By Shelby McQuay, Senior Municipal Advisor | Managing Director
and Aaron Bushberger, Municipal Advisor

November 2023 School District Election Analysis & Outlook for 2024

November proved to be a busy month for school district elections across Minnesota!  60 school districts asked a total of 93 ballot questions for voter approved authority for operating referendums, capital project levies and bond referendums.

Now that the dust has settled, there are a number of key factors to reflect on relative to how districts fared in this election cycle.  First, in the school election results presented below, you can see, the newly authorized operating referendum by board renewal alters past trends in the operating referendum statistics.  First, the newly authorized ability for school districts to renew operating referendum authority without a vote meant no renewals for this purpose were on the ballot, as shown in the table below.  As a result, the overall passage rate for operating referendums, which previously had been bolstered by the near 100 percent passage of renewals, is much lower.  The renewal statistics remained consistent for capital project levies with 100% passage.

Exploring the results further, we expected districts to face an uphill messaging battle this fall when asking for additional operating funds, after the Legislature adjourned in May with a ‘historic’ increase in school funding.  While it’s true this new State money will go a long way in helping districts make up lost ground after two decades of general education basic formula funding lagging behind inflation, that was only part of the story.  Additional legislative mandates, inflationary pressures for both contracted services and wages, and expiring federal funding have created immense budgetary pressures.  Yet it was difficult to convince taxpayers of the need for additional funding in some communities, especially when the message coming from St. Paul focused only on how well school districts were taken care of during the last legislative session.

Legislative changes had a real impact!

• The opportunity: The 2023 legislature granted school boards the ability to renew operating referendum authorities, which effectively eliminated the need and cost of taking operating referendum renewal questions to voters. 13 districts would have otherwise had to go to voters in November 2023 to continue to levy their operating referendum authorities.  Instead, the school boards for all 13 districts simply renewed their authorities via Board action.
• The challenge: Deadlines related to the review and comment process were accelerated for school building bonds and capital project levies requesting funding for anything outside of technology. School districts are now required to publish the review and comment in their official newspaper 48 days ahead of the election (previously the deadline was 20 days prior), which in turn pushed up the review and comment submission deadline to the Minnesota Department of Education.  This domino effect caused some districts that were still adhering to the old deadlines to rush their process to comply with the new deadlines.

While the election data is certainly useful in illustrating trends and correlations, we also noted some anecdotal takeaways.  The seemingly impossible balance between tax impact and project scope was not necessarily the deciding factor in whether a bond referendum would pass.  Collectively and systematically, districts have identified the projects that can either pull a referendum across the finish line or cause it to fail miserably.  Districts also have done a great job of listening to constituents and finding creative ways to keep the more controversial pressure projects out of the voter approved realm. Aside from project scope, we saw several instances where tax impact didn’t carry as much weight with voters as one might expect.  For example, in northwestern Minnesota, two neighboring districts went to voters with similar capital project questions and yet the tax impacts for each were tremendously different. The successful $21 million referendum election carried a tax impact of more than $1,000 on a $200,000 home, while the unsuccessful $28 million election had a tax impact of only $218 for that same $200,000 home.  The narrative here is that the tax tolerance of a community varies and neither the project nor the impact to pocketbooks is a one-size fits all solution.

For districts that may be going back to voters or those considering a new ask in the coming years, now is the time to start planning (if you haven’t already)!  Below are some important items to consider if you are contemplating an upcoming referendum:

• Possible 2024 Election Dates: School districts are required to hold elections on specific dates established by law. Operating referendums may only be held during the November general election (unless by mail ballot), while capital project levy and school building bond elections may be held on specified dates in February, April, May, August, and November.  Every community is different and though we’re collecting statistics on passage rates during each month, no clear trend has emerged. Meet the community where they are at with the expectations they have of the District.  This could mean holding your election on a general election day or letting the school request be the sole focus in a spring election to encourage parental engagement.
• Combined Polling Place Resolution: State statutes requires school boards to approve a combined polling place resolution every year. This resolution must be approved by the school board by December 31^st of each calendar year for the following calendar year.  Districts planning a February 2024 election actually needed to adopt the combined polling place resolution by November.  MSBA has a model policy available to schools and can serve as a resource.
• Review & Comment Deadline: Remember the accelerated schedule for public notices and review and comment and establish your election task timeline accordingly. If your paper publishes every two weeks, be sure to factor that into your timeline.
• Election Training: Stella Hegg, State Program Administrator from the Minnesota Secretary of State’s Office will attend Ehlers’ School Finance Seminar on Friday, April 5^th, 2024, to deliver training on the school district election process. If you’re new to school district finance, or simply need a refresher on referendum requirements and procedures, this session is a don’t miss.

As we head into 2024, we know it will be even more challenging to communicate your school district’s needs during a presidential election year.  It’s like to be contentious and loud, so developing a message strategy that will cut through all the noise and reach your residents effectively will be more important than ever.  Consider engaging a communications consultant, and make sure to connect with your Ehlers municipal advisors now to help you design a comprehensive and forward-thinking approach for your next referendum!

Ehlers congratulates its MN School District Clients on Successful Referendum Elections in 2023:

Congratulations to the districts that were successful in their operating and capital requests during 2023!  We appreciate the opportunity to collaborate with your school board, staff, and families in developing these long-term financial plans for your districts.  We are excited to see how these projects positively impact your students and communities!

Important Disclosures:

Ehlers is the joint marketing name of the following affiliated businesses (collectively, the “Affiliates”): Ehlers & Associates, Inc. (“EA”), a municipal advisor registered with the Municipal Securities Rulemaking Board (“MSRB”) and the Securities and Exchange Commission (“SEC”); Ehlers Investment Partners, LLC (“EIP”), an SEC registered investment adviser; and Bond Trust Services Corporation (“BTS”), holder of a limited banking charter issued by the State of Minnesota.

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