The West Salem School District's $32 million referendum failed Tuesday night by a final vote of 1,405 in favor and 1,690 against.
Last April, the district proposed a similar referendum that failed at the polls.
According to Superintendent Troy Gunderson, the school district then turned to voters to try to craft a more appealing proposal.
This year's proposal included a $32 million referendum to build a new middle school and renovate parts of the current school. It also included upgrades to sports facilities around the district.
But the failure of this year's referendum will force the district to return to the drawing board - again.
"We're sort of disappointed, because we thought we had put together the kind of plan people could really engage in," Gunderson said.
The district said it will continue to work with residents to reach a solution they're willing to stand by.
"We need to think about different options of what could come next," he said. "We want what's best for this village and we will continue to work toward that."