Fiscal Analysis of Stoughton School District Budget


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A project I completed for my master\'s degree- I evaluated the effects of the legislature\'s revenue caps on the Stoughton Area School District\'s ability to provide educational services.

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  • Fiscal Analysis of Stoughton School District Budget

    1. 1. The Looming Fiscal Crisis at the Stoughton Area School District a paper by Sam Wayne
    2. 2. About SASD <ul><li>District has approximately 3,650 students </li></ul><ul><li>Enrollment is declining at about 1% annually </li></ul><ul><li>Per Pupil spending is very low </li></ul><ul><ul><li>87% of state average </li></ul></ul><ul><ul><li>Less than 90% of districts statewide </li></ul></ul><ul><li>High School recently failed to meet Adequate Yearly Progress standards for No Child Left Behind Legislation </li></ul><ul><ul><li>Performance of Disabled subgroup was not adequate </li></ul></ul>
    3. 3. Revenue Limits <ul><li>In 1993, the State Legislature passed Statute 121.90 limiting the rate at which per pupil spending can increase </li></ul><ul><li>Passed in response to statewide call for property tax “relief” </li></ul><ul><li>$241.01 per pupil increase allowed next year </li></ul><ul><li>Districts can override spending limits by passing a referendum </li></ul>
    4. 4. Effects of Revenue Limits on SASD <ul><li>Salaries and Benefits account for 76% of SASD’s 2003-4 budget </li></ul><ul><li>These costs rise annually at average of 5% </li></ul>
    5. 5. Possible Expenditure Reductions <ul><li>Republican Majority in Assembly and Senate wish to pass a Property Tax Freeze or Taxpayers Bill of Rights (TABOR) Amendment in next session </li></ul><ul><li>In 2003, Property Tax Freeze failed to override Gov. Doyle’s veto by 1 vote in Senate </li></ul><ul><li>TABOR was on the agenda this year, but did not garner enough support to come to a vote </li></ul>
    6. 6. General Provisions of Tax Freeze <ul><li>Districts may increase their property tax levy by $100 per pupil each year </li></ul><ul><li>SASD projects that all increases in expenditures will be funded by property taxes </li></ul><ul><li>Likely result- replace $241.01 per pupil increase with $100 per pupil increase </li></ul><ul><li>If state further cuts equalization aid, the district will still be allowed only $100 per pupil increase in property tax levy </li></ul>
    7. 7. Effects of Tax Freeze on SASD <ul><li>Assuming state aid remains constant </li></ul><ul><li>Tax Freeze cuts allowable growth from 2.6% to 1% </li></ul>
    8. 8. Effects of TABOR on Schools <ul><li>School districts may increase their per pupil spending by the previous year’s CPI index (inflation) </li></ul><ul><li>Average inflation 1986-2002 is 2.94% </li></ul><ul><li>Current revenue caps allow per pupil spending to increase by 2.6% </li></ul><ul><li>If TABOR were enacted in 1986, it would have lowered SASD spending in 9 of 18 years between 1986 and 2002 </li></ul>
    9. 9. SASD’s Budget Cut Options <ul><li>Increase class size </li></ul><ul><ul><li>District policy to average 20 students per class </li></ul></ul><ul><ul><li>Most classrooms in district can seat 25 students </li></ul></ul><ul><ul><li>Will cut at most 20% of teachers </li></ul></ul><ul><ul><li>Save $3.475 million annually if all cut immediately </li></ul></ul><ul><li>Eliminate non-essentials </li></ul><ul><ul><li>Art, Music, Phys-ed, “Talented and Gifted” program, advanced classes, junior varsity, and varsity sports </li></ul></ul><ul><ul><li>Will cut at most 10% of expenses </li></ul></ul><ul><li>Neither of these, even when combined, will cut enough expenses to avoid eventual need for annual referenda </li></ul>
    10. 10. Need for Ongoing Referenda <ul><li>In order to provide district services at or near current levels, spending referenda will have to pass annually once General Fund is depleted </li></ul><ul><li>To operate at bare-bones capacity, referenda will have to pass annually starting in 2015 </li></ul><ul><li>Superintendent Dr. Myron Palomba says that annual referenda will be necessary to keep the district from shutting down </li></ul>
    11. 11. History of Referenda for SASD <ul><li>The district has passed all four spending referenda it has floated since 1994 </li></ul><ul><ul><li>1994: $28 million </li></ul></ul><ul><ul><li>1998: $320,000 </li></ul></ul><ul><ul><li>2001: $2.5 million </li></ul></ul><ul><ul><li>2003: $4.5 million </li></ul></ul><ul><li>Past referenda were all for capital improvements </li></ul><ul><li>District residents were not subject to “bumper-sticker campaigns” </li></ul>
    12. 12. Legitimizing an Ongoing Referenda <ul><li>To avoid a negative fund balance, the district plans on floating a referendum this year </li></ul><ul><ul><li>This is a good way to test public sentiment towards exceeding revenue limits, and allows for a failure before a negative fund balance </li></ul></ul><ul><li>In order to credibly float referenda annually, the district will have to make a few service cuts </li></ul><ul><ul><li>Immediately laying off 4-5 teachers may be necessary </li></ul></ul><ul><ul><li>In addition, there may have to be a hiring freeze for the next few years as the public gets acclimated to voting on the district budget </li></ul></ul>
    13. 13. Structuring an Ongoing Referenda <ul><li>After proposing referendum this year, use General Fund monies until they expire in 2006-2007 </li></ul><ul><li>Each year referendum should cover all operating costs above imposed restrictions </li></ul><ul><ul><li>Postponing payment by lowering the amount sought only increases funds necessary in the future </li></ul></ul><ul><li>The public should be aware that a referendum will have to pass every year to prevent severe service cuts </li></ul>
    14. 14. Other Recommendations <ul><li>Lobby incoming State Senator Mark Miller and incoming Assemblyman Gary Hebl against a Property Tax Freeze, a TABOR amendment, and the current Revenue Limits </li></ul><ul><ul><li>This will not be very effective, because: </li></ul></ul><ul><ul><ul><li>Both men are already against these issues </li></ul></ul></ul><ul><ul><ul><li>Both men are generally powerless, as they are new members in the minority party </li></ul></ul></ul><ul><li>Join with other school districts affected by Revenue Limits to create a lobbying force separate from WEAC </li></ul>