EDITORIAL: Stingy state forces referendums on school districts

The consequences of the defeat of the Northern Ozaukee School District referendum in April are arriving. First came a budget projection of an $800,000 deficit in the next school year. Then last week, the school board had to resort to using reserve funds to cover a pay raise for district employees.

When revenue does not cover expenses, it’s an unsustainable way to operate a school district that is expected to meet reasonable standards of education quality. At some point the reserves are used up and education programs are cut back.

The April 2024 referendum, which was defeated by a 53% vote, was the third NOSD referendum in the past six years. In 2023, voters also rejected an operating referendum. In a 2018 referendum, 64% of voters approved a $15 million expenditure for building improvements.

The latest NOSD referendum was one of 93 in the state this year. In the past four years, 152 Wisconsin school districts have held operating referendums. The sheer number of them is a stark measure of the inadequacy of state revenue caps and education funding.

Referendums are an expensive distraction from the education mission with no guarantee of success, but school districts are turning to them in increasing numbers because revenue limits and state funding have lagged far behind inflation for more than a decade, leaving them struggling to meet operating expenses.

Small school districts like NOSD, disadvantaged by a state aid formula based on enrollment, are particularly vulnerable.

NOSD’s most recent referendum faced some fairly strident opposition, even though it would not have increased taxes. Opponents made an issue of the school board’s decision to prepay interest on the 2018 building loan, suggesting that this constituted some form of malfeasance.

To the contrary, debt prepayment is a fiscally sound expedient used by many Wisconsin school districts to shorten the life of loans, thus reducing the cost of the debt for taxpayers.

Critics have pointed out accurately, however, that debt prepayment is not a sinecure. It allows districts to legally exceed levy limits to make interest payments and then hold referendums that if approved shift the increased spending to operating costs without further tax increases.

Whether or not the debt strategy makes referendum passage more likely thanks to the no-tax-increase feature (it obviously didn’t in NOSD’s case), it ultimately benefits taxpayers. Savings resulting from the NOSD prepayment of five year’s worth interest on its loan amount to about $2 million.

Some of those calling for defeat of the referendum accused the school board and administration of wasteful spending, ignoring the fact that the district is now operating with about the same budget as 10 years ago.

An anonymous flyer distributed to residents claimed as an example of fiscal irresponsibility that School Supt. Dave Karrels is being overpaid. It was one of a number of uniformed statements in the flyer.

There is nothing extravagant about the NOSD superintendant’s salary. Karrels, a well respected administrator, is paid $160,000 a year. This compares with $156,0000 for the Cedar Grove-Belgium superintendent in a district with an enrollment 20% smaller than NOSD. Port Washington-Saukville’s new superintendent will be paid $192,000; Grafton’s makes $214,000.

The teacher pay increases approved by the school board last week, totalling nearly $200,000, are necessary. At a time when public schools are struggling to retain and attract teachers, districts like NOSD have no choice but to offer reasonably competitive pay, even if it has to come from reserve funds instead of budgeted revenue.

Going forward, to have an operating budget without a deficit that has to be offset from diminishing savings, the school district will have to appeal to voters again for help.

This is likely to cause referendum fatigue among voters. Some will be frustrated by being asked to pay an increasing share of school expenses while the Legislature ignores its obligation to provide state funding that keeps pace with rising costs. Opposition voices will rise again to blame the school board and administrators for the district’s plight.

None of that will change the fact that NOSD cannot sustain the quality of its schools and the education they provide for Northern Ozaukee children without additional tax revenue.

It’s up to voters who care about that to say “yes” next time.