Issues of declining state aid for Madison schools could be exacerbated in a district that has long relied on local revenue to educate students, leaving residents shouldering more of the burden in the face of the continued coronavirus crisis, a new report finds.
The brief, from the nonpartisan Wisconsin Policy Forum, highlights the uncertainty local officials are facing as they stand poised to approve a preliminary budget plan later this summer that would raise property taxes by an estimated $46 for the average home just to maintain spending levels on operations.
Estimates flagged in the report show property taxes would be nearly 38% higher next year under the proposed operating budget compared with 2012, a jump the brief notes is "more than twice the rate of inflation" and doesn't include potential changes in state aid levels going forward.
Crafting Madison Metropolitan School District's budget is a challenge for education officers, as they await a potential state budget repair bill to fix an anticipated revenue shortfall that could include cuts for K-12. In the meantime, officials are already bracing for a decline in state aid before extra action may come from lawmakers and Gov. Tony Evers.
Research director Jason Stein said a loss of state K-12 funding next fiscal year, assuming the district would have the ability to backfill it with higher property taxes, would heighten the reliance on local revenue further to support schools.
"It certainly has the potential to make it worse, right, or further accentuate the trend," he said.
And if district leaders opt to pursue two referenda questions this fall, taxpayers could find themselves footing even more of the bill to help educate kids in a district that only sees a quarter of its operating budget covered by state and federal support, per the report -- the forum's first-ever review of MMSD's budget.
The current and looming budgetary challenges are just part of the reality outlined in Thursday’s report, which notes the district has come to “an inflection point” given the novel coronavirus crisis and the lack of a permanent superintendent after initial hire Matthew Gutierrez withdrew his acceptance of the position.
In addition to the long-term challenge of declining state support, the report shows the fallout from challenges brought by the COVID-19 crisis could also hurt the district's ability to address disparities in student outcomes.
That's because some efforts to reduce those gaps based on race, disability or socioeconomic status would be cut under the budget, though the report notes it would still provide some new funding streams for disadvantaged students — though the brief cautions "much could still change" depending on state action.
Under the current budget plan, which the Madison School Board is expected to vote on during its June 29 meeting following amendments and public feedback, overall spending would take a nearly 1% hit (dropping it to $476.1 million across all funds) and the district would shed 47.5 positions (or 1.2%).
The district’s past and continued reliance on property taxes, given its relatively high spending and property wealth, may actually “insulate it somewhat from further state cuts,” the report finds.
But if state aid or revenue limits, which dictate how much districts can raise in local property taxes and general school aids, are cut under future state action, the report notes the district could rely on its reserve balance to make it up.
Still, the brief stresses that doing so could mean the funding couldn't be used for lessening short-term borrowing, maintaining a strong bond rating and ensuring low interest rates on long-term debts.
The report spends no time speculating on what a possible budget repair bill could include — though it mentions the potential impact of state officials opting to freeze or decrease the $179 per-pupil increase currently allowed under state revenue limits.
That figure amounts to an estimated $4.9 million in funding for the district, the report states.
The findings note that another big, pending budget decision for the district is whether to go forward with one or two planned referenda on the November ballot.
The School Board recently agreed to spend $20,000 on a poll to get residents' input on the questions, which include a $317 million capital referendum and $33 million operating referendum that would phase in over four years.
The capital referendum would allow the district to renovate the four comprehensive high schools, move Capital High School into the Hoyt building and build a new elementary school on the city’s south side.
The operating referendum would allow the district to surpass the state-imposed levy limit by $6 million in year one, an additional $8 million in year two, $9 million more in year three and $10 million more in year four. The district would then be able to surpass the limit by $33 million in perpetuity.
The report notes the second referendum to raise taxes and spending by $6 million "this year seems unlikely but a vote is still possible on similar increases in the other years." Part of that funding would go toward student equity efforts, new K-5 reading materials in English and Spanish and more, the brief adds.
The district's preliminary 2020-21 school year budget would go into effect July 1, though local officials are preparing to make changes to it as needed tied to potential state action and more.
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