School budget foreshadows financial challenges

For all the good news in the Port Washington-Saukville School District budget, the 2020-21 spending plan approved by the School Board Monday is a harbinger of financial challenges to come.

The district is the beneficiary of a nearly $1.2 million increase in state aid during a pandemic that raised concerns about the impact of decreased state tax revenue on education spending, and with both the district tax levy and rate decreasing, most residents can expect to pay slightly less in school taxes.

But disguised by the positive financial news is a problem that could haunt the district next year and for years to come — student enrollment.

The district is educating 79 fewer students than it did last year, and its average enrollment over the last three years — a figure used to calculate its tax levy limit — is down 40 students. 

That does not include a sharp decrease in the number of summer school students this year. Each summer school student counts as a percentage of a full-time student, and normally the program adds the equivalent of between 48 and 53 students to the district’s enrollment. This year, when the program was offered only online and focused on remedial education because of the pandemic, it added the equivalent of only six students to the district’s enrollment. 

Student enrollment is a key component in the state aid formula, and generally the more students a district has, the more aid it receives.

The district was able to soften the financial blow this year with a one-time declining enrollment exemption to the revenue limit worth $422,288. But it won’t have that exemption next school year, and if enrollment does not increase, the district will be left with a substantial hole in its budget. 

“This (the exemption) is really a parachute that is easing the fall of students,” Director of Business Services Jim Froemming said. “It’s a one-year break.”

Open enrollment is also a significant factor in this year’s budget with more Port Washington-Saukville students opting to attend schools outside the district than are coming in. Last year, the district had 43 more incoming than outgoing students. This year, it has four more outgoing than incoming students. 

Districts still count outgoing students as their own for the purposes of state aid, but open enrollment has a financial impact because for every outgoing student, districts must transfer an amount of money roughly equivalent to the state aid it receives for that pupil to the district he is attending. When districts have more incoming than outgoing open enrollment students and can educate the incoming students without increasing their overhead costs, they benefit financially from the program.

  “This is something that affects our budget big time this year,” Froemming said. “We have to do some work to see if we can get these students back.”

Also affecting the district finances is the $516,727 impact the state’s private school choice program will have on its tax levy this year, an increase of $55,777, or 12%. That amount will pay for about 60 district students to attend private schools through the voucher program.

School districts pay for students to attend private schools through the voucher program with a reduction in state aid. They then have the ability to increase their property tax levies to cover the cost. 

The Port Washington-Saukville School District is not alone in dealing with the challenges of declining enrollment. The Wisconsin Department of Public Instruction reported earlier this month that public school enrollment has decreased 3% statewide this year. 

While demographics may be a factor locally, administrators say, the Covid-19 pandemic is undoubtedly contributing to declining enrollment and playing a role in open enrollment and school choice decisions.

For instance, the Port Washington-Saukville School District has 30 fewer students enrolled in its optional 4-year-old preschool program this year, a possible reflection of the concern parents have about sending their young children to school during a pandemic. 

Parents of older students who share those concerns may be opting to home school their children, enroll them in virtual charter schools or send them to smaller private schools, administrators said.

Concerns about students not receiving enough in-person instruction may also be influencing open enrollment decisions. While the Port-Saukville School District is offering a mix of in-person and online instruction to minimize the impact of Covid-19 in schools, with high school and middle school students attending classes two days a week and elementary school students in classrooms four days a week, other area districts are offering full-time, in-person instruction. That, Froemming said, may appeal to some parents, especially those who have trouble arranging care for their children when they’re not in school.

“On one hand you have people who believe kids belong in school five days a week and on the other you have parents who are keeping their children at home or enrolling them in established virtual schools,” Supt. Michael Weber said.

While the district’s declining enrollment exemption helped balance this year’s budget, so did its fund balance. The district will use $160,000 in savings to help fund the operation of its Breakwater Academy, an alternative school in its third year, $65,000 to pay for the addition of an unanticipated middle school  teacher and $77,788 to pay the cost of new laptop computers for teachers not covered by a grant.

Working in the district’s favor this year are lower transportation, utility and summer school costs due to the pandemic and its hybrid eduction model, although the cost of  paying substitute teachers, who are in high demand, and technology spending have increased because of Covid-19.

The result is a $38,630 decrease in the property tax levy, to $17.2 million, and a tax rate that is decreasing by 65 cents, or 6.7%, to $8.97 per $1,000 of property value.

Because property values increased by nearly 7% in the district, taxpayers won’t realize a windfall in saving but most can expect their school tax bills to be slightly lower. The exception in is the Village of Saukville, where values rose by nearly double the average and taxpayers can expect an increase in school taxes.