The details of Madison's referendum

The Madison Metropolitan School District's Board of Education voted unanimously to ask the voters to consider a referendum question on Tuesday November 4.

Here are the details from the Education Referendum fact sheet 9-26-08:

Why these budget gaps?

In 1993, the State of Wisconsin created two competing pieces of legislation. First, the revenue cap (or revenue limit) restricts the amount of funds that a Wisconsin school board can raise from local property tax without going to referendum. This law has allowed an average yearly increase of 2.22% per student above a district's previous year's budget. For the 2008-09 budget of the
Madison Metropolitan School District (MMSD,) this increase is $270 per student or about a 2.5%
increase.

Second, the Qualified Economic Offer (QEO) requires that "school district professional employee" contracts increase by a minimum of 3.8% to avoid arbitration on economic issues. All employee contracts make up about 85% of the MMSD budgets. When districts negotiate a 3.8% total package (wages and benefits) to avoid arbitration but the overall budget can only increase by an average of 2.22%, a budget gap is created. See graph below.

To close the gap, districts have to make cuts in programs and services, create efficiencies, obtain outside revenue and/or go to referendum.

Cuts to stay under revenue cap

Since 1993, the Madison School District has reduced programs and services by over $60 million. The two largest categories of reductions in this period have been 1) direct services to students, and 2) administrative. Together they make up more than 86% of the total reductions.

These reductions include:

• 157 full-time equivalent positions (FTEs) from special education.
• Central office staffing in the areas of physical education, world languages, environmental education, and driver's education.
• A total of 52.5 positions from the Building Services area which covers custodial and maintenance operations.
• 79.6 FTEs from middle and high schools.
• 32 FTEs from student services.
• 15.2 FTEs from elementary school art, music, physical education, and reading support.

Efficiencies to stay under revenue cap

Since 1993, MMSD has developed many efficiency measures that create permanent cost savings. Examples:
By using energy-efficient technology when making necessary maintenance repairs, the district saves almost $750,000 annually in energy costs:

• Lighting projects that use high efficiency sources.
• Motion sensors.
• Majority of all single pane glass replaced with insulated glass.
• Boiler replacements that use high efficiency boilers.
• District-wide temperature control system.
• Transportation savings of over $600,000 each year through a partnership with private schools and through consolidating MMSD Schools' start and end times.
• Madison Schools is the fiscal agent for a consortium of five school districts that shares human resources and financial management software systems. This partnership benefits MMSD taxpayers by saving $700,000 annually through reduced staff members.
• Changes in health insurance plans, which netted $97,000 in savings to the district compared to prior contracts.

A Partnership

The community and the school district would share the responsibility for the gap: the community part would come through an approved referendum. The school district part would come by continuing to make cuts, find efficiencies, and lessen the tax impact - see "Tax Savings" below.

The question

The referendum asks for the approval - starting in 2009-10 - to spend more than the revenue limit will allow. The amount to exceed the revenue limit would be

• $5 million in the 2009-10 year,
• An additional $4 million in the 2010-11 year for a total of $9 million, and
• An additional $4 million in the 2011-12 year for a total of $13 million.

It's a recurring referendum which means that, if approved, the school district could exceed the revenue limit by $13 million in the 2011-12 year and in every year after that.

Tax impact

The projected tax impact on the average Madison home (valued at $250,000) will be

• An increase of $27.50 in 2009-10,
• In 2010-11, an increase of $43.10 over the previous year, for a total of $70.60, and
• In 2011-12, an increase of $20.90 over the previous year, for a total of $91.50.

The cumulative total increase over the three years is $189.60 ($27.50 + $70.60 + $91.50), or an
average of $63.20 per year.

Tax rate

The tax rate -- that is, the property tax paid per $1,000 of assessed value -- is projected to go:

• Up 1.1% in 2009-10, (from $9.92 to $10.03, or 11 cents).
• Down 2.1% in 2010-11 (from $10.03 to $9.81, or 22 cents).
• Down 3.0% in 2011-12 (from $9.81 to $9.51, or 30 cents).

Cuts to be made in next 3 years

Passing a referendum does not necessarily allow the MMSD to add programs and services because reductions will still be necessary. The projected budget shortfall for 2009-10 is $8 million. An approved referendum would provide $5 million. The school district would still need to address a $3 million budget shortfall for 2009-10:

• $600,000 from staff positions not allocated to schools.
• $400,000 in yet to be determined areas.
• $2 million used from the district's cash balance for the 2009-10 year.

Even with an approved referendum, the school district projects it will still have to make cuts of approximately $2.5 million in the following two years.

It should be noted that since 1993 the district has reduced programs and services by over $60 million.

Tax Savings

The district is taking two other actions to lower the amount of tax dollars needed:

• Levy $2 million less in the Fund 80 portion of the budget for the 2009-10 year.
• Use the Capital Expansion Fund, also named Fund 41. (Funds are categories of the local budget.)

Under Wisconsin's equalization aid formula, the MMSD has to give dollars back to the state because Madison has higher than average property values and higher than average cost per pupil. By using Fund 41, the district can spread the cost of capital projects over a longer period of time, which means the district will receive more from the state and rely less on the local property tax.