Midwest school bond measures lag national passage rate

Michigan's Plainwell Community Schools had a $39.8 million bond measure on the ballot Nov. 5, its second attempt this year to secure voter approval for capital projects in the district.

The new bond had been downsized from the district's $42 million May ask and would have financed a new preschool, elementary school gymnasium additions, safety and security updates, turf and track replacement at the high school and other infrastructure projects, according to the district's website.

Voters rejected the measure. But Plainwell Community Schools was not alone: 10 of the 22 school bond measures on Michigan ballots this November failed, according to a database maintained by Michigan's Department of Treasury.

Michigan's 45.5% rejection rate was significantly higher than the national rejection rate for school bonds in November's election, according to data from SchoolBondFinder.com. Nationwide, 485 of 729 school bond measures, 66.53% of those on the ballot, passed.

Year to date, 1,583 of 2,150 U.S. school bond measures, or 74% have passed, the company said.

Plainwell Superintendent Matthew Montange said in addition to the projects listed on its website, the district was also seeking funds to complete projects left over from its 2019 bond referendum due to cost overruns.

"Inflation overall definitely had an impact on both prior projects and personal household situations and perceptions," Montange told The Bond Buyer. "We specifically had a particularly vocal 'no' group, mostly on Facebook, that sent out mailers regarding millage rates and total school debt comparisons in the area."

Montange acknowledged that Plainwell, which enrolls about 2,600 students, has one of the higher millage rates in the area and said the district plans to wait a few years before trying again, which will give the millage rate time to drop significantly.

"Though we were not asking for an increase but an extension, even an extension in this economic environment with high inflation felt like too much for voters at this time," he said. "We heard feedback that the ask was too big."

The district, about 37 miles south of Grand Rapids, has outstanding general obligation unlimited tax building and site bonds, issued in 2024, 2022 and 2020, as well as refunding bonds issued in 2020 and 2017, according to postings on the Municipal Securities Rulemaking Board's EMMA website. The district's most recent annual report, posted to EMMA last December, shows $54.805 million of bond debt, not including the third series of GOULT bonds issued this year.

The athletic stadium turf still needs replacing immediately, Montange said. Given voters' rejection of the new bond, the district has settled on a solution involving "favorable pricing for our last projects from the 2019 bond and saving money by not repurposing the old pool, which was also part of the original projects for 2019," he said.

"Bond funds are now fully depleted to complete our elementary A/C projects, but we will not have to expend as much in terms of district general fund [as] we originally planned," he added. "We also have a pending sale of our district educational broadband service license to help garner additional funds for the field turf project."

Roscommon Area Public Schools, a district of about 821 students in northern Michigan, roughly 65 miles southeast of Traverse City, also saw its bond referendum voted down in November, as voters turned down a $12.8 million authorization.

The district has outstanding Series 2016 refunding bonds and Series 2018 general obligation unlimited tax bonds, according to postings on the MSRB's EMMA website. The bonds had $4.93 million and $2.605 million par outstanding as of June 30, respectively, according to annual financial statements.

Superintendent Catherine Erickson said the district's last ballot question, in 2018, passed. She attributed the defeat of the 2024 bond to "the national political climate, distrust of governmental institutions and there was a large increase in voter turnout in our county."

There is some evidence that Americans are souring on institutions, including governmental ones. Pew Charitable Trusts found that by spring 2024, only 22% of U.S. adults trusted the federal government to do the right thing most of the time. And Gallup found only 29% of U.S. adults said they had a great deal or quite a lot of trust in public schools this year, down from 58% in 1973.

Erickson said Roscommon's 2024 bond measure was necessary for facilities projects, including boiler improvements, roof repairs and track and driveway upgrades. The district plans to try again in May.

"Inflation is certainly always part of the discussion when we talk about projects," said Belvia Gray, public sector principal at the consulting and advisory firm Baker Tilly. "[And] if you look nationwide, home values have increased, and depending on where you live, how that impacts your tax bill situation is going to be different."

But Gray stressed that there are also local variations at play in the different bond measure outcomes. "Every situation is so unique," she said. "I've worked on many projects, and they all are just like little snowflakes; they're all unique in their own special way."

Among Midwest states, Michigan stands in contrast to Wisconsin, which had 58 school bond measures on the November ballot, the most of any state in the region. Of those, 87.93% passed, with only 12.07% falling short, according to a database maintained by the Wisconsin Department of Public Instruction.

Still, Michigan's public schools fared better than those in Ohio, where only 34.38% of school bond measures on the ballot in November passed, while 65.62% failed, according to data compiled by the Ohio School Boards Association.

Iowa voters approved 45.5% of the state's 33 school bond measures last month, according to SchoolBondFinder.com data. Minnesotans approved 55.55% of the 36 school bonds on local ballots.

Illinois had a passage rate of about 63.6%, with eight of 22 total bond referendums voted down. Some of those votes were too close to call for days after the election; Westmont Community Unit School District's bond measure ultimately .

Nebraskans approved two of the seven school bond measures across the state. Other states in the region had between zero and two school bond measures, according to SchoolBondFinder.com.

"I'm seeing a lot more intentionality in terms of making sure that all the stakeholders are being consulted and brought together before the project is moved forward," Baker Tilly's Gray said. "Projects are taking a little longer to even get to a referendum vote, because a lot of communities are spending a lot of time on the front end to have meetings with their communities. They really want to get the project right ? have the right project at the right time at the right cost."

The other reality that school districts have to contend with is higher interest rates, Gray said. Whereas her clients might have been looking at interest rates of less than a percent a few years ago, today they're looking at interest rates in the 3% to 4% range.

"Not only are the costs of materials higher, but the cost of borrowing is higher," she said. "There's just more time that is being spent, because there are more decisions that are needing to be made prior to even going to the ballot."