Operational referendum discussion on hold – for now
By Tracy Ouellette
SLN Staff
Citing the uncertainty of the state’s budget and its educational funding, the East Troy School Board has tabled discussion about a possible operational referendum until the 2017-19 Wisconsin budget is released.
The board had asked administration to present information on their options for a referendum at Monday night’s meeting. Because of the annual structural deficits in the School District’s budget, and the deep cuts needed every year to balance the budget, the board members are looking at what possible solutions are available.
Over the past 10 years, the district has cut more than $8 million from its budget because of the structural deficits and impact needs.
District Administrator Chris Hibner said one of the biggest questions facing the board was “What is the right time” to ask the stakeholders for assistance.
“We are in a competitive market and surrounding districts are passing operational referendums … it’s creating a spiraling effect,” Hibner said.
He told the board he thought the new elementary school and other improvements from the facility referendum projects would possibly start to show a positive effect on enrollment next year and if it did, that would also change things. Increased enrollment would mean an increase in the revenue limit – eventually. Because the aid is calculated on a three-year average, increased enrollment numbers slowly increase revenue amounts.
Even so, the looming reality that the district may need to ask taxpayers to approve an operational referendum in the next few years is a real possibility.
Business Manager Kathy Zwirgzdas said the district has been “living within its means” since the last operational referendum ended about seven years ago. She told the board going to an operational referendum presented some challenges in both getting the word out as to why it was needed and helping people understand exactly how it would work. She and Hibner both stated that even with an operational referendum the district would possibly still need to cut the budget each year because of increasing structural deficits.
She also explained that if the School Board eventually decided to go with a non-recurring referendum, whether it was for three or five years, when it ended the district would be faced with a structural deficit of about $3 million the following school year.
Zwirgzdas explained that when referendum money is used to make up the deficit each year, it’s compounded.
“You have to add on the new deficit to the old deficit each year,” Zwirgzdas said.
In the projections she provided the board, which were based off of the district’s financial projections from Baird, the annual projected deficits starting with the 2018-19 school year (when the board is looking at the possible referendum) are $300,000, $483,000 and $775,000 annually moving forward. The projected compounded deficits starting in 2018-19 and moving forward are: $300,000, $784,000 and $1.6 million.
So, Zwirgzdas said, that would mean the district would need $900,000 a year on a three-year non-recurring operational referendum to just cover the projected structural deficits. And, at the end of the three years, the district would be facing a structural deficit of about $3 million.
Because of the uncertainty with the budget numbers and revenu, Zwirgzdas said a rough estimate on the cost of a three-year non-recurring operational referendum to the taxpayer would be about 60 cents on $1,000 of home value, or about $120 a year on a $200,000 home. That number does not compound, Zwirgzdas said, so the total cost over three years for that homeowner would be $360.
Zwirgzdas presented a total of five options of recurring and non-recurring referendums to the board for their consideration with similar numbers broken down differently depending on what type of referendum it was.
Zwirgzdas said the way to avoid the $3 million structural deficit at the end of a non-recurring referendum was to request a recurring referendum, which some school districts in the state have been doing lately because the community understands that once a district becomes dependent on that money for its operations, its going to need to continue.
The board discussed getting community input on the matter and agreed now wasn’t the time to move forward with an operational referendum.
“(But) it is time to move to the next phase of things and ask for feedback this fall,” School Board President Ted Zess said.
