Sunday, July 5, 2009

Is the Perfect Storm on the Horizon?

Are we headed for the ‘Perfect Storm'? For those of you who have been paying attention to the District’s operations for the last few years it is all starting to add up to the "Perfect Storm"…financial storm that is! For those that haven’t been paying attention let us bring you up to speed on the districts financial commitments that are about to come to roost.

$115M in Construction
The School District is in the middle of the construction of the new High School (including a pool) and renovation of the current high school into an 8/9 school the total of which will cost the taxpayers about $100,000,000. We opened Creekside elementary last fall (~ $15M), and there’s already talk about an EIGHTH elementary school (although Creekside is barely at 50% capacity). There are already reports (they ALWAYS hold this stuff close to the vest) that the “contingency” portion of the construction budget has been exhausted…and we’re over a year away from opening! Remember that 2/3 of the money was borrowed THIS year...which means we'll see it in the upcoming budget. That means this years' property taxes 0

The new 4K Program will COST us
4 year old kindergarten will begin this Fall and, despite hopes that the district will MAKE money off of the additional kids down the road, this first year will result in a DEBIT of about $140,000 based on projections. Of course this all assumes that we reach an enrollment of at least 350 kids and aid to districts remains as projected last winter (NOT!!). District officials will quickly try to point out that in years 2 and 3 the 4K program will generate income but have no assurances from DPI that the funding will be at the same level or at all as it has in the past. In fact, start up funding was cut this year for the first time since the program started.

Recessionary Unemployment and Wage Cuts
Regional unemployment is hovering around 10% and workers throughout the community are having to take unpaid furloughs and pay cuts while teachers, who we support and believe should have fair and reasonable compensation packages, are getting about a 7% pay RAISE over the next two years based on their recently approved contract. For the next budget year, that contract will cost taxpayers an additional $2,000,000.

More raises...while others see furloughs and pay cuts
At the 7/13/09 school board meeting, we expect the board to approve pay raises to Administration Support staff that represent a 3.8% “total package” increase. Remember that teachers got the same 3.8% “ total package “ increase, but the salary portion of that calls for raises of 4.2% THIS year. Next up will be district administrators themselves…you know…the $100K club. Past practice is to give Administrators what teachers got in the prior contract…which was over 4%! 4.2% of $100K means an increase of at least $4200 for each of them. Will YOU be getting a $4,200 raise this fall? Lastly District ADMINISTRATOR (Super Nintendo) Tim Culver will also get a nice pay raise to augment his current salary of $145,000…just you wait and see. Do the math. What’s 4% of 145,000?

Devaluation of Property
Sure...we love it when our assessments go down...well...kinda sorta. But when EVERYONE's property valuation decreases, as is happening right now, then the tax base shrinks. That means that everyone will have to pay a higher share of property taxes to cover the cost of running the school district and all its increased spending. Yes...we have the new Target....but is it enough? It's a concept that can be somewhat simplified. If the total value (called the "equalized value") of all the property in the district is $1,000,000 (It was more like $3.2B last year), and the school district budget increases to $100,000 (the TOTAL budget is more like $110M), then the school district mill rate (cost per $1,000 of home value) is $100. No if that equalized value shrinks to $900,000, the mill rate rises to $111 ( [100K/900K] X 1000 ).

We hear the City Council talking about holding the line on the mill rate. Heard any talk like that from the school board? Didn't think so.

Slowing Growth
Growth in the school district appears to be as shriveled and dried up as....well....let's avoid that analogy and just say that it's no longer on 'roids. If the school year started tomorrow the district would have an enrollment loss of about 82 students at elementary school level alone over last years Third Friday Count. And say...has as anyone noticed the number of new and existing homes on the market?

Enrollment growth is the lifeblood of a school district. Why WOULDN'T Dr. Tim be crowing about these precious "kids"? They pay his ginormous salary! "The kids" are valued at about $10,000 each when it comes to state aid. An enrollment loss of 82 kids at the elementary school level would result in a loss of State funding to the tune of about $900,000! (In all fairness there is typically a surge of enrollments in August which will fill in some of those losses but will it be enough to get the same level of funding as last year, only time will tell.)

Unprecedented DPI Cuts to State Aid
The Wisconsin DPI has indicated that they will be cutting aid to school by 3.5% each of the next two years. It is a little unclear now where those cuts may come from but rest assured they will come. But if you read the State Journal, today’s edition has an article about Madison taking a 15% cut in state aid. Remember? Madison? A special part of the budget that called for them to only get a maximum 10% cut?
We have YET to see even a HINT of a budget from the school board. A public hearing is usually held in late May or early June. There is discussion about a possible public hearing on the proposed budget—which no one has yet seen—on July 20 or 22.

Admittedly, some of this stuff is difficult to predict but the conditions of reduced funding and increased spending are in place and we seem to be headed for the ‘Perfect Storm’! That right folks, WE will be left holding the bag when it comes time to pay for these commitments made by the District Administration and the School Board. So when the storm gets here you know who you can thank…”Supernintendoadmistratorsupreme” and the school board members who for some reason couldn’t see this one coming.
[SP-EYE-there have been a handful of instances of board members showing restraint by voting against a costly item like Jill Camber-Davidson-4K and Al Slane with the teachers contract but they are too few to mention and in the end were passed with a majority vote.]

If the storm never gets here that’s fine, we can admit that our prediction was wrong. Just like the weatherman's predictions, conditions may be ripe for severe storms that never develop. All we are really saying is that, during these financial times, a hint of fiscal conservatism would be nice. Let’s be conservative and error on the side of, as 2009 School Board Candidate John Welke first put it, “being good stewards of the tax payers dollars.”

No matter what happens, a tsunami, thunderstorm, light rain or sunny weather we are confident of one thing. School Board Member Jim ‘Sea Bass’ McCourt will be belly up to the nicest restaurant available at next year’s WASB Conference eyeing up high end entrée’s you and I will have to pay for. After all, even though he lives in a home valued at more than $400K, he has earned it by way of time spent at school board meetings and via all of the community engagement activities he is involved in as a board member and community engagement committee president…at least in his mind, he has!