Proposed Referendum Limits
Prairie du Chien School Board takes stand against bill to restrict referenda
By Ted Pennekamp
The Prairie du Chien School Board unanimously passed a resolution on Nov. 9 against proposed legislation that would place restrictions on school district referendum ballot dates and implement a two-year waiting period following a failed referendum.
The Prairie du Chien School District has been seeking public input and studying possible facilities upgrades over the past several months and is expected to have a referendum regarding upgrades and exceeding the revenue limit in April of 2016.
Under current law, there is no limitation on whether, and how frequently a referendum may be placed before voters.
In addition to a two-year waiting period following a failed referendum, the proposed bill, introduced by State Senator Duey Stroebel (R Cedarburg) and State Representative Michael Schraa (R Oshkosh), a school referendum would have to coincide with a regularly scheduled spring or fall general election.
In its resolution, the school board says the proposed law would have a significant detrimental impact upon small, rural school districts which have few places to make cuts.
“Legislators should know that supporting this bill could have the unintended effect of forcing districts to consider dissolving their schools with devastating impact on local economies,” states the resolution.
The board also states that being extremely restrictive with referendums would affect a variety of funding mechanisms used by school boards to assist them in managing their finances such as short term borrowing, state trust fund loans, promissory notes, and other types of borrowing or the issuance of bonds. The board says the bill would take away local control, and would instead, have large state government control school referenda.
“Referenda provide an opportunity for a community to have a very focused and robust conversation about what it wants its public schools to be,” said the board in its resolution. “School boards propose referenda because they believe doing so is in the best educational interests of the students and communities they represent.”
In its resolution, the school board calls upon Governor Scott Walker, State Senator Jennifer Shilling and State Representative Lee Nerison to, “Oppose this proposed legislation that would further curtail the already very limited set of revenue options available to Wisconsin school boards.”
Both WEAC and the Wisconsin Association of School Boards are opposing the bill.
Proponents of the bill say the bill is designed to lower property taxes and to keep voters from being exhausted by multiple referendums. Proponents also say the bill would prevent special elections when voter turnout is low. They say there are often big decisions being made by a community when relatively few people turn out to vote during special elections held on odd dates. Holding referenda on general election dates helps to ensure that important decisions are made when there are many more voters, which would make the referenda more honestly reflect the will of the community, proponents say.
The two-year waiting period following a failed referendum would significantly impact small, rural districts which lack tax base of any scale and have few places left for cuts without significantly impacting the quality of education offered in the district, said Prairie du Chien School Board President Christine Panka. Additionally, restricting referenda to a particular schedule within the election cycle will make competition for contractors to provide approved work at a competitive price for school districts challenging because bidding for school projects will be saturated at predictable cycles throughout the year, Panka said.
Referenda are the only way a school district can access additional financial resources and it has become even more important in light of state budget cuts to education and the arbitrarily low revenue cap imposed on the Prairie du Chien District by past legislation, Panka noted.
In addressing the school board’s concerns regarding the proposed bill’s effect on the variety of funding mechanisms used by school districts, Panka explained, state aid is funding that school districts receive from the state and that is paid directly to the district. The Prairie du Chien School District receives state school aid of approximately 60-70 percent which varies from year to year. Wisconsin provides the bulk of state aid to school districts based on an equalization formula that attempts to provide each public school district with a guaranteed tax base behind each pupil. This aid is often referred to as equalization aid.
Because property values vary widely across the state, school districts differ in their ability to raise property tax revenue for educational programs. The equalization aid formula is designed to compensate, through state aid, for a given district’s lack of fiscal capacity (“ability to pay”) through property taxes, Panka said.
School districts do not control when they receive equalization aids. These payment dates are set by statute and determined by the Legislature. When looking over the following information, it should be noted, all Wisconsin public school districts’ fiscal years operate from July 1 to June 30.
Equalization aid is distributed to school districts according to the following statutory payment schedule:
•15 percent on the third Monday in September;
•25 percent on the first Monday in December;
•25 percent on the fourth Monday in March; and
•35 percent on the third Monday in June.
The state pays a small percentage ($75 million) of equalization aid on a delayed basis, with districts receiving these monies on the fourth Monday in July, which is actually in the following school year. School districts receive the bulk of state aid rather late in their fiscal year, with the biggest chunk coming after the end of the school term.
Similarly, the other source of school income is the local property tax collections which occur twice annually. The first half of property taxes are collected with deadlines of Dec. 31 and Jan. 31. The second half of property taxes are due on July 31. Monies collected by local municipalities on behalf of the school district are distributed to the school after those collection deadlines.
As a result, said Panka, the timing of state aid payments as well as the receiving of property taxes, may affect a district’s need to maintain a sufficient fund balance (The Prairie du Chien School District’s current fund balance is approximately $2 million) to meet its cash-flow needs and avoid short-term borrowing.
In the fall of each school year, the school board approves a line of credit in the event that the school district needs to borrow on a short-term basis. The school district borrowed monies on a short-term basis in 2013-14 and did not borrow any short-term monies during the 2014-15 school year.
“I’ve been asked if the district needs more money, why not just raise taxes to compensate for what is not coming from the state any longer?” said Panka. “Well, if school funding wasn’t complicated enough, all schools have received a revenue limit imposed by the State Legislature that holds our per student spending to the limits in which our district spent per student back in 1992. The only way to address our district financial shortages is to ask the voters to exceed that revenue limit through the referendum process or to make cuts to programming for students.”
Panka further stated, “The health of our schools has a direct impact on our community’s economic growth and sustainability. As such, the school board took a stance to object to Senate Bill 355- School Referenda Restrictions as they would prefer to have our electorate continue to be a part of the conversation about making these very challenging decisions about public education in our community versus decisions being forced upon our community by legislators in Madison.”
