FAQs

A school corporation may conduct a referendum to create a property tax levy for purposes of supplementing the revenue it receives from the state funding formula. The Valparaiso Community Schools (VCS) Board of Trustees passed a resolution that states that the proposed referendum would be used to supplement existing revenues received from the state of Indiana for the purpose of managing class sizes and essential health & safety initiatives, retaining teachers and staff, and funding academic and educationally related programs.

 An operating referendum creates an additional levy that goes into a special fund titled “referendum fund” for a period not to exceed eight years. However, a referendum tax rate may be re-imposed or extended under the law if approved by the voters of the district.

The reduced rate referendum is a renewal of a referendum passed by voters in the VCS district in 2015. In order to renew the referendum, Indiana law requires Valparaiso Community Schools hold the election in 2022. The maximum tax rate on the ballot in the November election is over one-fourth (27%) lower than the tax rate the school requested in 2015. In May 2022, VCS will be voting to extend the referendum for up to another 8 years.

The revenue is collected by the county through the property tax bills of property taxpayers in the school district. The money does not pass through the state, but goes directly to the school for the purposes of supplementing the education and operation funds of the school corporation. The education fund pays for faculty and staff. 

The referendum is only on the ballot of voters registered to vote in the VCS district (Center Township.) Registered voters living outside of the VCS district will not be voting on the referendum. The reduced referendum tax rate will take effect only if a majority of the voters vote “Yes” to the ballot question. If it passes, the reduced referendum rate goes into effect next year.

The referendum ballot language is established by Indiana law, approved by the Indiana Department of Local Government Finance.

The language in the May 2022 referendum was passed by the politicians in Indianapolis this past spring in an effort to scare voters and take away local control. It uses a formula which does not correctly reflect the lowering of the tax rate.

The referendum ballot as approved reads:

“Shall Valparaiso Community Schools continue to impose increased property taxes paid to the school corporation by homeowners and businesses for eight (8) years immediately following the holding of the referendum for the purpose of managing class sizes and essential health & safety initiatives, retaining teachers and staff, funding academic and educationally related programs and changing the maximum operating referendum tax levy fund rate from $0.2042 to $0.1495 per one hundred dollars ($100) of assessed valuation? The property tax increase requested in this referendum was originally approved by the voters in May, 2015, and originally increased the average property tax paid to the school corporation per year on a residence within the school corporation by 23.4% and originally increased the average property tax paid to the school corporation per year on a business property within the school corporation by 19.4%.”

The formula VCS was required to follow for the percentages of the tax effect 7 years ago, is not an accurate representation due to several factors. There is no information required on the ballot concerning the effect of the renewal of the referendum. Averages of overall taxing district rates and assessed values from seven years ago are distorted in the formula and not truly representative of the taxpayer base. The actual increase to an average median value home in 2016 (first year of the referendum) was $179.19. For a home in Valparaiso, this represented 9.95% of the tax bill, not 23.4% as is implied. The school’s tax rate other than the operating referendum decreased over the last six years.

The legislators and regulators in Indianapolis would not allow this information to be included. While the state did allow “changing the maximum referendum property tax rate from $0.2042 to $0.1495,” they required the school to use the word “changing” instead of the word “decreasing” or “reducing” which accurately reflects the rate reduction.

Only those who pay property tax in the Valparaiso Community School district pay the referendum tax. Commercial rental property owners may choose to pass the tax on to their tenants. Senior citizens, homeowners, mortgage holders and some other types of taxpayers receive exemptions that lower their assessed value and lessen the impact of the tax rate compared to others. By law, the rate is applied to the net assessed value of the property after these deductions. The law does not allow certain classes of taxpayers to be exempt from the rate. For instance, charging only property taxpayers with children in the schools would be considered tuition and against the law established by the Indiana Constitution that says education is tuition free and available to all.

In 2015 the voters approved a maximum rate of twenty and forty-two hundredths cents ($0.2042) per one hundred dollars ($100) of net assessed value. The 2022 renewal referendum is requesting a lower maximum rate of fourteen and ninety-five hundredths cents ($0.1495) per one-hundred dollars ($100) of net assessed value. 

The VCS Board of Trustees, with the recommendation of the Chief Finance Officer has only used the full maximum rate three times in the last seven years. By setting the renewal rate at this lower rate, property taxpayers in the VCS are assured that the 2022 renewal rate will not exceed this new maximum tax rate. Projections by financial experts indicate this new lower rate will be able to provide the necessary supplemental revenue to maintain the reputation of academic excellence this community expects. 

The tax rate is set by the school board, upon a recommendation from administrators who take into account the district’s financial needs. The referendum renewal is for a maximum rate of 14.95 cents, although the school district historically has not always used the full amount. 

Historically, the school district has been frugal with these funds by taking a lesser percentage when possible. In the past seven years, only three times has the board requested the full 20.42 cents as state funding decreased. The school board remains committed to taking less than the maximum amount when possible. 

If a majority of the voters voting on the operating referendum vote in opposition, VCS will not have the funding necessary for Valparaiso schools to retain teachers, keep class sizes low and provide the curriculum offerings the students need. Voters only need to look at the problems other school districts like Elkhart Community Schools have experienced after their referendum failed to renew.

Without the revenue generated by the referendum, future budgets will need to be reduced by approximately $4.5 million every year. Budget cuts would have to be made in critical areas. Without the referendum and the flexibility it provides in funding, class sizes will have to increase. In addition to larger class sizes this will also mean fewer opportunities for students. Voting yes means taxes from the schools will go down in 2023 and Valparaiso Schools will continue to receive adequate funding.

Another public question on the same or substantially similar referendum may not be submitted to the voters earlier than two years after the date of the election without a petition of voters to allow it in one year. The earliest the referendum could be presented would be the May 2023 election. VCS would not be able to receive the critical referendum funding beginning in January 2023.

Referendum funds will be used to pay for the salaries and benefits of thirty classroom teachers that otherwise would have been paid for through the education fund. This allows class sizes to remain small, and following the pandemic, even smaller than usual in some cases.

When cutbacks occur in staffing due to funding shortfalls, the term RIF is used. This refers to Reduction-in-Force which is based on seniority and certification. Certification is making sure teachers are certified to teach the classes and programs that will be offered the next year. For instance, if the music programs were going to be reduced, a music teacher who is not certified to teach other subjects might be more at risk of being cut. Generally, less senior teachers are reduced before a more senior teacher. Exceptions to this may be made because of certification. 

Reductions are based on the budget, enrollment, the schedule of classes, and rules from the Indiana Department of Education. The number of staff reductions can be potentially reduced by retirements.

If the referendum is renewed no reductions in work force will be necessary. If the referendum fails, reductions in force will result in larger class sizes which, in turn make it more difficult for students to receive the individual attention they need.

The state distributes money from revenue it collects in income tax, sales tax, gaming revenues, etc. to the almost 400 Indiana school corporations, virtual schools and charter school associations based on a funding formula the state legislature creates and passes bi-annually as part of the state budget process.

All funding issues begin with the 100 legislators in the Indiana House. The state funding formula provides about 86% of the revenue in VCS’s Education Fund. About 90% of this fund pays for teachers and staff of the corporation. The funding formula begins with a per pupil “foundation” or base amount.

The foundation amount is multiplied by the “complexity index” to determine additional funding required for the education of “at-risk” children. A significant inequity in the funding formula occurs when the money for an at-risk student does not follow the child to another school district. For example, the top funded districts receive over $2,000 extra for each at-risk student. When these same students move to Valparaiso schools, the millions of extra dollars do not follow those students. There are no significant adjustments to the funding formula for a school corporation based upon achievement scores. Most discussion on “merit pay” centers on individual teacher pay and not the amount given to schools to fund those teachers. There is also no accountability for achievement results from those school corporations and charter school associations with higher levels of at risk students from the additional money they generated.

The 2008 Property Tax Reform legislation and the continuing funding decline against inflation since, has now made the inequities in the funding formula a serious funding crisis by making state funding based on the General Assembly’s formula the only source of funding to pay for classroom instruction. Changes to the foundation amount, adding an index for academic results and some other tweaks to the formula are all possible, but will most likely be gradual changes over the next several years if at all.

The legislature addressed some of these concerns in the spring 2021 legislative session. School districts in Indiana will receive new money from the state this year and Valparaiso is appreciative of the anticipated increase. However, this percentage increase still means a $1.1 million dollar inflation adjusted deficiency since 2010.

By state law, school districts can’t use other school funds (Debt Service, Transportation, Capital Projects Funds) to pay Education Fund expenses such as salaries. For example, money used to build buildings cannot be used for teacher salaries and instructional supplies. These laws also limit creative funding reduction ideas like four day school weeks, cutting transportation to save teachers, changes in food service, charging parents tuition and more.

No teaching positions have been lost because of past or current building projects.

The stimulus funding will result in the district receiving approximately $7.375 million in total. This funding has many restrictions as to how it can be used. The funding has been spent on COVID-19 mitigation efforts, the replacement of HVAC systems to improve air quality, and is currently being used to pay salaries for several teachers to keep class sizes small as students return to school after virtual learning. While the additional funds have been extremely helpful to schools as the pandemic’s impact continues, they are one-time funds and Valparaiso cannot depend on these funds to offset the loss due to property tax caps and changes to state funding.

Valparaiso Community schools has lost an average of $1.1 million per year from its budget due to the constitutional circuit breaker “claw-back” also known as property tax caps.

Indiana law does not allow school corporations to advocate for a referendum once it has been placed on the ballot by the School Board. Information and communication about the referendum from that point must come from a source independent of the school corporation, such as a group driven by community members.

In addition, school employees, with a few exceptions (e.g. superintendent and business manager), cannot advocate for the referendum during regular school hours “while they are on the clock”; however, before and after school, VCS staff members are like anyone else and can advocate for the referendum.

Some community minded patrons have volunteered and more are needed to help with the referendum. These patrons as well as other volunteers have mobilized to support the referendum. Supporters of Valparaiso Community Schools has been formed to guide this campaign process. The officers include Co-Chairpersons: Local Business Owners Rob Thorgren and Rick Urschel and Treasurer Matt Vessely.

In order to fund the campaign, including yard signs, brochures and this web site, the Supporters of VCS must raise money from sources outside of the school corporation funds. Donations can be made with a credit or debit card here.