Recommendation of
Finance Committee
To the Prescott School Board
Replacement Levy Cap Override
December 1, 2015 Presentation
6:00 p.m. Prescott School Board Meeting
Finance Committee Task: To advise the administration and school board regarding the need for and
appropriate time - - if affirming - - to put a levy cap override question to the voters. The current levy
cap override of $1,460,000 was approved in 2011 and sunsets at the end of this current school year.
The goal of the committee is to identify what financing is needed and determine if a levy cap
referendum is necessary. If affirmed, what would that amount be and for what duration?
Committee Members: Two initial members left the committee due to personal reasons/interests prior
to formulating a final recommendation. The committee members bringing this recommendation
forward are: Jim Reichert, Kelly Radloff, Rick Murphy, Mark Helmer, Josias Franco, Carrie Fisher, and
Rick Spicuzza.
Process: The committee met four times over three weeks to review data pertinent to school funding
including:
● Past referenda information
● Historic student enrollment and projected future student enrollment figures from Applied
Population Laboratory
● Recent actual budgets
● Budget projections
● State aid calculations
The committee reviewed this information to determine if a gap in revenues and expenses will
continue, how that gap can be met, and what referendum timing is necessary for the most efficient
management of the district.
Background on State Funding:
Wisconsin schools are funded primarily through state aid based on student enrollment and local
property tax. In 1993, in an effort to control property taxes, the state imposed three strategies (the
three-legged stool) that impact school revenues: 1. The state committed to providing 2/3 of school
revenues; 2. The state imposed revenue limits on districts to reduce the impact on local property taxes;
and 3. The state imposed limits on compensation increases for teachers - -the QEO, or Qualified
Economic Offer.
After Act 10 (the state implementation of categorical aid per student, etc.), only the state revenue limit
“leg” (often called a levy cap) remains. The levy cap is based on revenue profiles that were in place in
1993. Frugal districts, including Prescott, were then base-lined with frugal revenue limits. The state
imposed revenue limit requires districts to either significantly cut costs or request additional local
investment through local property taxes to adequately meet increased expenses for such things as
testing requirements, building maintenance, utilities, as well as district growth in enrollment, space
and building needs.
The levy cap for school operations allows an opportunity to keep local tax dollars local. Rather than the
state collecting property taxes and reallocating them across all school districts, an operational
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referendum to exceed the cap allows voters to approve property tax dollars for use right in their own
communities. An operational referendum for a levy cap override gives voters an opportunity to invest
in their local school district by approving a property tax increase above the mandated state limit for
school revenue.
Background on Local Levy Cap Override Votes:
The current levy cap override was approved by voters in 2011 and is set to expire at the end of the
2015-2016 school year. The state revenue funding formula creates an appreciable deficit gap between
what a school district is allowed to receive in revenues compared to actual expenses. Each year that
the state continues the revenue cap, the gap in funding becomes more pronounced (see chart below).
Budget vs. Revenue Chart
Assumptions: Budget increase 2% per year with State Aid Revenue at 1%.
The finance committee recognizes that the district has made substantial permanent cuts to contain
costs in conjunction with prior referendums (see Appendix A). While additional efficiencies may be
possible, the committee feels that the local community will need to continue its investment in the
school district through a levy cap override to meet future budget and educational needs of our student
body.
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Historically, voters have supported operating referendums:
1999 - $350,000 non-recurring for 4 years
836 yes/ 515 no (passed by 321)
2002 - $700,000 non-recurring for 6 years 1539 yes/1126 no (passed by 413)
2007 - $1,120,000 non-recurring 4 years
806 yes/ 755 no (passed by 51)
2011 - $1,460,000 non-recurring 4 years
1013 yes/ 902 no (passed by 111)
$136,000 budget cuts
$370,278 budget cuts
$226,750 budget cuts
$260,000 budget cuts
Additionally, the school board has been and will continue to be proactive in undertaking specific cost
containment action steps to address health care costs, utility cost reduction steps, etc.
The following considerations were taken into account by the committee to establish fair and best
estimates of district revenues and operating costs in order to propose a specific value amount to invest
in our overall operations to meet the needs of our students.
Considerations:
1. Enrollment based on current actual enrollment numbers and recent enrollment history, the
committee projects near-term future enrollment to remain stable. This is based on a currently
more accurate model from the most recent Applied Population Laboratory study.
2. Operating costs specific to our current three buildings and programs to meet students present
and future needs along with ongoing cost increases.
3. Examining recent historic budgets, the committee projects a 2% increase in expenses.
4. An overall 1% increase in revenue annually from the state is projected.
5. Based on history of four-year levy cap override votes providing the necessary funding to satisfy
the projected needs - - and a desire to determine the true operating costs of the new high
school during this transitional time for our district --a four year time frame is being
recommended.
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6. The potential budget cuts identified in 2011 in the event of a failed referendum would likely
remain in the event of a failed 2016 referendum. It is the will of the committee to leave the
exact cuts to the district administration and school board. Those possible cuts are attached as
Appendix B.
7. Teacher contracts are approved by mid-May, so the finance committee recommends the
earliest possible election date to assure continuity in staffing, and allow retention and
recruitment of highly qualified staff and efficiency in budgeting for the 2016-2017 school year.
8. The district recognizes the need to attract and retain quality teaching staff to deliver the
curriculum and opportunities necessary for student preparedness.
9. The district is committed to providing curricular options that will attract and retain students to
the district to reduce the open enrollment deficit.
10. The district has committed to a continuous improvement model in academics and measuring its
effectiveness.
11. Property tax impact is an important consideration in assuring voters understand the
importance of this investment.
CAUTIONARY NOTE ON NEW HIGH SCHOOL OPERATIONS:
Voters approved a separate $110,000, 4-year operating referendum for the new high school beginning
in fall 2016-2017 to help bridge additional operating costs of bringing a fourth building on line. This
amount was formulated based on enrollment trends and projected utility fees and operating costs.
The finance committee strongly recommends that the school district monitor all the assumptions
closely, especially as the actual operating costs are known within two years, to assure the approved
referendum will be sufficient to successfully operate its schools.
The Recommendation:
Based on projected state revenue increases of 1% and projected expense increases of 2%, the
finance committee recommends a non-recurring levy cap override of $1,870,000 for four years
beginning with school year 2016-2017.
The property tax impact of this levy, based on current economic factors, would be approximately $261
annually per $100,000 of home value, an increase of $46 above current levels. The finance committee
feels the public would support this amount and term limit.
Current mil rate
levy mil rate increase
total impact
2.15/$1,000
.46/$1,000
2.61/$1,000
Current annual levy
proposed annual increase total annual impact
$215/$100,000
$46/$100,000
$261/$100,000
* Historically, the last two levy cap overrides have resulted in $51 and $50 annual increases,
respectively.
The earliest possible election date upon board approval is February 16, 2016.
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APPENDIX A: PRIOR PERMANENT BUDGET CUTS AS DOCUMENTED IN 2007 REFERENDUM
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APPENDIX B: POTENTIAL CUTS IDENTIFIED IN 2001 REFERENDUM IN THE EVENT OF AN
UNSUCCESSFUL REFERENDUM VOTE
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