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Change Is In the Wind
The holiday season is full of gift giving. The "gift" many property owners receive during the month of December does not come with pretty bows and wraps. It simply comes in an envelope and is entitled property tax bill. Unfortunately, it also can't be returned.
We all take great pride in our schools, but that property tax bill hits home and everyone's bottom line. Our board of education is very sensitive to the economic environment we find ourselves in. They have worked hard to balance student need with the need to hold the line on taxes as much as possible.
The design of the current Wisconsin school finance system ensures that changes in state aid and property taxes are inversely related. If state aid goes down, property taxes go up or cuts in expenditures must be made.
The state system of revenue limits for schools result in cuts. State imposed revenue limits were put into place in 1993. Under the formula, revenue increases for Menomonie have been held to 2-3%. It does not matter if it comes from the local levy or the state. We are only allowed to spend so much. In order to spend more we would be required to hold a referendum to override the limit.
We can all appreciate the attempt to hold down property taxes. However, there were few or no controls on the expenditures. Our expenditures have risen annually by 3-4%.
Common sense tells you that if your household bills are exceeding your income, either you cut expenses or go in the red. For school districts, it sets up an automatic structural deficit every year. We are not allowed to operate "in the red." Basically the increase in revenue each year is less than the increase in costs, some of which are beyond our control.
Despite making cuts each year, our district has still been able to provide a level of excellence that is expected by our community. We offer outstanding programs and diverse opportunities for our learners. The goal is to have our students both "career and college" ready. However, there are projects we have deferred and positions that have remained unfilled. There are certainly things we would like to do but can't afford. It is a balancing act.
Budgeting continues to be challenging. The main factors to consider when determining our revenue include enrollment, district equalized land value, state equalized aid, and grants.
The district's enrollment or membership count is recorded twice a year as required by the Department of Public Instruction. The membership count is converted to full-time equivalency or the FTE count. Most students count as 1.0 FTE. 4K students count as 0.6 FTE. Summer school FTE is calculated by days and hours.
Our enrollment has increased over the past few years due to our 4-year-old kindergarten. The increase in FTE has helped our fiscal situation. Our current membership count is 3,322 students. The enrollment breakdown is as follows:
4 year-old kindergarten 251
River Heights 379
Lucas Charter 35
Menomonie Middle 687
Menomonie HS 1028
But enrollment is only part of the formula. We must also consider the district equalized land values. The district equalized land value is divided by our membership count to determine a per member value. In 2010-11 this amount is $499,810, which is down from $523,839 or a 9.5% reduction. Through the eyes of the state it dictates what local taxpayers "should" be able to provide.
Most of us could have predicted this decline. Ours was modest compared to other areas of the state.
Once the per member value is determined, the state uses the figure to determine the amount of state aid they will provide. This year the district's equalization aid will increase to $19,511.491 or an increase of 5.7%. The decrease in the land value per student results in the district being considered "poorer" in the eyes of the state. Therefore,, the formula generates more equalization aid.
Keep in mind that if our enrollment was in decline, the "per member value" of our land value would have INCREASED and, thus, state aid would have decreased. It is the inverse relationship that I mentioned earlier. In that case our portion of state aid would have declined. Districts with declining enrollment are being hit very hard.
Even with an increase in aid, our budget cannot increase. Remember the revenue limit.
The lead school finance story this year has been the state budget problem. Total aids the state paid to districts fell by 5.7% in 2009-2010. With the exception of 2005-06, an election year, state aids have been gradually moderating.
We will wait to see what happens with the newly elected legislature. They will be making decisions about the per pupil revenue and whether there will be any increase at all. We are hoping to maintain 2010-11 levels of funding. If state revenue is cut further, expenditure cuts will be deeper.
When it comes to the school district budgeting cycle, the primary concern is for "the child in the chair." When we begin discussions about possible reductions, we often see advocates for sustaining programs speak passionately about each program or position.
We don't want to make further reductions. We have already been doing that for years and we value everything we currently have in place. Everything is important to someone. However, I hope I have helped to explain why cuts are inevitable under the current school funding formulas.
Change is in the wind. When the state legislature sets its budget for education we will try our best to be ready. We are planning for multiple scenarios and hopeful for the best.
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