The city of Madison this week outlined a series of cuts it says will need to be made if voters don’t approve the city’s $22 million referendum in November. But don’t expect the Madison School District to follow suit.
If the $100 million school operating referendum fails next month, the school board plans to prop up the budget by pulling money from reserves, which as of July 1 totaled $114.6 million. The district would spend about $46.3 million from its reserves to avoid putting programs and personnel on the chopping block right away, Assistant Superintendent for Financial Services Bob Soldner told the Wisconsin State Journal.
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That, however, is a one-time solution the district can’t afford to take far beyond this school year.
If the referendum fails, Soldner said, staff and programming reductions are likely in 2025-26, given that employee wages and benefits account for 80% of all spending.
Since 1995, 13 of the 16 referendum questions put to voters by the Madison School District have passed. Several raise taxes forever.
The district still plans to draw down reserves by about $22.9 million in the current school year, even if the operating referendum is successful, in part to pay for wage increases that already have been approved.
Soldner also said the district would spend some of this money on expanding full-day 4K, multilingual education and career opportunities for middle schoolers. At this point, no specific expansion plans or associated costs have been shared.
The drawdown of reserves and the need to ask voters for more is a consequence of a state funding formula that hasn’t kept up with inflation, school administrators and board members say.
“We’re at a point where the board is going to make some really difficult decisions if we don’t get sustainable ongoing revenues,” Soldner said.
The preliminary budget the Madison School District already has in place assumes no extra money will come in from taxpayers. The School Board approved that version of the budget, which calls for about $501 million in total spending from the district’s general education fund, in June. That figure represents most, but not all, expenses.
The budget adds more than 100 full-time positions compared with last school year. Most of the additions are at the classroom level, with more teachers and education assistants added back to schools, along with more mental health staff. The budget also accounts for about $15 million in health care increases.
Raises for several employee groups will go into effect regardless of the outcome of the referendum, too. Soldner said these expenses would be part of the $46.3 million set to be pulled from reserves.
In September, the School Board approved a 2.06% raise for employees that will cost about $7.1 million in 2024-25.
Referendum dollars would pay for another 2.06% wage increase for teachers and staff, bringing the total pay boost to the maximum allowable 4.12%. The total increase will cost about $14 million in 2024-25, Soldner said.
The Board also voted last month to spend $1.9 million to adjust salaries for some student services staff. Wages in the department had been compressed for several years, so newly hired employees with less experience were earning close to, or more than, employees with more tenure.
And bonuses for substitute teachers recommended in July will cost between $400,000 and $500,000 each year.
What’s next?
The School Board is required by law to approve a balanced budget.
Board policy also requires the district to maintain a fund balance that is equal to 10% to 15% of its general operating budget, which currently sits at about $496.6 million.
If the referendum fails and the School Board takes $46.3 million from reserves this year, the district will end the fiscal year with an estimated $68.3 million in reserves, or roughly 14% of the general operating budget.
While still within the board’s policy target, drawing down reserves significantly limits the district’s ability to use this pot of money again right away and could risk hurting the district’s financial rating.
Later this month, the School Board will approve two different versions of the district’s 2024-25 budget — one that assumes the referendums are successful and another that assumes the measures fail. Required by state law to adopt a final budget before the end of October but not yet knowing the outcome of the referendums, the board needs to have a plan in place for both scenarios.
Helping the board’s bottom line, Soldner said, is the fact that the district is getting more money from the state than originally expected and is projecting a slight increase in enrollment, the key metric in determining state funding.
The School Board is scheduled to discuss budget scenarios on Monday and take a final vote on both budgets on Oct. 28.
Still unavailable for public viewing is the district’s detailed spending plan that accounts for a successful operating referendum. A broad overview indicates general education fund spending would increase to $508 million.
Because the full $100 million amount would be implemented gradually over four years, Madison schools would have an additional $30 million to work with in the 2024-25 budget.
An unsuccessful referendum in November could prompt the district to come back to voters with another proposal as early as next spring.
