Presented with what district officials said could be financially tight future budgets, the Madison School Board signaled its support Monday to explore a possible operating referendum during the November 2020 election.
The board directed Madison School District staff to begin gathering community feedback this fall on an operating referendum, which allows school districts to exceed state-imposed revenue limits and raise more money through property taxes.
At the same time, the district will be gauging support of a potentially large facilities referendum also proposed for the 2020 presidential ballot.
While there was unanimous support in pursuing an operating referendum, some board members said the district needs to take a financially cautious approach on simultaneously putting forward two referendums that have the potential to raise property taxes on the average home by hundreds of dollars over a few years.
“I don’t think we can proceed with the type of growth and investment in our schools and our kids that we would like to do without exploring the option of another operating-to-exceed referendum,” board member Kate Toews said at the Operations Work Group meeting.
While Toews called the facilities referendum “critical” for the district, she said other options to boost revenue and keep the price of an operating referendum down need to be explored, such as a magnet school for the arts that could draw in students from other districts and the state money that would come with them.
Board President Gloria Reyes said she is supportive of an operating referendum, but the district needs to be “very careful” about focusing on its priorities when asking for more help from taxpayers.
“We just can’t have everything,” she said.
Under certain assumptions, such as keeping pay raises consistent and increasing health insurance costs, the district could face funding gaps of about $10 million in each of the next three school years if no new revenue is brought in locally or from the state, said Kelly Ruppel, the district’s chief financial officer.
The interest in a new operating referendum comes as a previous operating referendum is set to expire. In 2016, voters approved a referendum to phase-in $26 million in new taxing authority for the district over four school years ending in 2019-20.
If a new four-year operating referendum is pursued — and passed by voters — it could mean eight consecutive years of the district adding taxing authority.
Focus on high schools
Separately, the district will begin next week gathering input on a proposed facilities referendum largely focused on the high schools.
The facilities referendum is proposed to include major renovations and upgrades at the four main high schools — possibly running as high as $280 million — along with finding a new home for the alternative Capital High program and potentially siting a new elementary school on the South Side.
For “illustrative purposes,” the district presented an example of how property taxes could be affected under a four-year, $36 million operating referendum and a $315 million facilities referendum.
The district’s portion of property taxes on an average-value house of approximately $295,000 in 2019-20 is estimated at $3,252. It could increase — about $600 over four years — to $3,853 by 2023-24 under the two-referendum scenario.
In the past few years, property taxes have remained relatively stable, being offset by increases in the total tax base, Ruppel said. But the district is predicting growth and development will slow down in the coming years.
The district has a $463 million budget for the 2019-20 school year — of which 71% comes from property taxes — that has been aided by $15 million in new revenue from the 2016 operating referendum and additional money in the state’s 2019-21 biennial budget.
Without another operating referendum, the new revenue in 2020-21 is estimated to be $4.8 million, Ruppel said, leaving about a $10 million gap if certain factors, such as the employee salary schedule, are kept consistent.
To close the gap without a referendum, Ruppel said the district might have to consider measures like cutting positions and attempting to negotiate with insurers to reduce health care costs.
If an operating referendum is put on the November 2020 ballot, the School Board would need to approve two budgets for the 2020-21 school year, with one assuming the ask is approved and another if it would fail, Ruppel said.
The board has until May to finalize referendum questions for the November 2020 election.
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