IPS Board Approves $315M Tax Increase Request, Indy Chamber 'Concerned'

Indianapolis Public Schools will ask voters to approve a $315.2 million property tax referendum during November general election to help fund teacher pay and other operating costs.

The school board approved the request during a public hearing Tuesday where community groups, educators, and parents spoke in favor of increasing taxes to benefit students and educators.

The operating referendum is the second tax increase the district will have on the November ballot. The board already approved $52 million capital request to improve building safety. 

The operating referendum request is three times what the Indy Chamber recommended the district seek in exchange for its business members’ support. Last week Chamber leadership called on the district to cut nearly $500 million in costs, including closing more than a dozen schools.

The Chamber quickly responded with a statement, saying it’s “concerned” about the request and foresees a challenge for its passage.

IPS Superintendent Lewis Ferebee said the Chamber’s proposal, which called for reducing bussing, teachers and elementary schools, would damage the district. Board members criticized the Chamber’s plan and IPS staff reported they were unable to replicate the proposed savings with the same district data.

Ferebee says it’s taken months for the administration to weigh the tradeoffs of asking for the $315 million referendum after a previous, much higher proposal drew community opposition.

“This has truly been a tightrope to balance. Because the district and the administration continue to be sensitive to two philosophies of the vitality of the city,” Ferebee said. “And one is more geared to an investment in our public education system and one belief is, moreso centered around taxation and how that can tax burden hamper the vitality of the city.”

The board approved the referendum 5-0 with members Mary Ann Sullivan and Dorene Hoops absent. But the board left open the possibility to revise the amount during board meetings next week if they can reach common ground with the Chamber.

Michael Huber, Indy Chamber CEO, quickly issued a statement Tuesday objecting to the proposed referendum.

“We’re concerned that our numbers are so divergent. We need to study the assumptions behind the $315 million request; clearly the tax impact is significant and the task of winning voter support will be challenging,” he said.

Huber also alluded to a compromise, saying “even close partners can disagree” and the Chamber is committed “to continue our discussions and help the district pursue opportunities for efficiency and become an employer of choice for great educators.”

One reason IPS is betting on a local tax increase is that it’s the only sure way to lock in future funds. The district has seen its state per-pupil funding drop as it’s enrollment declines and lawmakers change how schools are funded.  Over the past three years, IPS has lost about $15.5 million annually in state funds.

Even if the referendum is approved, Ferebee says the district could still be forced to close schools, reduce transportation for magnet and choice schools and slow the pace of teacher and employee pay increases. Currently, the district faces a $45 million budget deficit for the upcoming school year.

In 2008 IPS passed a $278 million capital referendum with 78 percent voting in favor.

Eight other Marion County districts have attempted capital and/or operating referendums since 2008. Of those,15 passed and four failed.

Tax Details

The proposed referendum would be a local property-tax levy of no more than $0.2806 on each $100 of assessed valuation for $39.4 million annually for eight years.

That would mean the median-priced home of $75,300 would pay an additional $46.84 a year, or $3.90 per month. The median home value is based on the 2018 property tax billing statements of homes within the IPS district.

The district already approved a $52 million capital referendum for school safety upgrades for the November ballot. It is a local property-tax levy of no more than $0.0332 on each $100 of assessed valuation for eight years. If approved, the median-priced home of $75,300 would pay an additional $5.54 a year, or $0.46 per month.

If both referenda are approved, the median-priced home of $75,300 would pay an additional $52.38 a year, or $4.36 per month.