Merrill Area Public Schools is in the early stages of planning for a referendum seeking voter approval for additional school tax funding. The MAPS Board of Education voted Wednesday night to proceed with the formation of a referendum planning process.
A new Strategic & Long Range Financial Planning Committee held its first meeting on Jan. 11. At that meeting it was the consensus of the committee to explore a referendum for the district, though no specifics of a referendum were discussed. At Wednesday’s Board of Education meeting, the board formally established this committee as the referendum committee and tasked it to come back with a plan.
The referendum planning process will include a working committee of all board members, representatives from administration and staff and community members. A referendum plan would include the amount and type of referendum, the proposed date and communication strategies for informing voters of the district’s rationale for proposing the referendum.
“We want a broad range of people involved and we want lots of people informed,” said MAPS Superintendent John Sample.
The referendum discussion is being driven by a dire financial forecast, with a $2.5 million budget shortfall looming in 2019.
The amount of local tax a school district can levy is based on the number of full-time students in the district. Student count also impacts the amount of state revenue the district receives. For MAPS, that number has been steadily declining for years.
MAPS enrollment, as measured by counts done the third Friday of every September, has dropped by 256 students since 2012. The district counted 2,985 students in September of 2012; the 2016 September count showed 2,729 students. Enrollment is projected to continue to decline by an additional 209 students by the year 2022.
As the district’s expenses are expected to rise, the amount of local tax revenue it can legally raise is expected to decline. The district’s general fund tax levy for 2016-17 was $8,564,835. As enrollment wanes, that levy figure is projected to drop to $6,158,035 by the 2021-2022 budget. A large drop in the levy will take place in 2019 as the current referendum levy is retired.
MAPS’ last successful referendum was approved by voters in 1996. That $29.7 million referendum authorized the construction of Kate Goodrich Elementary School and the renovations of the high school and middle school facilities. Debt on those projects will be paid off with a final $1.5 million payment in the 2018 MAPS budget.
Timing a referendum to go into effect in 2019 will allow the district to replace the current referendum levy with a new one, without necessarily raising taxes.
“We have been eyeing that year for a referendum,” Dasher said, “when it would make the increase in taxes negligible.”
MAPS administration has developed some strategies to address shortfalls in the budgets for this year and next. Part of that plan is to transfer just under $500,000 this year from the district’s general fund to balance the budget. The district currently has just over $6 million in its general fund. for the 2017-18 budget, another nearly $500,000 would be transferred from the general fund and almost $700,000 from the post employment benefits trust fund to address a projected $1.3 million deficit. Using general fund money to help balance the next two budgets will leave about $5,154,000 in the fund, or roughly 14.7% of general fund expenditures, as of June 30, 2018.
The budget picture becomes more bleak in the 2018-2019 school year, when the 1996 referendum is paid off, creating a drop in the local levy.
Continuing the practice of utilizing the general fund to balance the budget would deplete the fund in the 2019-2020 school year.
“These strategies would exhaust our options for dealing with the deficit that would result in the 2018-19 school year, which currently stands at just under $2.5 million,” stated MAPS finance director Brian Dasher. “We would need to either bring in additional revenue for that year and/or make drastic budget reductions which would result in significant program and staff reductions.”
Board member Jon Smith said he’s comfortable with drawing from the general fund for the next couple of years, as long as the board recognizes it as a short-term solution.
“I’m fine with buying ourselves two years’ time,” Smith said. “But, there needs to be a solid plan at the end of that two-year period that solves our problems for the next 10 years at least.”
Even if the district does manage to pass a referendum, it won’t solve all of MAPS’ budget concerns, Dasher cautioned. Even with additional tax revenue, as enrollment continues to decline, MAPS will still need to be budget carefully.
“Even if a referendum were to pass, that doesn’t mean this all goes away,” he told the board. “A referendum resets declining revenue, but then it starts declining again. As long as we are in a declining revenue situation, we’re never really going to be able to get ahead of revenue versus deficit. “We need a referendum, I believe, but we still have a lot of work to do.”
As the board plans for presenting a referendum, Dasher urged them to also plan for the possibility of the referendum not passing. With a potential date for a referendum being on the April 2018 ballot, MAPS can’t wait that long before developing a contingency plan, he said.
“We don’t want to put our hope solely on a referendum passing,” Dasher said. “We can’t go all the way out to next April with our only plan being a referendum passing.”
Smith stressed that voters will want to see a long-term plan when presented with a referendum question.
“As a taxpayer, I can handle a referendum if I’m confident that the district will ask for it once and there is an ongoing solution in place,” he said. “We get one shot, and it has to be a lasting solution.”
MAPS has successfully passed one referendum out of five attempts since 1995, according to data compiled by the Wisconsin Department of Public Instruction. Voters rejected recurring referendums for general operations in 2008 and 2009. Both three-year proposals, the 2008 referendum totaled $2,195,000 and the 2009 referendum $2,125,000.
In the November 2016 election, Wisconsin school districts placed 67 school referendum questions on ballots seeking additional funding for building projects, maintenance and operations. Of those, 55 were approved.
Dasher noted that there are variables yet unknown that could require adjustment of short-term budget projections.
“The biggest variable yet to come is the governor’s budget which will be released on February 8th,” Dasher said.