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The Looming Fiscal Crisis at the Stoughton Area School District a paper by Sam Wayne

About SASD District has approximately 3,650 students Enrollment is declining at about 1% annually Per Pupil spending is very low 87% of state average Less than 90% of districts statewide High School recently failed to meet Adequate Yearly Progress standards for No Child Left Behind Legislation Performance of Disabled subgroup was not adequate

Revenue Limits In 1993, the State Legislature passed Statute 121.90 limiting the rate at which per pupil spending can increase Passed in response to statewide call for property tax “relief” $241.01 per pupil increase allowed next year Districts can override spending limits by passing a referendum

Effects of Revenue Limits on SASD Salaries and Benefits account for 76% of SASD’s 2003-4 budget These costs rise annually at average of 5%

Possible Expenditure Reductions Republican Majority in Assembly and Senate wish to pass a Property Tax Freeze or Taxpayers Bill of Rights (TABOR) Amendment in next session In 2003, Property Tax Freeze failed to override Gov. Doyle’s veto by 1 vote in Senate TABOR was on the agenda this year, but did not garner enough support to come to a vote

General Provisions of Tax Freeze Districts may increase their property tax levy by $100 per pupil each year SASD projects that all increases in expenditures will be funded by property taxes Likely result- replace $241.01 per pupil increase with $100 per pupil increase If state further cuts equalization aid, the district will still be allowed only $100 per pupil increase in property tax levy

Effects of Tax Freeze on SASD Assuming state aid remains constant Tax Freeze cuts allowable growth from 2.6% to 1%

Effects of TABOR on Schools School districts may increase their per pupil spending by the previous year’s CPI index (inflation) Average inflation 1986-2002 is 2.94% Current revenue caps allow per pupil spending to increase by 2.6% If TABOR were enacted in 1986, it would have lowered SASD spending in 9 of 18 years between 1986 and 2002

SASD’s Budget Cut Options Increase class size District policy to average 20 students per class Most classrooms in district can seat 25 students Will cut at most 20% of teachers Save $3.475 million annually if all cut immediately Eliminate non-essentials Art, Music, Phys-ed, “Talented and Gifted” program, advanced classes, junior varsity, and varsity sports Will cut at most 10% of expenses Neither of these, even when combined, will cut enough expenses to avoid eventual need for annual referenda

Need for Ongoing Referenda In order to provide district services at or near current levels, spending referenda will have to pass annually once General Fund is depleted To operate at bare-bones capacity, referenda will have to pass annually starting in 2015 Superintendent Dr. Myron Palomba says that annual referenda will be necessary to keep the district from shutting down

History of Referenda for SASD The district has passed all four spending referenda it has floated since 1994 1994: $28 million 1998: $320,000 2001: $2.5 million 2003: $4.5 million Past referenda were all for capital improvements District residents were not subject to “bumper-sticker campaigns”

Legitimizing an Ongoing Referenda To avoid a negative fund balance, the district plans on floating a referendum this year This is a good way to test public sentiment towards exceeding revenue limits, and allows for a failure before a negative fund balance In order to credibly float referenda annually, the district will have to make a few service cuts Immediately laying off 4-5 teachers may be necessary In addition, there may have to be a hiring freeze for the next few years as the public gets acclimated to voting on the district budget

Structuring an Ongoing Referenda After proposing referendum this year, use General Fund monies until they expire in 2006-2007 Each year referendum should cover all operating costs above imposed restrictions Postponing payment by lowering the amount sought only increases funds necessary in the future The public should be aware that a referendum will have to pass every year to prevent severe service cuts

Other Recommendations Lobby incoming State Senator Mark Miller and incoming Assemblyman Gary Hebl against a Property Tax Freeze, a TABOR amendment, and the current Revenue Limits This will not be very effective, because: Both men are already against these issues Both men are generally powerless, as they are new members in the minority party Join with other school districts affected by Revenue Limits to create a lobbying force separate from WEAC

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Fiscal Analysis of Stoughton School District Budget

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