Bean Blossom C S C $2,859 Richmond Community Schools $1,699 Rising Sun-Ohio Co Com $2,640 River Forest Community Sch Corp $2,108 Rochester Community School Corp $2,951 Rossville Con School District $2,104 Rush County Schools $3,224 Salem Community Schools $2,185 School City of East Chicago $2,778 School City of Hammond $2,307 School City of Hobart $3,047 School City of Mishawaka $1,817 School City of Whiting $2,154 School Town of Highland $2,613 School Town of Munster $4,413 School Town of Speedway $3,073 Scott County School District 1 $2,139 Scott County School District 2 $2,274 Seymour Community Schools $1,959 Shelby Eastern Schools $3,797 Shelbyville Central Schools $2,613 Shenandoah School Corporation $2,177 Sheridan Community Schools $4,568 Shoals Community School Corp $2,547 Smith-Green Community Schools $1,903 South Adams Schools $3,172 South Bend Community School Corp $2,871 South Central Com School Corp $2,477 South Dearborn Community Sch Corp $2,616 South Gibson School Corporation $3,256 South Harrison Com Schools $2,145 THE IMPACT OF PROPERTY TAX CAPS ON FUNDING EQUITY IN INDIANA PUBLIC SCHOOLS 73
South Henry School Corp $2,101 South Knox School Corp $3,042 South Madison Com Sch Corp $2,582 South Montgomery Com Sch Corp $5,327 South Newton School Corp $4,052 South Putnam Community Schools $3,530 South Ripley Com Sch Corp $2,841 South Spencer County Sch Corp $3,998 South Vermillion Com Sch Corp $2,668 Southeast Dubois Co Sch Corp $2,732 Southeast Fountain School Corp $2,520 Southeastern School Corp $2,649 Southern Hancock Co Com Sch Corp $2,469 Southern Wells Com Schools $2,205 Southwest Dubois Co Sch Corp $2,582 Southwest Parke Com Sch Corp $2,042 Southwest School Corp $3,793 Southwestern Con Sch Shelby Co $3,206 Southwestern-Jefferson Co Con $2,178 Spencer-Owen Community Schools $2,766 Springs Valley Com School Corp $2,478 Sunman-Dearborn Com Sch Corp $3,135 Switzerland County School Corp $2,008 Taylor Community School Corp $2,931 Tell City-Troy Twp School Corp $2,794 Tippecanoe School Corp $2,836 Tippecanoe Valley School Corp $2,804 Tipton Community School Corp $2,872 Tri-Central Community Schools $4,245 Tri-County School Corporation $5,849 Tri-Creek School Corporation $3,777 Triton School Corporation $2,657 Tri-Township Cons School Corp $3,222 Twin Lakes School Corp $2,378 Union Co/Clg Corner Joint Sch Dist $2,972 Union School Corporation $5,208 Union Township School Corp $3,841 Union-North United School Corp $2,190 Valparaiso Community Schools $4,530 Vigo County School Corp $1,914 Vincennes Community School Corp $3,396 THE IMPACT OF PROPERTY TAX CAPS ON FUNDING EQUITY IN INDIANA PUBLIC SCHOOLS 74
Wabash City Schools $1,542 Wa-Nee Community Schools $3,251 Warrick County School Corp $2,131 Warsaw Community Schools $2,791 Washington Community Schools $1,906 Wawasee Community School Corp $3,539 Wes-Del Community Schools $2,511 West Central School Corp $2,096 West Clark Community Schools $2,459 West Lafayette Com School Corp $5,490 West Noble School Corporation $2,386 West Washington School Corp $2,888 Western Boone Co Com Sch Dist $3,465 Western School Corp $2,246 Western Wayne Schools $1,703 Westfield-Washington Schools $5,336 Westview School Corporation $3,442 White River Valley School District $4,514 Whitko Community School Corp $4,048 Whitley Co Cons Schools $2,774 Yorktown Community Schools $2,217 Zionsville Community Schools $4,511
Table 5 classifies schools as city/urban, rural, and suburban. There is no agreed upon definition of these classifications in the literature as it applies to school corporations. For the purposes of this study, I categorized districts as city/urban school if the corporation encompassed a city with greater than 10,000 residents and was not contiguous with another larger city.
Districts were categorized as suburban if they were contiguous with a city of 50,000 residents or more. All other schools were categorized as rural. These categories were necessary in order to address one of the research questions.
THE IMPACT OF PROPERTY TAX CAPS ON FUNDING EQUITY IN INDIANA PUBLIC SCHOOLS 75
Table 5
Classification of School Corporations as City/Urban, Rural, and Suburban
City/Urban School Corporations Fort Wayne Community Schools M S D Decatur Township East Allen County Schools Franklin Township Com Sch Corp Bartholomew Con School Corp M S D Lawrence Township Logansport Community Sch Corp Perry Township Schools Greater Clark County Schools M S D Pike Township Community Schools of Frankfort M S D Warren Township Greensburg Community Schools M S D Washington Township Muncie Community Schools M S D Wayne Township Greater Jasper Consolidated Schs Beech Grove City Schools Elkhart Community Schools Indianapolis Public Schools Goshen Community Schools School Town of Speedway Marion Community Schools Plymouth Community School Corp New Castle Community School Corp Peru Community Schools Kokomo School Corporation Monroe County Community Sch Corp Seymour Community Schools Crawfordsville Community Schools Madison Consolidated Schools M S D Martinsville Schools Vincennes Community School Corp Portage Township Schools Warsaw Community Schools Valparaiso Community Schools Franklin Community School Corp Greencastle Community School Corp School City of East Chicago School City of Mishawaka Gary Community School Corp South Bend Community School Corp School City of Hammond Shelbyville Central Schools School City of Hobart Lafayette School Corporation School City of Whiting Evansville Vanderburgh School Corp Michigan City Area Schools Vigo County School Corp LaPorte Community School Corp Richmond Community Schools North Lawrence Com Schools
Rural School Corporations Adams Central Community Schools Frankton-Lapel Community Schools North Adams Community Schools South Madison Com Sch Corp South Adams Schools Alexandria Community School Corp Flat Rock-Hawcreek School Corp Anderson Community School Corp Benton Community School Corp Elwood Community School Corp Blackford County Schools Culver Community Schools Corp THE IMPACT OF PROPERTY TAX CAPS ON FUNDING EQUITY IN INDIANA PUBLIC SCHOOLS 76
Brown County School Corporation Argos Community Schools Carroll Consolidated School Corp Bremen Public Schools Delphi Community School Corp Triton School Corporation Pioneer Regional School Corp Shoals Community School Corp Southeastern School Corp Loogootee Community Sch Corp West Clark Community Schools Maconaquah School Corp Clay Community Schools North Miami Community Schools Clinton Central School Corporation Oak Hill United School Corp Clinton Prairie School Corporation Richland-Bean Blossom C S C Rossville Con School District North Montgomery Com Sch Corp Crawford County Community Sch Corp South Montgomery Com Sch Corp Barr-Reeve Community Schools Inc Monroe-Gregg School District North Daviess Com Schools Eminence Community School Corp Washington Community Schools North Newton School Corp Sunman-Dearborn Com Sch Corp South Newton School Corp South Dearborn Community Sch Corp Central Noble Com School Corp Lawrenceburg Community School Corp East Noble School Corporation Decatur County Community Schools West Noble School Corporation DeKalb Co Eastern Com Sch Dist Rising Sun-Ohio Co Com Garrett-Keyser-Butler Com Sch Corp Orleans Community Schools DeKalb Co Ctl United Sch Dist Paoli Community School Corp Delaware Community School Corp Springs Valley Com School Corp Wes-Del Community Schools Spencer-Owen Community Schools Liberty-Perry Community Sch Corp Southwest Parke Com Sch Corp Cowan Community School Corp Perry Central Com Schools Corp Yorktown Community Schools Cannelton City Schools Daleville Community Schools Tell City-Troy Twp School Corp Northeast Dubois Co Sch Corp North Central Parke Comm Schl Corp Southeast Dubois Co Sch Corp Pike County School Corp Southwest Dubois Co Sch Corp M S D Boone Township Fairfield Community Schools Duneland School Corporation Baugo Community Schools East Porter County School Corp Middlebury Community Schools Porter Township School Corp Wa-Nee Community Schools Union Township School Corp Fayette County School Corporation M S D Mount Vernon Attica Consolidated School Corp M S D North Posey Co Schools Covington Community School Corp Eastern Pulaski Community Sch Corp Southeast Fountain School Corp West Central School Corp Franklin County Community Sch Corp South Putnam Community Schools Rochester Community School Corp North Putnam Community Schools Caston School Corporation Cloverdale Community Schools THE IMPACT OF PROPERTY TAX CAPS ON FUNDING EQUITY IN INDIANA PUBLIC SCHOOLS 77
East Gibson School Corporation Union School Corporation North Gibson School Corp Randolph Southern School Corp South Gibson School Corporation Monroe Central School Corp Eastbrook Community Sch Corp Randolph Central School Corp Madison-Grant United School Corp Randolph Eastern School Corp Mississinewa Community School Corp South Ripley Com Sch Corp Bloomfield School District Batesville Community School Corp Eastern Greene Schools Jac-Cen-Del Community Sch Corp Linton-Stockton School Corporation Milan Community Schools M S D Shakamak Schools Rush County Schools White River Valley School District John Glenn School Corporation Lanesville Community School Corp Union-North United School Corp North Harrison Com School Corp Scott County School District 1 South Harrison Com Schools Scott County School District 2 Blue River Valley Schools Shelby Eastern Schools South Henry School Corp Northwestern Con School Corp Shenandoah School Corporation Southwestern Con Sch Shelby Co C A Beard Memorial School Corp North Spencer County Sch Corp Taylor Community School Corp South Spencer County Sch Corp Northwestern School Corp Oregon-Davis School Corp Eastern Howard School Corporation North Judson-San Pierre Sch Corp Western School Corp Knox Community School Corp Huntington Co Com Sch Corp Fremont Community Schools Medora Community School Corp Hamilton Community Schools Brownstown Cnt Com Sch Corp M S D Steuben County Crothersville Community Schools Northeast School Corp Kankakee Valley School Corp Southwest School Corp Rensselaer Central School Corp Switzerland County School Corp Jay School Corporation Tri-Central Community Schools Southwestern-Jefferson Co Con Tipton Community School Corp Jennings County School Corporation Union Co/Clg Corner Joint Sch Dist North Knox School Corp North Vermillion Com Sch Corp South Knox School Corp South Vermillion Com Sch Corp Wawasee Community School Corp Manchester Community Schools Tippecanoe Valley School Corp M S D Wabash County Schools Whitko Community School Corp Wabash City Schools Prairie Heights Community Sch Corp M S D Warren County Westview School Corporation Warrick County School Corp Lakeland School Corporation Salem Community Schools Hanover Community School Corp East Washington School Corp River Forest Community Sch Corp West Washington School Corp THE IMPACT OF PROPERTY TAX CAPS ON FUNDING EQUITY IN INDIANA PUBLIC SCHOOLS 78
Nineveh-Hensley-Jackson United Nettle Creek School Corporation Edinburgh Community School Corp Western Wayne Schools Sheridan Community Schools Centerville-Abington Com Schs Mill Creek Community Sch Corp Northeastern Wayne Schools Eastern Hancock Co Com Sch Corp Southern Wells Com Schools North West Hendricks Schools Northern Wells Com Schools Tri-Creek School Corporation M S D Bluffton-Harrison Lake Station Community Schools North White School Corp New Prairie United School Corp Frontier School Corporation M S D of New Durham Township Tri-County School Corporation Tri-Township Cons School Corp Twin Lakes School Corp South Central Com School Corp Smith-Green Community Schools Mitchell Community Schools Whitley Co Cons Schools
Suburban School Corporations M S D Southwest Allen County Schls Avon Community School Corp Northwest Allen County Schools Danville Community School Corp Western Boone Co Com Sch Dist Plainfield Community School Corp Zionsville Community Schools Clark-Pleasant Community Sch Corp Lebanon Community School Corp Center Grove Community School Corp Concord Community Schools Greenwood Community Sch Corp Clarksville Community School Corp Merrillville Community School Corp New Albany-Floyd Co Con Sch Lake Central School Corporation Hamilton Southeastern Schools Lake Ridge School Corporation Hamilton Heights School Corp Crown Point Community School Corp Westfield-Washington Schools Griffith Public Schools Carmel Clay Schools School Town of Highland Noblesville Schools School Town of Munster Southern Hancock Co Com Sch Corp Mooresville Con School Corp Greenfield-Central Com Schools Penn-Harris-Madison School Corp Mt Vernon Community School Corp Tippecanoe School Corp Brownsburg Community School Corp West Lafayette Com School Corp
Table 6 lists the school corporations that were eligible for a waiver from the protection of debt service levies. This waiver is quite technical in nature. The Indiana Department of Local
Government Finance is required to “protect” debt service levies when approving school budgets.
This means that losses due to property taxes are only able to be taken from the remaining school THE IMPACT OF PROPERTY TAX CAPS ON FUNDING EQUITY IN INDIANA PUBLIC SCHOOLS 79 funds that are financed with property taxes: the capital projects fund, transportation fund, and the bus replacement fund. After property tax caps were implemented, some schools were hit so hard in these three funds that they became financially incapable of transporting students. To address this situation, the General Assembly passed legislation in 2014 to provide schools that would lose 10% or more of their transportation funds the ability to receive a waiver from protected debt service levies. This allowed tax cap losses to be shared among all funds, including debt funds. With debt funds absorbing large amounts of the tax cap losses, transportation levies were restored to varying degrees across school corporations. Given that the state legislature enacted special legislation to help these school districts, it stands to reason that these school corporations stand out as those feeling the greatest effects of property tax cap losses.
Table 6
School Corporations that Received Protected Debt Service Waiver
Protected Debt Waiver School Corporations 2016 Anderson Community Schools Avon Community Schools Beech Grove City Schools Blackford County Schools Brownsburg Community Schools Centerville-Abington Community Schools Charles A Beard MSC Clark-Pleasant Community Schools Clarksville Community Schools Concord Community Schools Crawfordsville Community Schools Danville Community Schools Eastern Greene Schools Eastern Howard Schools Elkhart Community Schools Elwood Community Schools Evansville-Vanderburgh Schools Fayette County Schools Fort Wayne Community Schools THE IMPACT OF PROPERTY TAX CAPS ON FUNDING EQUITY IN INDIANA PUBLIC SCHOOLS 80
Franklin Community Schools Franklin Township Community Schools Frankton-Lapel Community Schools Goshen Community Schools Greater Clark County Schools Greater Jasper Consolid'd Schools Greenfield-Central Comm'y Schools Indianapolis Public Schools Kokomo Schools Lake Station Community Schools LaPorte Community Schools Linton-Stockton Schools Logansport Community Schools Marion Community Schools Medora Community Schools Michigan City Area Schools MSD Decatur Township MSD Lawrence Township MSD Pike Township MSD Southwest Allen County MSD Warren Township Mt. Vernon Community Schools Muncie Community Schools Noblesville Schools North Gibson Schools North Lawrence Community Schools North West Hendricks Schools Northwest Allen County Schools Penn-Harris-Madison Schools Peru Community Schools Portage Township Schools Randolph Central Schools Randolph Eastern Schools River Forest Community Schools School City of Mishawaka School Town of Munster Scott County School Dist No. 1 Shelbyville Central Schools South Bend Community Schools South Madison Community Schools Tell City-Troy Township Schools THE IMPACT OF PROPERTY TAX CAPS ON FUNDING EQUITY IN INDIANA PUBLIC SCHOOLS 81
Valparaiso Community Schools Vigo County Schools Vincennes Community Schools Wa-Nee Community Schools Washington Community Schools West Lafayette Community Schools Westfield Washington Schools Zionsville Community Schools
Table 7 lists several different types of student demographic data. The percentage of students who are on free and reduced lunch in each school corporation serves as a measure of poverty. There is a noticeable spread across the state in the data for this measure. Data showing the percentage of nonwhite students who attend every school district is also shown in Table 7. In addition the percentage of special education students served in each school corporation is listed.
Daleville and MSD Southwest Allen school corporations represent the low end of the spectrum, with less than 8% of their student population needing special education services. On the other end of the spectrum, North Gibson, Salem, and Shoals all serve student populations where over
25% require these services. Lastly, the percentage of students who are classified as English learners in each school district is included in Table 7. The highest percentage in the state is found at Frankfort Community School Corporation where just over 22% of students are English learners. Conversely, a significant number of school corporations do not serve any English learners.
THE IMPACT OF PROPERTY TAX CAPS ON FUNDING EQUITY IN INDIANA PUBLIC SCHOOLS 82
Table 7
Student Demographic Data
2016 2016 % Free/ 2016 % 2016 % Special School Corporation Reduced Nonwhite English Education Lunch Students Learners Students % Adams Central Community Schools 26% 6% 10.48% 2.78% Alexandria Community School Corp 49% 9% 16.66% 1.15% Anderson Community School Corp 78% 43% 22.35% 3.89% Argos Community Schools 42% 8% 15.82% 0.47% Attica Consolidated School Corp 54% 6% 21.10% 0.82% Avon Community School Corp 27% 30% 14.67% 3.38% Barr-Reeve Community Schools Inc 28% 1% 10.61% 0.00% Bartholomew Con School Corp 44% 26% 12.38% 7.38% Batesville Community School Corp 27% 8% 13.38% 1.34% Baugo Community Schools 38% 18% 10.62% 4.07% Beech Grove City Schools 68% 23% 16.32% 2.25% Benton Community School Corp 46% 12% 23.41% 2.35% Blackford County Schools 56% 7% 16.69% 0.82% Bloomfield School District 41% 7% 13.83% 0.48% Blue River Valley Schools 40% 4% 13.23% 0.00% Bremen Public Schools 41% 28% 12.97% 9.01% Brown County School Corporation 52% 6% 24.64% 0.30% Brownsburg Community School Corp 24% 23% 11.58% 1.50% Brownstown Cnt Com Sch Corp 38% 5% 14.35% 0.06% C A Beard Memorial School Corp 46% 4% 20.78% 0.00% Cannelton City Schools 78% 8% 20.85% 0.00% Carmel Clay Schools 9% 25% 9.62% 2.56% Carroll Consolidated School Corp 40% 6% 9.73% 0.18% Caston School Corporation 44% 9% 9.43% 0.73% Center Grove Community School 20% 12% 13.45% 1.16% Corp Centerville-Abington Com Schs 38% 8% 11.53% 0.17% Central Noble Com School Corp 45% 5% 17.21% 0.16% Clark-Pleasant Community Sch Corp 45% 19% 13.85% 2.83% Clarksville Community School Corp 65% 27% 16.83% 4.28% Clay Community Schools 54% 5% 20.46% 0.17% Clinton Central School Corporation 44% 4% 11.66% 0.00% Clinton Prairie School Corporation 40% 9% 13.39% 2.08% Cloverdale Community Schools 52% 6% 17.74% 0.00% THE IMPACT OF PROPERTY TAX CAPS ON FUNDING EQUITY IN INDIANA PUBLIC SCHOOLS 83
Community Schools of Frankfort 76% 50% 12.78% 22.17% Concord Community Schools 58% 51% 13.57% 15.15% Covington Community School Corp 39% 8% 14.88% 0.64% Cowan Community School Corp 39% 3% 12.52% 0.13% Crawford County Community Sch 60% 3% 20.39% 0.13% Corp Crawfordsville Community Schools 62% 23% 21.71% 6.63% Crothersville Community Schools 52% 8% 19.72% 0.61% Crown Point Community School Corp 21% 20% 10.76% 1.90% Culver Community Schools Corp 58% 13% 13.86% 0.51% Daleville Community Schools 46% 6% 7.25% 0.22% Danville Community School Corp 31% 7% 11.61% 0.81% Decatur County Community Schools 46% 3% 18.33% 0.25% DeKalb Co Ctl United Sch Dist 42% 8% 14.50% 0.94% DeKalb Co Eastern Com Sch Dist 47% 6% 17.15% 0.76% Delaware Community School Corp 40% 6% 15.68% 0.00% Delphi Community School Corp 47% 13% 10.91% 4.04% Duneland School Corporation 27% 17% 16.14% 0.65% East Allen County Schools 50% 35% 11.63% 7.06% East Gibson School Corporation 42% 3% 21.73% 0.11% East Noble School Corporation 46% 9% 18.81% 3.24% East Porter County School Corp 20% 11% 13.95% 0.44% East Washington School Corp 49% 6% 17.73% 0.42% Eastbrook Community Sch Corp 39% 7% 14.38% 0.62% Eastern Greene Schools 45% 6% 15.37% 0.33% Eastern Hancock Co Com Sch Corp 28% 3% 17.92% 0.17% Eastern Howard School Corporation 34% 9% 15.66% 0.13% Eastern Pulaski Community Sch Corp 41% 7% 14.27% 0.00% Edinburgh Community School Corp 66% 9% 18.99% 2.52% Elkhart Community Schools 65% 56% 16.45% 12.76% Elwood Community School Corp 64% 11% 16.11% 1.51% Eminence Community School Corp 41% 3% 19.95% 0.00% Evansville Vanderburgh School Corp 58% 30% 15.62% 2.17% Fairfield Community Schools 21% 9% 10.79% 8.56% Fayette County School Corporation 62% 6% 15.97% 0.11% Flat Rock-Hawcreek School Corp 44% 5% 14.37% 1.04% Fort Wayne Community Schools 65% 55% 15.37% 7.81% Franklin Community School Corp 42% 12% 14.71% 0.98% Franklin County Community Sch 49% 2% 14.57% 0.12% Corp Franklin Township Com Sch Corp 38% 24% 15.46% 2.96% Frankton-Lapel Community Schools 36% 8% 13.26% 0.60% THE IMPACT OF PROPERTY TAX CAPS ON FUNDING EQUITY IN INDIANA PUBLIC SCHOOLS 84
Fremont Community Schools 44% 6% 13.88% 0.33% Frontier School Corporation 29% 5% 18.13% 0.00% Garrett-Keyser-Butler Com Sch Corp 50% 8% 15.98% 0.84% Gary Community School Corp 78% 99% 14.48% 0.22% Goshen Community Schools 63% 58% 12.31% 20.30% Greater Clark County Schools 57% 36% 16.29% 5.33% Greater Jasper Consolidated Schs 33% 17% 12.23% 5.61% Greencastle Community School Corp 46% 9% 15.67% 1.19% Greenfield-Central Com Schools 32% 7% 16.70% 0.22% Greensburg Community Schools 51% 6% 15.93% 0.85% Greenwood Community Sch Corp 46% 19% 15.61% 2.67% Griffith Public Schools 51% 50% 14.35% 0.96% Hamilton Community Schools 32% 5% 17.38% 0.00% Hamilton Heights School Corp 31% 7% 14.52% 0.81% Hamilton Southeastern Schools 14% 24% 10.26% 2.41% Hanover Community School Corp 23% 18% 11.81% 1.54% Huntington Co Com Sch Corp 44% 7% 17.40% 0.47% Indianapolis Public Schools 71% 79% 17.00% 14.41% Jac-Cen-Del Community Sch Corp 43% 3% 17.83% 0.71% Jay School Corporation 55% 8% 24.56% 2.70% Jennings County School Corporation 58% 8% 19.91% 1.34% John Glenn School Corporation 38% 10% 12.38% 0.46% Kankakee Valley School Corp 38% 12% 14.67% 2.66% Knox Community School Corp 57% 7% 12.06% 1.14% Kokomo School Corporation 70% 34% 18.08% 1.49% Lafayette School Corporation 67% 50% 19.50% 9.55% Lake Central School Corporation 18% 27% 13.78% 1.80% Lake Ridge New Tech Schools 88% 60% 15.11% 3.79% Lake Station Community Schools 76% 48% 13.50% 6.28% Lakeland School Corporation 50% 22% 17.18% 7.51% Lanesville Community School Corp 16% 4% 12.97% 0.00% LaPorte Community School Corp 51% 24% 15.80% 3.34% Lawrenceburg Community School 41% 10% 15.98% 0.44% Corp Lebanon Community School Corp 41% 12% 18.61% 1.51% Liberty-Perry Community Sch Corp 49% 5% 15.12% 0.08% Linton-Stockton School Corporation 49% 4% 9.66% 0.49% Logansport Community Sch Corp 56% 46% 11.73% 21.46% Loogootee Community Sch Corp 44% 4% 17.72% 0.12% M S D Bluffton-Harrison 48% 9% 14.94% 1.27% M S D Boone Township 36% 16% 14.93% 0.17% M S D Decatur Township 66% 28% 14.18% 4.54% THE IMPACT OF PROPERTY TAX CAPS ON FUNDING EQUITY IN INDIANA PUBLIC SCHOOLS 85
M S D Lawrence Township 64% 73% 12.63% 11.24% M S D Martinsville Schools 51% 5% 16.49% 0.41% M S D Mount Vernon 39% 9% 23.53% 0.53% M S D North Posey Co Schools 30% 6% 19.81% 0.13% M S D of New Durham Township 37% 12% 12.40% 0.00% M S D Pike Township 63% 90% 13.48% 13.89% M S D Shakamak Schools 56% 3% 12.25% 0.00% M S D Southwest Allen County Schls 15% 19% 7.86% 0.51% M S D Steuben County 46% 15% 15.08% 2.85% M S D Wabash County Schools 42% 6% 14.48% 0.34% M S D Warren County 41% 4% 17.96% 0.16% M S D Warren Township 74% 72% 15.25% 6.94% M S D Washington Township 57% 70% 14.64% 12.46% M S D Wayne Township 75% 64% 12.43% 12.59% Maconaquah School Corp 58% 15% 16.25% 1.34% Madison Consolidated Schools 50% 11% 15.83% 1.39% Madison-Grant United School Corp 30% 6% 16.54% 0.57% Manchester Community Schools 49% 11% 12.21% 2.42% Marion Community Schools 75% 49% 15.42% 2.57% Medora Community School Corp 72% 2% 22.93% 0.00% Merrillville Community School Corp 62% 86% 12.79% 2.40% Michigan City Area Schools 73% 54% 18.68% 1.43% Middlebury Community Schools 32% 13% 11.68% 5.85% Milan Community Schools 41% 2% 15.30% 0.00% Mill Creek Community Sch Corp 27% 5% 16.62% 0.39% Mississinewa Community School 59% 13% 16.38% 0.59% Corp Mitchell Community Schools 52% 5% 21.20% 0.06% Monroe Central School Corp 52% 7% 16.51% 0.00% Monroe County Community Sch Corp 36% 22% 15.02% 2.76% Monroe-Gregg School District 36% 6% 14.84% 0.19% Mooresville Con School Corp 42% 7% 13.75% 0.27% Mt Vernon Community School Corp 25% 16% 15.13% 0.46% Muncie Community Schools 75% 37% 21.72% 0.97% Nettle Creek School Corporation 40% 7% 17.04% 0.54% New Albany-Floyd Co Con Sch 42% 21% 16.94% 1.66% New Castle Community School Corp 57% 10% 19.32% 0.88% New Prairie United School Corp 34% 14% 12.68% 1.57% Nineveh-Hensley-Jackson United 32% 4% 15.32% 0.11% Noblesville Schools 23% 14% 14.49% 2.41% North Adams Community Schools 51% 18% 14.37% 0.55% North Central Parke Comm Schl Corp 53% 5% 21.01% 0.16% THE IMPACT OF PROPERTY TAX CAPS ON FUNDING EQUITY IN INDIANA PUBLIC SCHOOLS 86
North Daviess Com Schools 42% 4% 15.09% 2.57% North Gibson School Corp 52% 16% 25.79% 1.66% North Harrison Com School Corp 46% 5% 18.59% 0.31% North Judson-San Pierre Sch Corp 53% 9% 16.86% 0.58% North Knox School Corp 57% 4% 15.56% 0.15% North Lawrence Com Schools 49% 6% 19.95% 0.18% North Miami Community Schools 36% 5% 17.01% 0.42% North Montgomery Com Sch Corp 38% 7% 18.65% 1.63% North Newton School Corp 51% 10% 15.28% 1.30% North Putnam Community Schools 42% 3% 17.76% 0.00% North Spencer County Sch Corp 27% 10% 16.54% 3.38% North Vermillion Com Sch Corp 44% 5% 14.09% 0.67% North West Hendricks Schools 19% 6% 11.91% 0.26% North White School Corp 70% 40% 14.42% 20.28% Northeast Dubois Co Sch Corp 25% 3% 20.65% 0.00% Northeast School Corp 57% 4% 15.27% 0.00% Northeastern Wayne Schools 42% 6% 16.47% 0.30% Northern Wells Com Schools 29% 8% 13.73% 1.51% Northwest Allen County Schools 16% 14% 12.05% 1.15% Northwestern Con School Corp 39% 7% 14.70% 0.13% Northwestern School Corp 25% 11% 12.51% 0.11% Oak Hill United School Corp 36% 11% 11.83% 1.62% Oregon-Davis School Corp 58% 8% 10.63% 0.00% Orleans Community Schools 50% 2% 20.02% 0.12% Paoli Community School Corp 53% 4% 17.58% 0.21% Penn-Harris-Madison School Corp 27% 21% 12.75% 1.67% Perry Central Com Schools Corp 39% 4% 13.67% 0.00% Perry Township Schools 61% 47% 12.55% 20.55% Peru Community Schools 64% 12% 14.74% 0.52% Pike County School Corp 41% 4% 20.33% 0.37% Pioneer Regional School Corp 42% 9% 11.75% 1.98% Plainfield Community School Corp 26% 14% 14.29% 1.10% Plymouth Community School Corp 59% 28% 12.77% 7.55% Portage Township Schools 54% 39% 16.06% 1.68% Porter Township School Corp 26% 17% 19.49% 0.66% Prairie Heights Community Sch Corp 43% 9% 15.92% 1.10% Randolph Central School Corp 56% 7% 20.26% 0.84% Randolph Eastern School Corp 67% 25% 17.00% 7.27% Randolph Southern School Corp 50% 7% 14.67% 2.48% Rensselaer Central School Corp 48% 12% 16.97% 2.92% Richland-Bean Blossom C S C 36% 10% 17.09% 0.39% THE IMPACT OF PROPERTY TAX CAPS ON FUNDING EQUITY IN INDIANA PUBLIC SCHOOLS 87
Richmond Community Schools 76% 32% 21.05% 3.52% Rising Sun-Ohio Co Com 35% 4% 17.27% 0.26% River Forest Community Sch Corp 74% 57% 14.38% 6.74% Rochester Community School Corp 49% 10% 16.01% 1.20% Rossville Con School District 25% 6% 10.88% 0.60% Rush County Schools 50% 7% 13.78% 0.62% Salem Community Schools 53% 5% 26.84% 0.26% School City of East Chicago 86% 99% 18.63% 11.11% School City of Hammond 81% 84% 14.32% 10.66% School City of Hobart 44% 34% 12.59% 1.17% School City of Mishawaka 67% 24% 17.21% 1.16% School City of Whiting 62% 71% 13.16% 7.88% School Town of Highland 35% 38% 11.21% 2.36% School Town of Munster 18% 40% 11.54% 1.87% School Town of Speedway 57% 50% 13.59% 10.63% Scott County School District 1 100% 5% 17.90% 0.52% Scott County School District 2 57% 5% 17.94% 0.59% Seymour Community Schools 52% 28% 16.50% 13.84% Shelby Eastern Schools 36% 5% 17.00% 0.51% Shelbyville Central Schools 50% 21% 15.16% 6.00% Shenandoah School Corporation 38% 4% 16.82% 0.72% Sheridan Community Schools 38% 8% 18.05% 0.97% Shoals Community School Corp 60% 5% 26.87% 0.00% Smith-Green Community Schools 26% 5% 13.69% 0.00% South Adams Schools 44% 17% 15.02% 6.78% South Bend Community School Corp 71% 67% 18.48% 8.54% South Central Com School Corp 27% 9% 13.96% 0.52% South Dearborn Community Sch Corp 46% 4% 20.05% 0.12% South Gibson School Corporation 24% 5% 18.76% 0.35% South Harrison Com Schools 47% 9% 16.79% 0.93% South Henry School Corp 46% 4% 11.68% 0.24% South Knox School Corp 32% 3% 12.81% 0.00% South Madison Com Sch Corp 32% 9% 14.59% 0.51% South Montgomery Com Sch Corp 38% 8% 17.86% 0.18% South Newton School Corp 60% 15% 16.90% 4.93% South Putnam Community Schools 46% 5% 16.48% 0.35% South Ripley Com Sch Corp 55% 4% 18.30% 0.61% South Spencer County Sch Corp 45% 8% 17.39% 0.33% South Vermillion Com Sch Corp 53% 5% 18.20% 0.06% Southeast Dubois Co Sch Corp 23% 5% 12.46% 0.86% Southeast Fountain School Corp 49% 9% 12.90% 1.96% THE IMPACT OF PROPERTY TAX CAPS ON FUNDING EQUITY IN INDIANA PUBLIC SCHOOLS 88
Southeastern School Corp 41% 10% 10.68% 1.57% Southern Hancock Co Com Sch Corp 20% 6% 14.78% 0.51% Southern Wells Com Schools 33% 5% 14.06% 0.72% Southwest Dubois Co Sch Corp 47% 28% 12.67% 13.89% Southwest Parke Com Sch Corp 59% 6% 20.85% 0.20% Southwest School Corp 48% 5% 14.00% 0.17% Southwestern Con Sch Shelby Co 37% 5% 12.90% 0.34% Southwestern-Jefferson Co Con 55% 8% 15.43% 1.87% Spencer-Owen Community Schools 51% 5% 21.77% 0.19% Springs Valley Com School Corp 50% 14% 19.15% 0.35% Sunman-Dearborn Com Sch Corp 24% 4% 15.45% 0.34% Switzerland County School Corp 53% 4% 19.82% 0.33% Taylor Community School Corp 55% 24% 20.50% 0.47% Tell City-Troy Twp School Corp 42% 8% 16.97% 0.61% Tippecanoe School Corp 36% 25% 13.64% 5.25% Tippecanoe Valley School Corp 54% 18% 18.42% 5.22% Tipton Community School Corp 40% 8% 14.24% 1.10% Tri-Central Community Schools 40% 11% 15.64% 1.64% Tri-County School Corporation 41% 6% 19.11% 0.95% Tri-Creek School Corporation 27% 14% 11.53% 0.85% Triton School Corporation 42% 10% 8.25% 1.69% Tri-Township Cons School Corp 40% 6% 15.30% 0.26% Twin Lakes School Corp 49% 18% 12.92% 4.52% Union Co/Clg Corner Joint Sch Dist 44% 4% 15.21% 0.14% Union School Corporation 65% 3% 14.84% 0.39% Union Township School Corp 21% 18% 15.95% 0.55% Union-North United School Corp 54% 8% 13.57% 0.70% Valparaiso Community Schools 27% 20% 14.31% 2.36% Vigo County School Corp 55% 18% 18.37% 1.19% Vincennes Community School Corp 62% 11% 16.82% 0.48% Wabash City Schools 58% 6% 17.65% 0.40% Wa-Nee Community Schools 32% 14% 11.48% 3.87% Warrick County School Corp 29% 11% 17.82% 0.81% Warsaw Community Schools 48% 26% 14.39% 7.69% Washington Community Schools 64% 27% 22.03% 10.07% Wawasee Community School Corp 45% 15% 16.45% 2.50% Wes-Del Community Schools 48% 8% 15.91% 1.10% West Central School Corp 52% 7% 18.33% 0.85% West Clark Community Schools 36% 10% 14.07% 2.73% West Lafayette Com School Corp 18% 40% 9.46% 4.77% West Noble School Corporation 61% 51% 12.28% 18.32% THE IMPACT OF PROPERTY TAX CAPS ON FUNDING EQUITY IN INDIANA PUBLIC SCHOOLS 89
West Washington School Corp 52% 4% 18.90% 0.00% Western Boone Co Com Sch Dist 35% 5% 16.33% 0.23% Western School Corp 32% 14% 13.08% 0.48% Western Wayne Schools 54% 4% 12.90% 0.29% Westfield-Washington Schools 15% 18% 15.09% 2.58% Westview School Corporation 39% 5% 15.18% 21.65% White River Valley School District 54% 5% 14.75% 0.00% Whitko Community School Corp 46% 6% 19.79% 1.24% Whitley Co Cons Schools 29% 8% 17.85% 0.48% Yorktown Community Schools 35% 12% 11.09% 0.95% Zionsville Community Schools 5% 14% 11.73% 0.71%
Findings Related to Research Questions
The data presented in Chapter 4 was analyzed using statistical software to determine correlation coefficients. Correlational analysis allows relationships between variables to be examined and categorized as strong, moderate, or weak.
Research Question 1
What is the relationship between property tax caps and school funding in Indiana? To answer this question, multiple correlations were examined using the collected data. One useful relationship to examine is school corporation enrollment compared to property tax cap losses.
This question was addressed using a comparative analysis of the enrollment data presented in
Table 1 and the property tax cap losses listed in Table 2. Pearson’s product-moment correlation coefficient (r) was used to determine the degree to which these two factors were related.
Coefficient values range from -1.0 to 1.0 indicating the strength of the relationship. The closer values come to 1.0, the stronger the positive relationship between the variables. The closer values come to -1.0, the stronger the negative relationship between the variables. Values from
0.5 to 1.0 and -0.5 to -1.0 indicate a strong relationship. Values from 0.3 to 0.5 and -0.3 to -0.5 indicate a moderate relationship. Values from 0.1 to 0.3 and -0.1 to -0.3 indicate a weak THE IMPACT OF PROPERTY TAX CAPS ON FUNDING EQUITY IN INDIANA PUBLIC SCHOOLS 90 relationship. The calculated r-value for enrollment and property tax cap losses was 0.696, a strong positive relationship. Figure 1 shows the scatter plot.
Figure 1. Scatter plot comparing property tax cap losses and student enrollment.
$20,000,000 $18,000,000 $16,000,000 $14,000,000 $12,000,000 $10,000,000 $8,000,000 $6,000,000
Property Tax Tax PropertyLosses Cap $4,000,000 $2,000,000 $0 0 5000 10000 15000 20000 25000 30000 35000 Student Enrollment Grades K-12
The results show a strong relationship between property tax cap losses and enrollment, meaning that losses increase as enrolment increases. This result is interesting given that growing enrollment results in more revenue from state sources. That means that in 2016, schools were rewarded with more state dollars as enrollment grew while also losing more money from local property taxes due to the tax caps.
Another key factor to consider in examining the first research question is the relationship between property wealth and property tax cap losses. Table 3 lists the assessed valuation per pupil for every district in Indiana and this was compared to the property tax cap losses presented in Table 2. The calculated r-value for these two sets of data was -0.143, a weak negative relationship. Figure 2 shows the scatter plot.
THE IMPACT OF PROPERTY TAX CAPS ON FUNDING EQUITY IN INDIANA PUBLIC SCHOOLS 91
Figure 2. Scatter plot comparing property tax cap losses and assessed valuation per pupil.
$20,000,000 $18,000,000 $16,000,000 $14,000,000 $12,000,000 $10,000,000 $8,000,000 $6,000,000
Property Tax Tax PropertyLosses Cap $4,000,000 $2,000,000 $0 $0 $200,000 $400,000 $600,000 $800,000 $1,000,000 $1,200,000 Assessed Valuation Per Pupil
These results indicate that the relationship between property wealth and losses due to property tax caps in 2016 was tenuous. A stronger negative relationship would have indicated that losses due to tax caps increase as property wealth increases. In other words, a stronger relationship between these two variables would have shown that losses go up as districts get poorer in terms of property wealth.
While assessed valuation per pupil is useful in gauging the capacity of a community to support its students, it does not necessarily indicate that those students are indeed being supported at greater or lesser degrees depending on the wealth of the community. For example, the school board in a wealthy district could decide to voluntary keep property tax rates low to lessen the burden on their residents as opposed to expanding support for schools. For this reason, it is valuable to look at the relationship between actual tax levies on a per pupil basis contained in Table 4 and property tax cap losses listed in Table 2. The calculated r-value for these two sets of data was 0.190, a weak positive relationship. Figure 3 shows the scatter plot. THE IMPACT OF PROPERTY TAX CAPS ON FUNDING EQUITY IN INDIANA PUBLIC SCHOOLS 92
Figure 3. Scatter plot comparing property tax cap losses and property tax levy per pupil.
$20,000,000 $18,000,000 $16,000,000 $14,000,000 $12,000,000 $10,000,000 $8,000,000 $6,000,000
Property Tax Tax PropertyLosses Cap $4,000,000 $2,000,000 $0 $0 $2,000 $4,000 $6,000 $8,000 $10,000 $12,000 Property Tax Levy Per Pupil
Similar to the results obtained when examining assessed valuation per pupil, the relationship between tax cap losses and property tax levy per pupil in 2016 was weak. For that year, property wealth measured in terms of both capacity and actual levy had very little relationship to property tax cap losses.
Research Question 2
What is the relationship between property tax caps and school funding in rural, urban, or suburban Indiana school systems? Looking at the waiver data in Table 6 and the classification of schools into urban, rural, and suburban districts yields an interesting result. The percentages and pie charts in Table 8 and Figure 4 show the percentages in each category that qualified for the waiver in 2016.
Table 8
Percentage of Schools Receiving Protected Debt Waiver
Urban/City Rural Suburban Percentage of Schools Receiving Protected Debt Waiver 58% 10% 44%
THE IMPACT OF PROPERTY TAX CAPS ON FUNDING EQUITY IN INDIANA PUBLIC SCHOOLS 93
Figure 4. Percentage of schools receiving protected debt service waiver by location type.
Percentage of Urban Percentage of Suburban Schools Receiving Schools Receiving Waiver Waiver
42% Did Not 56% Did 44% Receive 58% Not Received Waiver Received Receive Waiver Waiver Waiver
Percentage of Rural Schools Receiving Waiver 10% Received Waiver
90% Did Not Receive Waiver
As indicated in Table 8 and Figure 4, legislative relief in the form of the protected property tax cap waiver was concentrated in suburban and urban schools. Only 10% of rural school corporations qualified for the aid provided by the state. This result suggests that revenue losses due to tax caps are concentrated in urban and suburban school districts while affecting only a minority of rural districts. THE IMPACT OF PROPERTY TAX CAPS ON FUNDING EQUITY IN INDIANA PUBLIC SCHOOLS 94
Research Question 3
What is the relationship between property tax caps and school funding in Indiana schools that serve differential proportions of students with low socio-economic status, students with disabilities, students who are considered English language learners, and students of color? Table
5 lists the percentage of students in each school corporation who qualify for free or reduced lunch. The correlation coefficient r for this data in relation to the property tax cap loss data detailed in Table 2 yields a value of 0.322, a moderately positive relationship. Figure 5 shows the scatter plot.
Figure 5. Scatter plot comparing property tax cap losses and percentage of English learners served.
$20,000,000 $18,000,000 $16,000,000 $14,000,000 $12,000,000 $10,000,000 $8,000,000 $6,000,000
Property Tax Tax PropertyLosses Cap $4,000,000 $2,000,000 $0 0 5 10 15 20 25 Precentage English Learners
This relationship raises some concern. For 2016, the year this data represents, property tax cap losses grew as the proportion of English learners in each school district grew. It is important to point out that the relationship is moderate. Nonetheless, a relationship between these two variables did exist in 2016. THE IMPACT OF PROPERTY TAX CAPS ON FUNDING EQUITY IN INDIANA PUBLIC SCHOOLS 95
To analyze the relationship between the percentage of special education students a school district serves and losses from the property tax caps, special education data in Table 7 was paired with property tax cap data from Table 2. The Pearson coefficient for these two data sets was -
0.008. This value indicates that there was no relationship between these two factors. Figure 6 shows the associated scatter plot.
Figure 6. Scatter plot comparing property tax cap losses and the percentage of special education students served.
$20,000,000 $18,000,000 $16,000,000 $14,000,000 $12,000,000 $10,000,000 $8,000,000 $6,000,000
Property Tax Tax PropertyLosses Cap $4,000,000 $2,000,000 $0 0 5 10 15 20 25 30 Precentage of Special Education Students
The data above show that no relationship existed in 2016 between property tax cap losses and the percentage of special education students served in school districts. This is a positive result. A positive relationship would have indicated that losses increase as a district’s special education population increases.
A crucial factor to consider in examining the third research question is the relationship between property wealth and diversity in Indiana’s school districts. The percentage of nonwhite students in each district is listed in Table 7. This data was compared to the property tax cap THE IMPACT OF PROPERTY TAX CAPS ON FUNDING EQUITY IN INDIANA PUBLIC SCHOOLS 96 losses presented in Table 2. The calculated r-value for these two sets of data was 0.576, a strong positive relationship. Figure 7 shows the scatter plot.
Figure 7. Scatter plot comparing property tax cap losses and percentage of nonwhite students served.
$20,000,000 $18,000,000 $16,000,000 $14,000,000 $12,000,000 $10,000,000 $8,000,000 $6,000,000
Property Tax Tax PropertyLosses Cap $4,000,000 $2,000,000 $0 0 20 40 60 80 100 120 Percentage of Nonwhite Students
The relationship here is troubling. It indicates that property tax cap losses increase as the proportion of nonwhite students attending school in a given district increases. This is an issue that could have serious ramifications for the state of Indiana if it continues over time. The equity lawsuits detailed in Chapter 2 stemmed from the reality that students of color were receiving less funding for their schooling than white students. If the 2016 relationship found in this study persists over time, the funding system for the state could be challenged legally.
Cross-correlational Results
In addition to the results previously detailed, it is important to examine the six characteristics that were analyzed in reference to property tax cap losses to determine if they are correlated to each other. The results of the cross-correlations are listed below in Table 9. THE IMPACT OF PROPERTY TAX CAPS ON FUNDING EQUITY IN INDIANA PUBLIC SCHOOLS 97
Table 9
Cross-Correlation of Key School Characteristics
2016 % 2016 2016 % 2016 % 2016 2016 Pearson Special Levy Nonwhite English AV Per Student Correlations Education Per Students Learners Pupil Enrollment Students Pupil 2016 % Nonwhite 1 -0.142 0.654 0.081 -0.102 0.575 Students 2016 % Special Education -0.142 1 -0.171 -0.006 0.067 -0.119 Students 2016 % English 0.654 -0.171 1 -0.007 -0.091 0.392 Learners 2016 Levy Per 0.081 -0.006 -0.007 1 0.669 0.048 Pupil 2016 AV Per -0.102 0.067 -0.091 0.669 1 -0.121 Pupil 2016 Student 0.575 -0.119 0.392 0.048 -0.121 1 Enrollment
The cross-correlational data reveal that student enrollment, the percentage of English learners, and the percentage of nonwhite students served are strongly correlated with each other.
The fact that students who are not native English speakers also tend to be nonwhite is obviously not a shock and does not really shed additional light on this study. However, the fact that enrollment is correlated with the other two variables is important to highlight. This indicates that nonwhite students and nonnative English speakers have a tendency to attend school in larger districts with high enrollment. Therefore, the relationship found earlier between student enrollment and property tax cap could be a reflection of the fact that larger districts tend to serve higher percentages of nonwhite students and students who are English learners.
THE IMPACT OF PROPERTY TAX CAPS ON FUNDING EQUITY IN INDIANA PUBLIC SCHOOLS 98
Summary
This study used 2016 data gathered for each individual school district and analyzed key characteristics in relationship to losses from property tax caps. The first set of results focused on enrollment and property wealth. Enrollment was found to be positively correlated with tax cap losses though this could be the result of large school districts serving higher proportions of students with demographic profiles that were strongly correlated with tax cap losses. Property wealth was weakly correlated with tax cap losses from both a holistic property wealth perspective and from analysis of actual tax levy data. The second part of the study found significant differences in state legislative aid between urban, suburban, and rural districts. Urban and suburban districts constitute the vast majority of the districts receiving state aid as a result of property tax caps while rural districts on the whole need very little intervention. The last set of results examined school demographic characteristics in relation to cap losses. While no relationship was found between losses and the percentage of special education students served by school districts, a relationship was found between both the percentage of English learners and the percentage of nonwhite students served in school districts and property tax cap losses. In particular, the strong relationship found between cap losses and the percentage of nonwhite students served represented a key finding in this study.
THE IMPACT OF PROPERTY TAX CAPS ON FUNDING EQUITY IN INDIANA PUBLIC SCHOOLS 99
CHAPTER 5
SUMMARY AND CONCLUSIONS
Summary of the Study
In 2008, Indiana implemented property tax caps across the state (Bradner, 2010). The purpose of this study was to use correlational methods to examine several key relationships of school corporations in Indiana related to property tax caps. The three research questions in this study addressed the following issues:
1. What is the relationship between property tax caps and school funding in Indiana?
2. What is the relationship between property tax caps and school funding in rural,
urban, or suburban Indiana school systems?
3. What is the relationship between property tax caps and school funding in Indiana
schools that serve differential proportions of students with low socio-economic status,
students with disabilities, students who are considered English language learners, and
students of various ethnicities?
These questions led to the collection on an extensive amount of financial and demographic data concerning every school corporation in the state of Indiana. This data was then correlated with property tax cap losses in each district to further understand the relationships between these variables. The correlations found by this study are summarized below in Table
10.
THE IMPACT OF PROPERTY TAX CAPS ON FUNDING EQUITY IN INDIANA PUBLIC SCHOOLS 100
Table 10
Summary of Property Tax Cap Loss Correlations
r-value Enrollment 0.696 Assessed Value Per Pupil -0.143 Property Tax Levy Per Pupil 0.190 Percentage of English Learners Served 0.322 Percentage of Special Education Students 0.008 Served Percentage of Nonwhite Students Served 0.576
Findings and Discussion
The data itself produced some interesting results. There are school districts in Indiana that serve as few as 205 students in grades K-12, and school districts that serve as many as
29,000 students. Property tax cap losses range from $80 to nearly $18,000,000. District property wealth ranges from $20 million to nearly $18 billion. Some school districts across
Indiana serve student populations where only 5% of students need free and reduced priced lunches, and one school district serves a student population where 100% of the students need this aid. Special education and English learner populations also vary widely. This study does not attempt to answer every question related to these demographic profiles and the property tax caps.
It is simply an attempt to capture the stated relationships as they existed in 2016.
Research Question 1
What is the relationship between property tax caps and school funding in Indiana? Three different correlations were measured to examine this question. The first, student enrollment was strongly correlated to property tax cap losses. These results suggest that property tax cap losses increase as school enrollment increases. However, it is important to examine the fact that student enrollment was found to be cross-correlated with both the percentage of English learners THE IMPACT OF PROPERTY TAX CAPS ON FUNDING EQUITY IN INDIANA PUBLIC SCHOOLS 101 served and the percentage of nonwhite students in attendance. The argument could be made that enrollment is not a distinctive characteristic related to tax cap loss. However, the fact that enrollment is very strongly correlated with losses due to property taxes indicates that this factor may indeed be an independent actor. In other words, larger enrollment may indicate larger property tax cap losses even in the absence of high proportions of English learners or nonwhite students. At a minimum, any further research into this topic should consider whether an independent relationship between enrollment and tax cap loss exists. The other two measures, per pupil assessed valuation and per pupil total levy had weak correlations to property tax cap losses. It is important to note that these weak correlations still provide some insight into this study by showing that property wealth does not have a strong relationship with tax cap losses.
Stated another way, according to this data property tax caps are neither mitigated nor worsened by varying levels of property wealth.
Historically, the United States has struggled to provide funding equity across districts that vary in property wealth as detailed in Chapter 2 (Warren, 2012). Landmark school equity court cases such as Rodriguez and Serrano rested on the difference in property wealth between school districts as a key driver of inequality (Sonstelie, Brunner, & Ardon, 2000). Adams and White found that equity was not possible if states ignored differences in property wealth (Adams &
White, 1997). Adams and White were looking at total property tax cap revenue while this study focused just on revenue differences due to property tax caps. The results showed that losses from property tax caps do not have strong relationships to property wealth.
Research Question 2
What is the relationship between property tax caps and school funding in rural, urban, or suburban Indiana school systems? In examining this question, the researcher was aided by the THE IMPACT OF PROPERTY TAX CAPS ON FUNDING EQUITY IN INDIANA PUBLIC SCHOOLS 102 fact that the state of Indiana decided to single out and help schools who sustained major financial losses due to property tax caps. When schools are categorized into city/urban, rural, and suburban districts and then cross-referenced with districts that received aid from the state of
Indiana, the data reveals that 58% of city/urban schools and 44% of suburban schools suffered losses so significant that the school transportation system for students was jeopardized. Only
10% of rural schools were impacted in this manner.
Wood and his fellow researchers found that inequity in the state of Indiana existed for both students and taxpayers (Wood et. al, 1990, p. 92). Regardless of where a school district is located, our country has long believed that equal funding is necessary to provide everyone with the key educational experiences necessary to provide opportunities for success (Hochschild &
Scovronick, 2000). The fact that Indiana districts located in urban and suburban environments strain to raise adequate funds to supply transportation for their pupils while rural districts are largely not impacted as shown in this study concurs with previous research that shows that location does, unfortunately, matter when it comes to school funding.
Research Question 3
What is the relationship between property tax caps and school funding in Indiana schools that serve differential proportions of students with low socio-economic status, students with disabilities, students who are considered English language learners, and students of various ethnicities? Multiple correlations were used to examine this question. After completing this analysis, a moderately positive relationship was found for English learners. When the special education data was examined, virtually no relationship was found. The strongest relationship was related to the percentage of nonwhite students served. THE IMPACT OF PROPERTY TAX CAPS ON FUNDING EQUITY IN INDIANA PUBLIC SCHOOLS 103
In Chapter 2, the early court cases were more focused on segregation of the races and the inherently unequal system that creates. The Brown case in particular abolished the idea of
“separate but equal” (Brown vs. Board of Education, 1954). Later equity cases such as
Rodriguez and Serrano looked at funding issues from the perspective of property wealth. The relationships found between losses due to property tax caps and the percentage of both nonwhite and English language learners served harken back to Brown and could pose a major problem for the state of Indiana if these results hold from year to year.
Conclusions
The following conclusions are listed below based on the findings of this study.
1. Enrollment growth is strongly correlated with property tax cap losses. It is obligatory to
mention that correlation does not imply causation. However, based on the results of this
research it is fair to say that in 2016 property tax cap losses grew as the number of students
rose in the state of Indiana. It is possible that enrollment is not an independent characteristic
because it is cross-correlated with the both the percentage of English learners served and the
percentage of nonwhite students present in a district.
2. Property wealth showed a weak relationship with property tax cap losses. This indicates that
property wealth is not a real factor in the losses that schools are experiencing. Stated another
way, rich schools in terms of property wealth are no more or less likely to endure cap losses
than poorer schools.
3. Tax levy was weekly correlated with tax cap losses. This was examined to account for the
fact that some school boards could voluntarily reduce the amount of financial support for
their districts in order to keep taxes low on their constituents. The data showed that students THE IMPACT OF PROPERTY TAX CAPS ON FUNDING EQUITY IN INDIANA PUBLIC SCHOOLS 104
who attend districts that levy more on a per pupil basis are not impacted by property tax cap
losses to a greater or lesser degree than students who attend districts where less is levied.
4. When measured in terms of aid provided by the Indiana general assembly to schools that
were losing too much money due to property tax cap losses, urban/city schools and suburban
schools are being affected at a much greater rate than suburban schools.
5. The percentage of students classified as English learners was moderately correlated with
property tax cap losses. The higher a school corporation’s proportion of English learners in
the student body in 2016 the more property tax cap losses that school district sustained.
Again, this correlation is moderate. It would be incorrect to assume this relationship
happened in every single case. It would also be incorrect to conclude that there is not a
relationship between the percentage of English learners in Indiana’s school corporations in
2016 and losses from property tax caps.
6. The percentage of special education students served has virtually no relationship with
property tax cap losses in 2016. Schools that serve higher proportions of students with these
needs are no more likely to have funding cuts due to the caps than schools that serve lower
proportions of special education students.
7. The percentage of nonwhite students enrolled in school corporations across Indiana in 2016
was strongly correlated with property tax cap losses. The higher the proportion of nonwhite
students served by school corporations the higher the losses sustained due to property tax
caps. State legislators should examine these results to avoid legal challenges that could arise
given these results.
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Recommendations
In order to analyze and understand the relationships uncovered by this study, policymakers and legislators should consider the results and study this issue thoroughly. The following recommendations are offered in an effort to guide future efforts in the area of property taxation policy and its relationship to school funding equity.
1. This study only examined one year of data, it should be repeated using data from each year
from the beginning of the property tax cap era to the present to see if the relationships found
in this study hold across the years.
2. Further research should attempt to determine if enrollment is an independent actor in relation
to property tax cap losses. If it is, legislators and local taxing authorities should examine this
study to seek possible reasons as to why growing enrollment is strongly correlated with
losses due to property tax caps. The system for local taxation across the state is exceedingly
complex and data in its most granular form would be needed to try to gain an understanding
of the reasons behind this relationship.
3. Policymakers should seek to determine why the negative impact of property tax cap losses,
as measured by the number of schools needing protected debt waivers as provided by the
Indiana state legislatures, is stronger among urban, city, and suburban areas than among rural
school corporations.
4. The results of the study showed a moderately positive correlation between the percentages of
English learners served and losses from property tax caps. Policymakers should examine this
relationship to determine if this correlation is an unintended consequence of the caps. THE IMPACT OF PROPERTY TAX CAPS ON FUNDING EQUITY IN INDIANA PUBLIC SCHOOLS 106
5. Policymakers and local government taxing agencies should look at the strong correlation
between the percentage of nonwhite students served in each school corporation and property
tax cap losses to determine if changes to the property tax system are warranted.
Further Research
While funding equity has been the subject of a number of studies as indicated in Chapter
2, property tax caps have not been studied as a distinct and separate school funding issue. This is probably due to the fact that property tax caps have not existed for a long period of time and because not all states rely on such a system. However, legislative action in Indiana is being replicated in other states across the nation (Roff, 2013). This indicates the need to further understand the unique funding inconsistencies that could occur with property tax caps. Further study of this issue needed.
Given that several concerning correlations were identified by this study, it would be helpful to repeat this study with other states that have implemented property tax caps. To make data comparable, it would be wise to focus on those states that cap taxes in a similar manner as
Indiana because some states do cap property taxes in very different ways (Rogers, 2005). Data derived from these types of studies could shed insight on key factors related to property tax caps across the country.
If the relationships uncovered by this study are present in schools, it stands to reason that other units of local government could have similar correlations with property tax caps. City governments, which provide essential services such as police and fire service, need to be examined using the same techniques to see if similar relationships are found. Library districts need to be examined as well to analyze these relationships. THE IMPACT OF PROPERTY TAX CAPS ON FUNDING EQUITY IN INDIANA PUBLIC SCHOOLS 107
Lastly, property tax cap methods of all different types across the nation need to be examined broadly against the factors indicated by this study. Perhaps different methods of placing limits on property taxes result in mitigation of some of the stronger correlations found in this particular study. Limiting property taxes to one, two, and three percent brackets based on property type is rather arbitrary. Perhaps other states have found ways to provide desired limits on property taxation without fostering the relationships found in this study.
Summary
The goal of this study was to examine important school district characteristics to determine potential relationships with funding losses due to property tax caps. The research showed that some troubling correlations exist. The first significant relationship shown by this research was with enrollment. This is ironic, considering that school funding that comes to districts directly from the state (as opposed to revenues that come from local property taxes) is strongly based on a “dollars follow the child model,” meaning that school districts have a strong financial incentive to grow enrollment. It is important to understand that the addition of pupils does not cause property tax cap losses. Rather, this relationship likely results from the fact that larger groups of people require more services from local government. Still, the enrollment relationship found in this study runs counter to a school funding model that favors growing enrollment in all other aspects.
The enrollment relationship is likely related to the finding, detailed in this study, that the vast majority of schools who qualify and receive relief from the property tax caps in the form of waivers from the protected debt service provision in Indiana law are urban, city, or suburban districts. Policymakers should examine the enrollment and urban/rural divide issues raised by this study and determine if solutions should be explored. THE IMPACT OF PROPERTY TAX CAPS ON FUNDING EQUITY IN INDIANA PUBLIC SCHOOLS 108
The other relationships brought to light by this study were a moderately positive correlation between tax cap losses and the percentages of English learners served and a strongly positive relationship between the percentages of nonwhite students served and tax cap losses.
These are the most troubling relationships found in this study. The literature review is rife with landmark court cases that contained a racial component. Major court rulings in Brown,
Rodriguez, and Serrano all made the argument that an imbalance was present between schools that served primarily white students and schools that served larger numbers of students of color.
To ignore the past and refuse to examine the relationships found by this study is to invite history to repeat itself. Policymakers and legislators should review the data presented in this study to determine if changes are needed to ensure that every student in Indiana is funded equitably.
THE IMPACT OF PROPERTY TAX CAPS ON FUNDING EQUITY IN INDIANA PUBLIC SCHOOLS 109
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