Boscobel School District voters will answer two requests for funding – one for operations and another for building – at the ballot box on Tuesday, April 5.
The school district’s current tax levy mill rate is $6.62 per $1,000 of equalized property values.
The tax levy is determined by the state using a formula mandated by the legislature using enrollment and property values. That formula creates a cap as to how much a school district can levy without asking for approval from voters through referendum.
The first question relates to funding the district’s overall operations. The school district has a $941,911 deficit for the current 2015-2016 school year. That deficit is being handled through budget cuts and drawing on the district’s general fund reserves. At the end of this year, the district will have a fund balance of $1.3 million.
Without additional funding approved through the referendum, the school district’s general fund balance, district deficit, and mill rate will be:
• 2016-2017 – a general fund balance of $163,418 after a funding deficit of -$1.17 million and a mill rate of $6.09 per $1,000 of equalized property values;
• 2017-2018 – a general fund balance of -$1.45 million after a funding deficit of -$1.6 million and a mill rate of $5.35 per $1,000;
• 2018-2019 – a general fund balance of -$3.27 million after a funding deficit of -$1.8 million and a mill rate of $4.87 per $1,000;
• 2019-2020 – a general fund balance of -$4.39 million after a funding deficit of -$2.12 million and a mill rate of $4.43 per $1,000; and
• 2020-2021 – a general fund balance of -$7.99 million after a funding deficit of -$2.6 million and a mill rate of $3.50 per $1,000.
Maintenance of a general fund balance is commonly accepted as necessary in order for schools to avoid short term borrowing to maintain cash flow for operation of the school district. According to the Wisconsin Department of Instruction, an appropriate fund balance is a critical factor in district financial planning and budgeting processes to avoid excessive short term borrowing and associated interest costs; to cover unforeseen expenditure needs; and to preserve or enhance the school district’s bond rating, thereby lowering debt costs when it does borrow by earning lower interest rates. As a general rule, some private sector auditing firms recommend a minimum level for fund balances between 20% and 30% of a school district’s general fund operating expenditures.
Also of note is the fact that with each decrease in the local levy, the schools see a decrease in state aid, which exacerbates deficit growth.
The second question seeks funding to address both rising costs relating to the operation of multiple buildings and repair issues that need to be addressed at the current middle/high school.
The building referendum would fund the repairs at the middle and high school and improve sports facilities by adding a larger gymnasium, while creating a single campus by building an addition to the north side of the middle/high school structure to house the early education and elementary classes.
The Boscobel School District operational referendum seeks to exceed the tax levy by $1.8 million, implemented over the course of three years.
The first year would see the tax levy increased by $950,000, raising the mill rate from $6.62 per $1,000 of equalized property values to $9.37. The projected deficit would be reduced to $224,571 and the general fund would be lowered to $1.11 million.
The second year the tax levy would increase an additional $650,000, raising the mill rate to $10.83 per $1,000. The projected deficit would be reduced to $14,134 and the general fund would be lowered to $1.099 million.
In the third year, the levy would increase an additional $200,000 with the mill rate rising to $11.03 per $1,000. The projected deficit would be reduced to $4,588 and the general fund would be lowered to $1.094 million.
The school would see the deficit begin to increase after this three-year period with a projected deficit of $317,831 and mill rate of $10.51 per $1,000 in the 2019-2020 school year and a projected deficit of $831,183 and mill rate of $9.38 per $1,000 in 2020-2021.
The approval to exceed the levy by $1.8 million would remain in place until the school district either voted to rescind the increase or chose not to collect its full amount for two years in succession, in which case it would revert to the base levy amount estimated by the state formula. The board would have to go to referendum again in order to reinstitute or raise the levy further.
The Boscobel School District is seeking $20 million for the building referendum.
If only the building referendum passes, the impact would raise the mill rate to $10.53 per $1,000 of equalized property values in 2016-2017; $8.43 per $1,000 in 2017-2018; $8.16 per $1,000 in 2018-2019; $7.58 per $1,000 in 2019-2020; and $6.65 per $1,000 in 2020-2021.
mill rate impact
If both referenda are approved by voters, the mill rate impact will be:
• 2016-2017 – $13.82 per $1,000 of equalized property values;
• 2017-2018 – $13.91 per $1,000 of equalized property values;
• 2018-2019 – $14.32 per $1,000 of equalized property values;
• 2019-2020 – $13.66 per $1,000 of equalized property values; and
• 2020-2021 – $12.53 per $1,000 of equalized property values.