A Citizen's Guide to Indiana

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West Lafayette 2026 Referendum Successful

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Just a little post script on my post from August about the West Lafayette referendum. I’m happy to report that it was successful. This time it passed with just shy of 70% of the vote. That’s down from the margins in 2017 and 2023, but it was the highest pass-rate in the state. Part of the reason for the decline is that the State keeps trying to put its thumb on the scale to discourage these referendums. Communities are now limited on when they can hold the referendums – general election years, rather than during primaries or municipal elections or special elections. The mandated language on the ballot is also misleading, designed to make the proposed tax rates as scary as possible.

West Lafayette is fortunate. Its citizens are more likely than average to value education. We’ve also been through this referendum process several times now – 2010, 2017, 2023, and now 2026. That the State forces us to waste time, money, and effort, to maintain funding that our local citizens have said repeatedly and emphatically that they want is wasteful.

Still, the process is a community building exercise. I have made some new friendships and strengthened others through the process of knocking on doors, organizing, and advocating for a cause. (Many of us were also united in our effort to elect a couple of great candidates to our local school board.) Our educational outreach hasn’t maybe gone far enough. Just yesterday, I heard a school board member talk about the need to be accountable with this “new” funding. I have no arguments with the accountability part of the statement. Spend the money productively and responsibly! But it’s not new money. We had to jump through all these hoops to maintain the status quo on school funding. West Side wasn’t looking to get rich off of this deal. The State reorganized the budget in a way that was detrimental to public education, and our community had to organize and vote to undo the damage the General Assembly was trying to cause.

On that note, a lot of the people in Indianapolis responsible for much of the bad education policy over the past decade or two got voted out on Tuesday. In terms of public education in Indiana, Bob Behning, long time chair of the House Education Committee was the most notable victim of the 2026 blue wave. A lot of the other Republican members of the education committee were ousted as well. The GOP still holds a majority in the General Assembly, and Mike Braun still appoints most of the state board of education. So, the privatization-minded approach to education will probably continue. But, with a stronger Democratic caucus in Indianapolis, hopefully the worst impulses can at least be mitigated.

West Lafayette Schools: 2026 Referendum

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This fall, the West Lafayette Community School Corporation has put a school funding referendum question on the ballot. If you live in the district, you should vote “yes.”

The school received approval from the voters for such a referendum tax rate as recently as 2023. But, the General Assembly has shifted the state’s tax system enough that, in order to maintain the status quo, the school has to get a new rate approved.

The short version is that the state has changed the way a property owner’s net assessed value is calculated which means that the referendum tax rate no longer generates the same revenue. Because of the changes, despite having the same real estate and the same approved tax rate, the landowner would be paying less tax to support the schools.

Here is the longer version:

History

Back in 2008, the General Assembly completely revamped how schools were funded. Mostly the state took over school funding. A number of state decisions led to West Lafayette, in particular, getting the short end of the funding stick.

We were landlocked and couldn’t grow – resulting in less money from a formula that valued growth. We were a small district – resulting in less money from a system that subsidized geographic size with greater busing needs. We were a district with fewer socioeconomic challenges – resulting in less money from the State’s “complexity index.”

None of these were necessarily unreasonable choices by the State. But the result was that West Lafayette received somewhere like the third lowest amount of per student funding of any school system in the state. Fortunately, the State gave districts the referendum tool – we could vote for higher taxes to support education in our communities.

West Lafayette is a relatively wealthier area that *strongly* values education. So, in 2010, the voters authorized a tax rate of up to $0.43 per $100 of assessed value.

Now, as it turned out, that rate was more than the school ended up needing. The budgets approved by the West Lafayette school board never exceeded $0.37 per $100 of assessed value. So, when it came time to re-authorize the referendum rate in 2017, the ballot question was limited to a rate of up to $0.37 per $100 of assessed value.

And, again in 2023, that was the rate that was re-authorized for taxes beginning in 2024. Up until now, it was sufficient for the school’s needs. And that rate would have been good through the year 2031.

SEA 1

But, in 2025, the General Assembly adopted SEA 1 which significantly changed the landscape. That referendum rate approved by the voters is multiplied by the “net assessed valuation” of a piece of property. Which is to say the assessed valuation after applying deductions.

There are three main areas where the General Assembly reduced the net assessed valuation in ways that reduce the funding for schools: 1) changes to the residential property deductions; 2) creation of a new deduction for rental properties; and 3) increased exemptions for business personal property.

The upshot is that if a person was paying $600 to fund the school under the old $0.37 rate, under the new assessment rules, an increased rate will be necessary to generate that same $600 tax payment for the school.

The school district has analyzed the impact of net assessed value once SEA-1 is phased in and has determined that a rate of up to $0.57 is necessary to generate the same revenue as the $0.37 rate under the old assessment rules.

Residential Property Deductions

Under current rules, a residential property owner gets two deductions: the “standard” deduction of $48,000 and a “supplemental” deduction of 37.5% of the assessed valuation. SEA 1 is phasing out the “standard” deduction and increasing the “supplemental” deduction from 37.5% to 66.7%. (The “supplemental” deduction will need a new name once the “standard” deduction is phased out and stands alone.) West Lafayette tends to have higher value homes, so the deduction from this extra percentage will tend to exceed the $48,000 “standard” that it will be replacing.

The break even point appears to be a home worth $102,740. Below that valuation, homeowners would get more value from the “standard” deduction. Above that valuation, the “supplemental” deduction based on a percentage gives a bigger break. And, because this is a percentage, the higher the valuation – the bigger the tax break.

So, where the $0.37 rate might result in a tax bill on a $300,000 home of about $600, now – because net assessed value is being calculated based on about 33.3% of the home’s actual value – that rate has to be higher (closer to that $0.57 rate) to generate the same $600 on the same property.

This is why the schools need to go through the referendum process to replace the existing $0.37 rate with a new rate of up to $0.57.

Rental Property Deductions

Indiana divides real property into “1%, 2%, and 3%” categories. This comes from categories added to the state constitution back in 2010 which limits the permissible tax bill to 1%, 2%, or 3% of a property’s net assessed value (unless an additional tax is authorized by referendum.) 1% is for homestead property, which is to say owner-occupied real estate. 2% is for agricultural land and non-owner occupied residential property (i.e. rental properties). And 3% is for everything else – which is to say (non-ag/non-rental) commercial, industrial, and business personal property.

Under current rules, the 2% properties don’t get much in the way of deductions. They have to pull full freight on their taxes. Under SEA 1, they’re given a 33.4% deduction which phases in through 2031. Given that West Lafayette is a university town, this deduction hits us particularly hard. Once again, the higher rate is necessary to keep the tax bill for landlords the same.

Business Personal Property

There is currently a business personal property exemption for property of up to $80,000. That exemption is being raised to $2 million. Meanwhile there is currently a depreciation floor of 30% – meaning that business personal property being used by a business has to be valued at 30% of its original value regardless of how old it gets. Under the new law, that floor drops to zero.

So a business might be using business personal property in its operations, but – for tax purposes – that property might now be regarded as not having any value. While West Lafayette does not have the same amount of business personal property as more industrial areas, these changes will not be helpful.

Ballot Language

The ballot language mandated by the General Assembly for these school operating fund referendums is, in my opinion, intentionally misleading. The folks in Indianapolis are reflexively hostile to local taxes and want the language to sound as intimidating as possible. In particular, it suggests an increased tax bill but does not make clear that the increase is as compared to no referendum rate at all rather than as compared to a taxpayer’s current bill. As our superintendent put it in a recent Op-Ed:

The legally required ballot language is misleading because it presents a calculation based on assumptions that do not necessarily reflect what an individual homeowner will actually pay. Actual property-tax impacts vary depending on assessed value, exemptions, deductions, circuit-breaker protections and other circumstances.

However, property-tax reform and individual tax-relief eligibility mean that a particular homeowner’s school property taxes could decrease, remain about the same or increase by a few dollars annually.

Consequences of Non-Passage

The referendum funding was put in place by our voters for a reason. The funding rate wasn’t adopted just for the hell of it – our community gets a return on its investment. It prevents class sizes from becoming unmanageable. It pays for teachers the school needs. And, it enables programming that provides our kids with a well-rounded education. If you cut the funding, teachers get cut. Class sizes get bigger. Programs not required by state law – think music and art – go away.

Referendum funds constitute nearly 25% of the West Lafayette school budget. These funds provide salary and benefits for more than 50 teachers in addition to paying for custodial and maintenance operations, including wages, benefits and equipment.

Conclusion

The goal of the West Lafayette school referendum question in 2026 is to keep school funding steady. The school is not trying to increase the amount it receives from this tax rate. Because of the variability in tax situations, some landowners would still experience a decreased tax bills while, for others, it might stay the same or increase somewhat. The tax impact is not expected to be significant for any homeowners as compared to the current tax structure.  Meanwhile, the impact on the school for voting “no” will degrade the quality of education in our community. A “yes” vote this fall is necessary to prevent this and preserve our schools in West Lafayette.

Hicks: Quality of Life Investments Spur Economic Growth

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Ball State Economist, Michael Hicks, has a column explaining that, while there is strong evidence that a community’s quality of life investments spur economic growth in that area; Indiana’s policymakers have mostly chosen to pursue the less reliable “agglomeration” model for economic growth.

Quality of life investments are amenities like outdoor recreation, cultural attractions, dining & entertainment, etc. Quality of life can also refer to things like education, public safety, access to quality housing options, and a clean and healthy environment. Meanwhile:

Agglomerations is the technical term for the magic that happens when businesses cluster in a certain area. … The idea is simple. Businesses that locate close to one another inadvertently share innovation and skills. They may do so through formal cooperation, by hiring one another’s staff or just by having people from the same trade hang out at a bar or go to church together.

One way or the other, the trick to economic growth basically involves getting educated people with their attendant abilities and skills to live in your area. Hicks tells us that the former is much more reliable than the latter. In spite of this, Indiana’s policymakers have spent far more resources on agglomeration than quality of life – spending gobs of money trying to attract employers to various places.

Part of this – maybe a large part –  might simply be a matter of imbalanced lobbying power. Companies who want government money have a pretty compelling incentive to hire people who can advocate for policies that direct public money to their private interests. The general public has a much more diffuse interest in the benefits that come from quality of life investments – particularly before they are actually built.

But I also have a sense that there is a strain in Hoosier thought that regards spending money on quality of life as frivolous. Maybe this goes back to our Calvinist/Puritan roots. Spending money on business and work is serious and productive. Spending money on a more enjoyable life is wasteful, possibly sinful. This world is a testing ground for the faithful, not a place for joy! (To be clear, this is me speculating; not something Prof. Hicks has ventured.)

 

Teachers are the Tip of the Spear

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Casey Smith, writing for the Indiana Capital Chronicle, has an excellent account of a recent meeting of the General Assembly’s interim study committee on fiscal policy. The top line information is that Indiana’s teachers make less than surrounding states and that’s going to cause us problems. (Ball State economist Michael Hicks has done a good job explaining how  Indiana’s fiscal and policy choices over education have hurt us and will continue to hurt us.) The information received by the study committee indicated that median wages for teachers, when adjusted for inflation, have declined since 2020 and lag behind neighboring states.

Some of the responses, hoping to dodge state responsibility for fixing the issue, are a riff on the classic “waste, fraud, abuse” theme which is an old chestnut when it comes to any government spending. In this case, some of the lawmakers are certain that the state money is simply not getting to teachers.

“It’s frustrating up here … that we want to take care of teachers as best we can, because we think that helps us educate kids better,” said Sen. Scott Baldwin, R-Noblesville. “But dollars going into the school system from this body don’t seem to always make it into the classroom or teachers’ pockets.”

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Baldwin continued to push for greater transparency in local spending to ensure that “dollars reach classrooms and teachers,” rather than being absorbed by administrative growth.

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Other ideas discussed included …  giving districts more flexibility to redirect certain capital project funds — like those used for athletic facilities — toward salaries.

“We just need to somehow loosen up that money for teachers over another astro-turf football field,” said Sen. Travis Holdman, R-Markle.

I challenge the idea that we are spending inordinately on facilities or administrators. But, even without getting into the weeds on that question, I think it’s absolutely worth mentioning – and loudly – that you need more than teachers to educate a kid. It’s like the recent trend on the right these days of trying to focus on “war fighters” in the military and ignoring the importance of logistics. One of my favorite quotes from Neal Stephenson’s Cryptonomicon (set in World War II):

The United States military … is first and foremost and unfathomable network of typist and file clerks, secondarily a stupendous mechanism for moving stuff from one part of the world to another, and last and least a fighting organization.

Similarly, Ulysses S. Grant has been criticized (perhaps unfairly) as being less of a soldier than General Lee. But Grant was a good quartermaster with a superior grasp of logistics which is part of why his efforts succeeded and Lee failed.

In a similar way, teachers are part of an educational system – an important part, but hardly the only part. We should make sure teachers are properly paid but it would be foolish to do so by starving the system of its facilities and logistical capabilities. (A failure to recognize that education requires a systematic approach is also a deficiency in Rep. Thompson’s recommendation for “market-based” incentive pay for STEM teachers or other areas where there are shortages. STEM teachers rely on, for example, the elementary teachers who have taught the kids to read and the fundamentals of math.)

Once again, as Caleb Mills – the father of Indiana’s educational system – said, “there is but one way to secure good schools, and that is to pay for them.”

Finding Equilibrium on the “Dear Harvard” letter and why it matters to all universities

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Good post by Purdue economics professors, Jay Akridge and David Hummels, (not exactly lefty firebrands) on the administration’s “Dear Harvard” letter and the threat it poses not just to Harvard, but to universities generally. Akridge and Hummels write a blog called “Finding Equilibrium” focused on the future of higher education.
Under the veneer of civil rights concerns, the executive branch is demanding changes to Harvard’s governance, departmental structure, faculty hiring, student admissions, and student conduct policies. In addition, the demands require extensive and intrusive new reporting and audit requirements on all the above, along with punitive actions taken against particular departments based on the content of their scholarship. It wants to impose quotas in faculty hiring and student admissions based on a federally mandated conception of “viewpoint diversity.”
When Harvard declined the executive branch’s demands, Trump indicated his intent to retaliate by using the IRS as leverage.
Say the economics professors:
“It’s old, rich, elite Harvard. The vast majority of higher education institutions look nothing like Harvard with respect to financial resources, selectivity, student profile, research reputation, alumni achievements,…so?
Let’s be clear. This represents perhaps the most dangerous moment in the history of the modern university. The Trump administration is threatening nothing less than the financial destruction of the world’s leading university. That is, unless Harvard complies with what they (Harvard) regard as a series of clearly illegal and unconstitutional demands, and put every aspect of their operation under the systematic control of the federal government.
Again, you might think this is an Ivy League problem and not relevant to the rest of higher education, but that would be wrong. It is no accident that first Columbia and now Harvard have been targeted, with Penn, Princeton, Cornell, Northwestern, and Brown next in line, and the list of “concerning” universities growing by the day. If the strongest and best-resourced universities are brought to heel, the rest will follow. And as should be clear from Columbia’s capitulation, agreeing to the administration’s initial demands does not resolve matters. It invites additional penalties and more aggressive intervention.”
The entire thing is worth a read.

Federal Economic Chaos Hurting Indiana

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Tariffs and the recent economic chaos is resulting in a projected $2 billion less in revenue for the State of Indiana than previously projected. That’s going to leave a mark.
“What happened?
The December forecast data included roughly $800 million in new revenue for the state over the next two years, though nearly all of that came in the first year. Now even that marginal growth is gone. Much of the loss can be attributed to economic uncertainty, including worries about the impact of tariffs in the country’s most manufacturing-intensive state.
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According to an analysis from Axios Indianapolis, Indiana is the third-most reliant state when it comes to China, which imported $6.1 billion in Hoosier goods in 2023. More than half of that was in pharmaceuticals and medicines followed by oilseeds and grains.”
This is a far cry from America’s economic prospects six months ago.
Two front pages of the Economist side by side. The first from October 2024 has a roll of dollar bills rocketing to the sky with the headline “The Envy of the World”.The second is this week’s front page which is a version of Munch’s Scream painting but the face is instead an upside down sack of dollar bills. The headline says “How a dollar crisis would unfold.”

What a difference six months makes.

Turning Pain into a Virtue and Spreading It

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Posted this in a Facebook thread and it’s a theme I mention from time to time, but for posterity:

The context was a debate in the Indiana Senate about whether teachers learning about and using techniques having to do with emotional intelligence is valuable for instruction. The General Assembly is removing “social emotional learning” provisions from the Indiana Code. Near as I can tell “SEL” is one of those pieces of jargon that, regardless of its true or original meaning, has turned into a shibboleth. One of the things being projected onto it from the right is the idea that it means coddling the kids, making them weak, emasculating the boys, and so forth.
This leads me to one of my periodic observations where I feel like a fair amount of the bad in the world we see is adults trying to rationalize their childhood trauma. Their parents beat them, neglected them, or otherwise treated them poorly in ways that may have, in retrospect, been unnecessary. But it can be unbearable to think that the pain and hurt inflicted by one’s parents may have been needless. So, they project virtue onto some of this stuff to give the pain value. Once pain becomes valuable, it becomes not just permissible but virtuous to spread it.

Hoosier Demographics: Get Busy Living or Get Busy Dying

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Ball State Economist, Michael Hicks, has a good column that I saw in the Indiana Citizen entitled “What the census tells Hoosiers about the Future.” I don’t know that there is a ton of new information in there, but one point that he lays out more bluntly than I usually see is that communities basically have a choice between growing or shrinking. Maintaining the status quo really isn’t an option. Either path has consequences. The growth consequences tend to present a happier set of challenges than the consequences of decline.

We see that most of the growth opportunities in Indiana come from immigration (70%) and lesser amounts from births (21%) and in-migration from other states (9%). And the places that attract growth feature strong public services, particularly schools. These features are paid for with taxes. A community seeing shrinking population usually sees the people with human capital leaving first (i.e. “brain drain.”) In general, therefore, it stands to reason that places in Indiana that oppose immigrants and taxes, are probably going to have a bad time in the coming years.

The entire column is well worth reading, but Hicks concludes:

The ability to make a choice to grow on your own terms, or decline, should be carefully guarded and nurtured by elected officials—particularly at the state level.

Still, any column about growth and decline needs to be honest about the future. Six of the 10 fastest-growing counties are in the Indianapolis metropolitan area. Nine of the 10 fastest-growing counties are urban, and nine of the 10 fastest-shrinking counties are rural.

There is room to grow in all the fast-growing places. There is little room to shrink in communities that are in decline.

I know many residents in small Hoosier towns want lower property taxes and are wary of immigration. Just be clear-eyed about the consequences of those choices, and make sure you are planning for smaller, less prosperous towns, school consolidation, longer response times by fire and police and continued brain drain. Those are all policy choices.

Due Process is Where You Go to See if What They Said is So

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“Nashville is where you go to see if what they said is so.”
I’m not anything like a country music fan, but I thought about this lyric from “Carl Perkins’ Cadillac” during a discussion about the current administration’s resistance to due process.
I mean, sure, you *say* you’re deporting bad people. But, talk is cheap. Probably cheaper today than maybe ever before. Due process is where you go to see if what they said is so.
“No person shall be deprived of liberty without due process of law.” In other words, “put up or shut up” is the American way.

Law is Potential Violence

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Another couple of thoughts I posted over on social media which seemed worth memorializing here.

In light of the ongoing unpleasantness, Peter Sagal on BlueSky posted: “It’s amazing to find out at this late date how much the rule of law depended on people simply deciding, on a voluntary, daily basis, not to break the law.” That prompted me to muse:

Law is, at its core, “potential violence.” You will do this or not do that, else guys with guns will compel compliance. But there isn’t enough violence in the world to compel all of the things we’ve legislated. At least not without completely wrecking the joint.

So, we absolutely rely on daily, voluntary compliance with law. And, for the most part, it’s a rational social contract. For most of us, most of the time, law offers more benefits than costs.

As that proposition breaks down – perhaps because the laws become more burdensome or because of too many free riders – more and more violence will be necessary to enforce compliance.

At a certain point, if law becomes little more than a violent burden, the system breaks. You just have warlords.

I’ve made similar observations in the past. I think I got the “potential violence” idea from the writings of Alvin Toffler.

If you don’t abide by the law, ultimately, guys with guns will come and force compliance; either on behalf of the state, in criminal cases or on behalf of other citizens in civil cases. Part of the social contract is that we have all handed our right to do violence over to the State in return for its protection and the expectation that the State will, if necessary, do violence on our behalf to protect our rights. Part of the reason we agree to this bargain is because the alternative is a Hobbesian state of nature where our lives are solitary, poor, nasty, brutish, and short. In such a state, the only property you could truly call yours would be only so much as you could hold by force against the force of others.

…

Part of the trick of our legal system is the fact that, by and large, Government use of violence is needed only rarely. Most people go along with the system without the need for actual force. If the Government had to force compliance with every order, the system would collapse. Most people go along with the system because at some level, even if they lose their particular case, they believe it is more or less fair.

…

If too many people become alienated from the system, the system starts unraveling. More and more, people reconsider using violence on their own behalf. We start slipping back toward the Hobbesian state of nature.

So, aside from altruism, it’s in all of our best interests to make sure as many people as possible believe in the notion of the basic fairness of our legal system. And, as much as people grumble about it, you’ll notice that most folks will give the legal system a whirl rather than take matters into their own hands when they are unable to resolve the matter through some sort of private agreement. We don’t want that to change.

Filed Under: Law