New taxpayer has big impact on PW-S school spending plan

There is a new taxpayer in town, one that almost immediately is having a significant impact on the finances of the Port Washington-Saukville School District.

That taxpayer is Vantage Data Centers, and the nearly 2,000 acres it purchased for its Lighthouse Campus on Port Washington’s north side is in large part driving a $354.9 million, or 12.1%, increase in the district’s equalized property value, giving it flexibility to manage its referendum debt and dropping the proposed tax rate by 3.9% even as the tax levy is to increase by $1.6 million, or 7.8%.

“That’s a huge increase,” Director of Business Services and Human Resources Mel Nettesheim said of property values as she updated a School Board committee on the proposed 2026-27 budget Monday. “And a large part of that is from new taxpayers in the City of Port Washington.”

But the increase in equalized property value is also changing the complexion of the district by helping to shift the burden of paying for education from the state to local taxpayers.

Student enrollment and equalized property value are two key components of the state’s school funding formula, and as the district becomes increasingly property-rich, its enrollment continues to decline. That doesn’t affect the amount of money the district has to spend, but rather where that money comes from. The proposed budget anticipates a $558,689 decrease in state aid and calls for local property taxpayers to contribute an additional $893,970 in revenue this school year.

“You’re going to see a lot less coming from general (state) aid and more from our property taxes,” Nettesheim told the Finance and Human Resources Committee  this week ahead of a public hearing on the 2026-27 budget at 5:30 p.m. Monday, Oct. 26, followed by a board vote on the spending plan.

For perspective, the district’s 12.1% increase in equalized property value is substantially higher than the state average of 7.5% and the 2% prediction the Port-Saukville School District used when planning to borrow $59.4 million for referendum projects approved by voters last year.

About half the 12.6% increase is attributable to the appreciation in value of existing property in the district.

The other half, however, is net new growth, in other words, new taxpayers that will now share the property tax burden, Brian Brewer, director of public finance for Baird, the district’s financial adviser, told the School Board in August.

“This is a combination of your existing property being worth more plus new taxpayers, new growth, new buildings, new neighborhoods, new investment in the community,” he said. “Your net new growth is a little over 6% of the 12%, which is very strong. Statewide, that number is generally around 1% to 2%, 3% in a growing community, but to have 6% of your 12% being net new taxpayers helps to spread out the levy over taxpaying residents.”

It is the net new growth that is significant for taxpayers, Supt. Michael McMahon noted.

“When the mill (tax) rate goes down, taxpayers don’t always feel it because if the value of their property increased, they could end up paying the same or more in taxes,” he said. “But when net new value goes up, those are new taxpayers chipping in.”

There won’t, however, be additional property value increases as the data center campus is developed, at least not for nearly two decades.

The City of Port Washington delayed the creation of a tax incremental financing district long enough for the value of the undeveloped Vantage Data Centers land to be applied to property values and tax rolls. But because the land is now in a TIF district, the increased value from improvements to the property — or so-called increment — will be used to pay for infrastructure improvements such as the extension of sewer and water service to the site rather than added to the tax rolls for an estimated 18 years, which means the School District and other taxing entities will have to wait to realize additional financial benefits from the project. When the infrastructure improvements are paid for, the full value of the $15 billion Lighthouse Campus will be added to the tax rolls.

Another significant budget factor — enrollment — is dropping again, this year by 51 students, consistent with both a district and statewide trend.

At the same time, open enrollment, the state program that allows parents to send their children to the school districts of their choice, continues to vex Port-Saukville school officials. The district has 32 more resident students opting out of the district than it has non-resident students coming in, the largest disparity in at least the last five years, and it comes as the district has made closing that gap a priority.

Districts are able to count resident students attending other school systems as their own under the state revenue formula but must transfer $11,030 per student to the district they are attending.

“The real take-away from this is open enrollment going out is at 201. It was at 182,” Nettesheim said. “We will be paying out a larger expense this year than last year.”

The district lost 10 students to open enrollment between kindergarten and first grade alone this year, she said.

“That was our largest swing in open enrollment out this year,” Nettesheim said.

McMahon said efforts to survey parents about their open enrollment decisions have not yielded statistically significant data. Anecdotal feedback has not been particularly helpful either.

“Just from memory, some of the things we heard that were reasons for kids leaving were bullying, sports, music and athletics,” he said. “Reasons people were coming to us were that they were bullied in other districts, sports, music, athletics.”

Contributing to the increase in the tax levy is a $7.8 million payment on referendum debt. That is about $300,000 more than the district needs to pay and reflects a concerted effort to pay off debt more quickly than planned to save interest costs, Nettesheim said.

“That levy is not only to offset what we need to pay off for the referendum but allows us to pay off our debt faster, which, long-game for taxpayers, means less (money) coming from them,” she said. “We could go down to $7.5 million or possibly even $7.4 million, but then we will not be prepaying any debt on our referendum.

“And even with that $7.8 million, our mill rate will be decreasing.”

In addition, the tax levy for the district community service fund, which pays for services the district provides for the community and is not constrained by state levy limits, is to increase by $100,000 this year primarily because the School District has taken over the City of Port Washington Park and Recreation Department’s theater program, Nettesheim said.

“I’ve realized that theater can be a very expensive endeavor,” she said.

The move was part of a cooperative effort to eliminate duplicated services, Nettesheim said, noting that both the city and School District had theater programs and the city rented the district’s Performing Arts Center for its productions.

The increase in the community service levy also reflects the fact the district has opened middle school extracurricular programs up to students from other schools.

“If students are at St. John (XXIII Catholic School in Port) or if they are homeschooled or even if they go to a different district, they have every right to join our musical,” Nettesheim said. “They can join basketball or volleyball or chess club — you name it, we’ve got it.”

The district balanced the 2026-27 budget by, in part, eliminating teaching positions for the second year in a row, saving $132,377 in salaries even after employees received an average 2.63% pay increase.

The budget also reflects a small surplus — about $139,000 — that will be invested in fund balance, which will climb to $7.3 million.

The bottom line in the proposed budget is a tax rate of $6.73 per $1,000 of equalized valuation, a decrease of 27 cents. How that will affect tax bills is uncertain and will depend on how much a homeowner’s property appreciated compared to the average increase in value and where that homeowner lives. For instance, because property values increased disproportionately in the City of Port Washington because of the data center campus, the city now makes up a significantly larger part of the School District and will shoulder more of the cost of operating it, so tax bills for those residents could decrease less or increase more than the bills for those living in other areas of the district.