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During their August 13 meeting, in a unanimous roll call vote, the DeForest Area School District (DASD) Board of Education passed a resolution to exceed the revenue limit for recurring, operational purposes in the amount of $7,900,000. This referendum question was on the November 5, 2024 ballot and was approved. The funds will be allocated towards supporting educational programming, retaining staff, and maintaining facilities in the 2025-26 school year.
In the fall of 1993, the Wisconsin legislature (s. 121.90) instituted a limit or control on the revenue a school district is entitled to receive each year. The control applies to revenue received from two sources:
general state aid (equalization, special adjustment and integration aids); and
select local levies (General Operations-Fund 10, Capital Projects-Fund 41 and Non-Referendum Debt-Fund 38).
The results of this computation can have significant impact on district finances, as general state aids and the General Fund (Fund 10) tax levy can comprise anywhere from 70-90 percent of a district's total General Fund revenues. SOURCE: DPI
Since 1994, Wisconsin school districts have been primarily funded by a combination of state aid and local property taxes.
Each school district in Wisconsin has a revenue limit created by the state budget. This limit caps the amount of money a district can receive through state aid and local property taxes. A district’s revenue limit is directly linked to two things: enrollment and state-approved adjustments. In most cases across the state, the revenue limits have not kept pace with inflation.
In addition, school boards can ask voters to pass an operating referendum. An operating referendum allows the district to raise its revenue limit authority.
Most districts in the state have used operating referendums to meet their budget challenges.
Yes, we are not alone in facing these challenges. More than 82% of Wisconsin school districts have proposed operational referendums to their communities over the past 30 years. In fact, 120 Wisconsin school districts will have 137 referendum questions on the November 2024 ballot.
DASD is the only school district in Dane County that has not pursued an operational referendum since 2020.
An operational referendum is a mechanism that allows school districts to seek additional funding by asking their communities to increase their revenue limits.
School districts may initiate two types of referendums to increase funding.
First, a district may hold a referendum to issue debt for a specified purpose. These are often referred to as “capital referenda,” because the funds are typically (but not always) for construction and other large capital projects. A capital referendum provides the authority to issue a certain amount of bonds/notes to pay for a capital project.
Second, a district may initiate a referendum to exceed its revenue limit without issuing new debt. These are referred to as “operating referenda.” An operating referendum pays for things such as utilities, routine maintenance, salaries and benefits of all staff, insurance, supplies, etc.
The word recurring means “occurring again periodically or repeatedly.” In a recurring referendum, there is an amount of dollars added each year in perpetuity. The word non-recurring means “not occurring repeatedly or occurring one time only.” In a non-recurring referendum, the amount of dollars is added on a temporary basis (number of years specified).
The Board of Education has allocated an additional $3 million of our fund balance to meet our financial needs in 2024-25. However, this is a short term solution. In order to maintain our ability to borrow at a favorable rate and meet BOE policy our fund balance needs to remain at 25% of the total district budget (approx. $55 million).
Fund balance reserves are similar to savings accounts, once the money is spent, it is gone. A savings account is not a long-term solution for covering ongoing costs.
The DeForest Area School District is facing significant financial challenges driven largely by factors beyond our control. Like all Wisconsin school districts, DASD operates under a revenue limit, which caps the amount of funding we can receive through state aid and property taxes. Unfortunately, the revenue limit formula results in DASD receiving significantly less funding per student compared to our peers in Dane County.
Currently, DASD receives the second lowest amount in revenue limit per student among all districts in the county. Our district’s limit is $11,941 per student, while the county average is $13,593.
The financial strain is further exacerbated by the fact that, by the end of 2025, our per-student funding will have fallen more than $3,300 behind inflation per student annually.
Addressing these challenges is crucial to ensuring that we can continue to provide the high-quality educational experience our community has come to expect from our schools.
The district has a proven track record of financial responsibility and keeping property taxes as low as possible in our community.
DASD is one of four school districts (out of 421) in the entire state with the highest possible Standard and Poor’s AA+ financial rating. This rating reflects strong financial health and management.
In 2024-25, DASD plans to again use funds from our fund balance—which is essentially our district savings account—to maintain a balanced budget. We are strategically spending our savings before impacting our community. In fact, we anticipate using $3.9 to $4 million of our reserves for this purpose.
It’s important to note that our fund balance to balance the budget is not a sound long-term solution, as it can negatively affect our credit rating, making borrowing more expensive in the future. Relying too heavily on fund balance also means the district has less savings available to cover unexpected costs should they arise.
Additional adjustments:
Lowered the amount needed from future tax levies for debt payments, which will offset the increase of the future referendum
Reduced future interest expenses by paying debit down earlier, reducing the need to levy for this expense in the future
Continued proactive fiscal management
Used federal, one-time ESSER funding for operational expenses due to $0/student increase in previous biennium state budget
Engaged in legislative advocacy
Froze building budgets for the last three years
Limited hiring to only what is needed due to growth
Use of fund balance (savings account) prior to seeking community taxpayer support.
Utilized previously set aside reserves and previous unspent funds resulting from the COVID pandemic closures to balance the budget
Made adjustments to the debt service levy and future debt payment plans.
Lowered the amount needed from future tax levies for debt payments, which will offset the increase of the future referendum
Reduced future interest expenses by paying debt down earlier, reducing the need to levy for this expense in the future
Stabilized the tax mill rate to minimize future spikes that would otherwise occur with a new referendum
Additional adjustments:
Continued proactive fiscal management
Maintained AA+ Bond Rating = saving interest
Used ESSER funding for operational expenses due to $0/student increase in previous biennium state budget
Engaged in legislative advocacy
Froze building budgets for the last three years
Limited hiring to only what is needed due to growth
Allocated over $3 million of fund balance for 2024-25 to cover budget shortfall
As a district, we have taken proactive steps to manage the significant financial challenges we face. One of the first steps was to allocate one-time federal COVID relief funds (known as ESSER) to help balance our budget during the 2021-23 biennium. These funds were crucial in offsetting revenue shortfalls, including supporting 16 full-time positions with temporary dollars. This allowed us to maintain essential services without immediately turning to our community for additional financial support.
We also froze building budget allocations for the past three years and restructured district leadership to achieve greater efficiency. At the same time, we engaged in an informational campaign to keep our community updated about the financial challenges we were facing and the steps we were taking to address them.
To further delay the need for a referendum, the Board of Education approved the use of our fund reserves to meet operational needs for both the 2023-24 and 2024-25 school years. While this approach allowed us to maintain balanced budgets temporarily, it is not a sustainable long-term solution. Using these reserves extensively could eventually harm our financial health, impacting our credit rating and increasing future borrowing costs.
In August 2023, the Board of Education approved a debt reduction plan. By restructuring our debt and paying off certain obligations early, we were able to establish a decrease in the debt levy. This, in turn, will help offset the tax impact of the proposed operational referendum in 2025-26, saving taxpayers money over the long term.
Through careful planning, strategic use of available resources, and ongoing community engagement, DASD has managed to navigate these financial challenges while continuing to provide quality education for our students. However, it has become clear that a more permanent solution is needed.
We have made an effort to engage our community around this important issue over the past two years. In November 2023, we held an all day community conversation, “Framework for Our Future, 3.5”. Parents, staff, and community members identified several key priorities for DASD as it addresses its financial challenges:
Maintain instructional programming
Manage growth and retain staff
Maintain infrastructure
Additionally, the Board of Education and members of the DASD administrative team held 27 community engagement sessions from February to June 2024. In addition to building understanding around public school funding, input was sought on possible support for an operational referendum ranging from $6.5M - $13.5M. We also shared information at the DeForest farmer’s markets, at the Community Expo, and via a DASD podcast focused on school funding.
Finally, the district launched a website focused on Future Funding and the district’s emerging financial needs to further inform and engage our community around these important issues.
On Tuesday, November 5, 2024, our community will vote on a proposed $7.9 million recurring operational referendum. If it’s approved, the referendum would enable DASD to fund the following priorities:
Maintain class sizes and instructional programming
Manage enrollment growth and retain staff
Maintain infrastructure, including technology, school safety, and emergency preparedness
We believe an operational referendum is the best option to address our financial needs and ensure students continue to have access to the exceptional educational experience our community has come to expect from DASD.
These objectives have been identified by our community as top priorities for DASD as we address our financial needs.
An approved referendum would have a tax impact of $0.72 for every $1,000 of assessed property value in our community. This would amount to about $288 per year ($24/month) on a home assessed at $400,000.
It’s worth noting that the DASD Board of Education established a debt drop-off in 2025-26 to minimize the impact of an anticipated referendum.
If the operational referendum is not approved, the district will need to make significant budget reductions to balance our finances. These reductions could impact several areas, including:
Class Sizes: We may need to increase class sizes due to potential staff reductions, affecting personalized attention and support for students.
Transportation: Transportation services may be scaled back, which could mean longer bus routes, fewer bus stops, or a reduction in transportation availability for certain programs.
Wages and Benefits: Compensation and benefits for our dedicated teachers and staff could be impacted, potentially affecting our ability to attract and retain high-quality educators and staff members.
With these potential reductions in mind, it's important to note that all options are currently on the table. We are committed to working closely with our community, staff, parents, and guardians to prioritize our needs and make difficult decisions together.
Our goal remains to provide the best possible education for our students, but without the necessary funding from the referendum, we will have to make some tough choices to ensure the district remains financially stable. Community engagement and feedback will be essential in guiding us through this challenging process.
Voters will see the following question on their ballots on Tuesday, November 5:
Shall the DeForest Area School District, Columbia and Dane Counties, Wisconsin, be authorized to exceed the revenue limit specified in Section 121.91, Wisconsin Statutes, on a recurring basis by $7,900,000 beginning in the 2025-2026 school year to support instructional programming, retain staff, and maintain facilities?
