OPINION: South Bend’s TIF Policy Is Failing Its Schools

Clay High School (Sarah Fishburn/Redress South Bend)

By Rexroth E. F. Washington | Guest Columnist

Jan. 26, 2026 South Bend is diverting about $50 million a year in property tax revenue into redevelopment accounts. At the same time, the community is told there are not enough bus drivers, that facilities need repairs, and that state legislators recently threatened to take over the South Bend School Board's governing role. 

Teachers are told there is no room for raises. Parents are asked to approve new taxes just to keep the school system stable. Buses run so late, or never come at all, so frequently that students are told over the loudspeaker to find their own way home. Clay High School has now been closed.

What almost never comes up is the largest structural diversion in South Bend’s finances.

The South Bend Community School Corporation is governed by an elected school board. The City of South Bend is governed by a mayor and a Common Council. They are legally separate entities with different budgets and responsibilities.

But they share one tax base.

And the way the City of South Bend manages the tax base is reshaping the school system's financial future.

Each year, roughly $50 million in property tax revenue generated inside South Bend does not flow into the funds that support schools, the fire department, libraries, township programs, and other local services. It is redirected into redevelopment accounts through a mechanism called Tax Increment Financing.

That money does not go to the South Bend Community School Corporation. It is controlled by the South Bend Redevelopment Commission.

Tax Increment Financing is often described as a technical budget tool. Its practical effect is simple.

When a TIF district is created, the assessed value of property inside that district is frozen at a base year. As redevelopment projects and infrastructure improvements raise property values, the resulting increase in tax revenue is captured and placed into a special fund instead of being distributed to schools and other taxing units.

The stated purpose of this system is to improve neighborhoods by funding redevelopment and infrastructure. Those improvements are meant to raise assessed values. Higher assessments mean higher property taxes. That is not a side effect of TIF. Higher property taxes is the objective of TIF.

A Referendum That Should Not Have Been Necessary

According to state filings, South Bend’s TIF districts now generate about $50 million a year in revenue. That money does not go to the South Bend Community School Corporation. It does not go into the city’s general fund.

That diversion matters because it directly intersects with how South Bend has chosen to fund its schools.

In 2020, the South Bend Community School Corporation went to voters asking for a property tax referendum. The district said it could not meet its public educational duty without an additional levy of about $20.8 million per year for eight years. Voters approved it. The total cost to taxpayers exceeds $220 million.

Homeowners were told the money was needed for teacher pay, curriculum, and support services for students.

What was not part of that public discussion is that a growing share of property tax revenue inside South Bend was already being diverted into TIF districts beyond the school corporation’s reach.

A Homeowner’s Tax Bill, in Plain Terms

To understand what that diversion means in practice, consider a real homeowner’s tax bill.

In 2021, a real homeowner paid $1,398 in property taxes. If a TIF district had been created around that property in 2022, that amount would become the frozen base. Schools and other local services would continue receiving only that sum each year.

By 2023, the homeowner’s tax bill had risen to $2,736. Under TIF, the first $1,398 would still be distributed normally. The remaining $1,338 would not. It would be diverted into the TIF fund.

Over four years, from 2022 through 2025, nearly $4,500 from that single home would have been walled off from schools, fire, library, township, and other services.

Which is a long way of saying: your tax bill went up, but your school’s budget did not.

This is why claims that TIF does not raise taxes do not hold up.

“So the statement ‘TIF does not increase property taxes’ is clearly incorrect,” wrote Kenneth Nordtvedt, a former Montana legislator and professor emeritus at Montana State University, in a paper titled The Dark Side of Tax Increment Financing. “Thirty million dollars a year cannot be diverted out of normal property tax pipelines and into TIF districts each year without raising somebody’s taxes.”

Who Controls These Decisions

None of this means the city runs the schools.

It means the city controls the tax growth the schools depend on.

Those decisions are made by the South Bend Redevelopment Commission, whose members are appointed by the mayor and the Common Council.

TIF was created as a redevelopment tool. In South Bend, TIF has become a parallel tax system.

And until South Bend stops diverting its tax base into redevelopment accounts, every school funding crisis will be a policy choice, not a mystery.

---

© 2026 Redress South Bend  – All Rights Reserved.

Use of any or all of this article must be credited and linked to Redress South Bend.

All opinions and views in this piece are attributed to the author and are not necessarily the thoughts or opinions of Redress South Bend.