As reported in the State Journal last week, it now looks like state aid to the Madison school district may be cut next year even more than we had expected.
This year, we received almost $50 million in general state aid. With the cuts in school funding at the state level, we knew this amount would be reduced, as it has been for each of the last several years.
The state budget bill includes a provision that caps the amount a school district’s general state aid can be cut to 10% of this year’s total. It’s not hard to figure out 10% of 50, so we expected that our state aid would be cut a bit less than $5 million, leaving us with a bit more than $45 million.
Well, not so fast. The Department of Public Instruction estimated last week that Madison will lose 13.5% of its state aid next year, or about $6.7 million. On a percentage basis, this is the third highest cut among the more than 400 school districts in the state.
How can we lose 13.5% when the budget bill says a district can’t lose more than 10%? It’s complicated. A year ago I wrote about DPI’s estimates of state aid for the 2010-2011 school year showing Madison receiving about $1.5 million more than we were expecting, as a result of some one-off adjustments to the state funding formula. My assumption is that the extra money we received this year was excluded from the state aid calculation before the state figured out the 10% maximum cut, though that does not seem to explain the entire variance.
As the last two years of DPI July estimates show, our state aid calculations tend to bounce around. We’ll get a final figure in October, and it will likely be different from what DPI is currently estimating.
Also, it appears as if the District might have become eligible for additional state aid that is earmarked for high-poverty school districts. This could mean an additional $1.7 in state aid.
We just recently passed a preliminary budget for the 2011-2012 school year that keeps the property tax levy at its current level of about $245 million, but that was premised on an apparently overly-optimistic assumption about how much state aid we’ll receive next year.
If the current DPI estimate holds up and we do not receive the high-poverty aid, we’ll have about a $2.2 million budget hole. (I realize that my explanation above indicates a somewhat smaller deficit, and I can’t reconcile the numbers at the moment.) If the DPI estimate is correct and we do qualify for the high-poverty aid, we’ll face about a $450,000 deficit.
However it turns out, if we face a budget hole our options are straightforward. Option 1: We can increase the property tax levy to fill the gap. (As a general rule of thumb, increasing the tax levy by $1 million translates into about an $11 increase for a $250,000 house. A $2.2 million increase would raise the tax levy on that home by about $24.) Option 2: We can make up the gap through spending cuts. Or Option 3: We can do a combination of both.
What should we do? Let’s let the people have their say, or at least that particular slice of the people that find their way to this blog.
You’ll see a poll below that lays out the three options described above. Just for the heck of it, I’m also including as an option that we should tax to the max and raise our property tax levy as high as possible, which would be about $253 million, would increase the tax levy on a $250,000 house by about $88, and would provide us with almost $6 million more to spend.
Please select the option that best represents your views. I believe you’ll only be able to vote once. No voter I.D. required just yet.
Thanks! This is the first time I’m trying a poll, so we’ll see how it goes.
UPDATE: Thanks to all who have voted so far. Marcia Standiford, who this month became the school district’s Supervisor of Public Information, reminds me that this spring the district offered a survey on budget issues to MMSD staff and garnered nearly a thousand responses (quite a few more than have registered their views here so far).
Information on the survey can be found here. One of the survey questions asked what strategy the district should pursue to deal with the need for additional revenues. The question was framed in terms of the percentages of increased revenue/decreased costs that should come from the different options.
Here is the question:
The precise amount of additional revenue needed for the 2011-2012 budget is in flux due to several factors including the state’s biennial budget. However, significant additional revenue will be needed in order to continue providing our current level of service.
At this time there are four ways school districts can generate additional revenue.
In your opinion, what percentage of the additional needed revenue should come from each of the following options?
Here are the responses:
|Q1 Summary What % should come from each of these? (only responses that added up to 100% included)|
|Total Responses 980 (32 skipped entire question, only 841 with 100%)|
|Reduce services, programs and/or expense||Make services and programs more efficient||Generate new or additional revenue||Increase the property tax levy (if available)|