In the lead up to the November 2023 elections, there was a great deal of anticipation surrounding the unprecedented number of opportunities on ballots across the country. SchoolBondFinder. com tracked over 2,175 capital project opportunities (voted by public or governing body) in 2023. At year end, 1,657 of those opportunities passed, representing a very strong 76% passage rate nationwide. When comparing that to equally comparative election years 2019 and 2021, we glean that the passage rate maintained steady but that there was a 66% increase from 2019 and 57 % increase from 2021 in the total dollars passed. Many have asked if this represents inflationary costs, and our answer has been not entirely. That is because when we compare the total tracked opportunities (i.e., total number of ballot questions/propositions) during those same years to 2023, we recognize that there was a 20% increase from 2019 and 40% increase from 2021 in the total tracked opportunities. Simply put, more districts went to vote in 2023 than in 2019 or 2021.
In tracking these opportunities, our researchers indicate the areas of expenditure for each district. Remarkably, we also noticed continued expenditure growth areas in CTE/STEM spaces, Secure Entrances and Vestibules, Athletic Facilities, Specialty Areas, and HVAC.
States that had the most opportunities pass in 2023 were: Texas (260), New York (201), Oklahoma (113), Michigan (83), Iowa (69), Ohio (64), Pennsylvania (62) New Mexico (44), Missouri (56), and Minnesota (59).
States that had the most total dollars pass in 2023 were: Texas ($43B), Michigan ($5.3B), New York ($4.5B), Ohio ($4.1B), Arizona ($3.7B), Minnesota ($3.5B), Washington ($3.2B), North Carolina ($2.9B), Oklahoma ($2.8B), and Massachusetts ($2.2B). The district with the highest price tag referendum of the year went to Charlotte- Mecklenburg Schools, North Carolina with a $2.5B capital project list. Over 30 projects were approved to replace, renovate, or build new schools in the district. The next 20 highest priced referenda of 2023 all came from Texas.
ESSER Impact
ESSER expires in September 2024 and Congressional action is not anticipated to extend that deadline. Districts have worked hard to expend these funds prudently, not only on learning loss mitigation but also by offsetting their referendum totals using applicable ESSER funds for capital projects. One explanation for the increase in total quantity of items that went to vote in 2023 is believed to be that ESSER allowed for this offsetting. Offsetting the total dollar ask of a local school tax election due to usage of federal ESSER funds allowed some districts that may not have otherwise passed or attempted a referendum to put forward much-needed capital project questions at the ballot box. The primary funding mechanism for capital projects remains school tax elections and we are already seeing that 2024 is shaping up to be another very active year.
2024 Projections & Historical Comparisons
Our research team is presently tracking over 1,550 opportunities for 2024 with 264 of those already locked into a vote date with certain dollar amounts attached. Presidential election years typically see an increase in the quantity of opportunities that go to vote as well as the total dollars eventually passed when looking to all other years. In the Presidential election year 2020, 1,421 opportunities went to vote with 1,124 passing (79% passage rate). The 2020 Presidential election year’s total of dollars passed represented $62.5B at stake for solution providers.
Even though 2020’s passage rate was very high, COVID did have a small impact on total dollars available and quantity of ballot items. By comparison, in Presidential election year 2016, there were 1,670 opportunities up to vote with 1,326 passing (79% passage rate) with a total dollar price tag of $72.4B. Based on SchoolBondFinder.com present tracking, 2024 has all the markers to surpass 2020 outcomes. What will be most interesting to note is whether 2024 also surpasses 2016 or pre-COVID comparable data.
Regulatory Considerations
It is also important to note that school tax elections are taking place throughout the entire year and not just in November. Some states and localities require their school districts to run school tax elections only during certain months. In doing so, these school districts are set to specific timelines for planning purposes. Other school districts have no limitations on when they can run a school tax election for capital projects and thus have more flexibility to conduct careful long-term planning. Regardless of these regulatory requirements, every year, every month, school tax elections take place across the country. We will continue to see school districts finalizing their proposed school tax elections for the ballot boxes in the weeks and months to come.
Each year multiple states consider legislation that would change when their school districts could run referenda and the schools of thought on both sides of that change are valid. Careful consideration should be made to these proposed legislative changes due to the potential to impact those districts that have diligently conducted long-term planning for their referenda schedules to provide for zero tax or minimal tax increases. Likewise, for those districts who are circumscribed to specific timelines, consideration should be made that flexibility may provide for more options in long-term capital project planning.