Get ready for a property tax increase.
Racine Unified, like many school districts around the state, will face the troubling decision this fall of cutting spending or increasing property taxes to cover a $4.8 million decrease in general state aid.
The news came down this week as school officials came to realize the brutal impact the recently passed state budget will have on districts. (The news may be equally grim for local governments, which are also facing state aid cuts.)
Dave Hazen, Unified's finance officer, described the situation in terms of pie. The Legislature had already determined Unified would have a smaller pie next school year by reducing the annual increase in spending per student. (Yeah, yeah, we know this is a case of an increase being called a decrease, but in terms of budgets, it means a cut in services.)
Unified used the state number to pass a preliminary budget on June 15 that assumed a $3.4 million increase in general state aid. But after the Legislature and Gov. Jim Doyle passed the budget, Unified is now facing a $4.8 million decrease in state aid. (In southeastern Wisconsin, only Waukesha faces a larger decrease.)
Hazen explained that the only way to make up that money is to cut services or increase local property taxes. The district was already anticipating an increase of 15 cents per $1,000 of assessed property value in its preliminary budget. By our calculations, without any cuts in spending (and remember, the School Board already made cuts in its preliminary budget), the district could be looking at a $1 per $1,000 (13.9%) increase in property taxes (that's $150 on a home valued at $150,000, and doesn't include property tax increases from other governments).
The School Board's job over the summer will be to figure out how much of the lost state revenue to pass on to taxpayers and how much to address through cuts, Hazen said.
"The question is how big is the slice (from the state) going to cover and big are local property taxes going to cover," he said.
School districts all over Wisconsin are facing the same decision. Salem, Madison and Oshkosh are all in near-crisis mode after learning of the reductions in state aid. One in four districts around the state will lose 15 percent of their state aid. (Here's a list of state aid to regional school districts.)
Amazingly, Kenosha Unified is not one of the districts facing a cut in state aid. The district actually will receive a $600,000 increase from the state, Hazen said. State officials explained away the roughly 90 school districts who will receive an increase in state money as the product of a "complex" funding formula.
Hazen is still waiting for a response from the Department of Public Instruction on the discrepancy between Racine and Kenosha.
You may also wonder if any of the federal stimulus money could help offset the lost state aid. In a word, Hazen said: "No."
The federal money was already used to minimize cuts in the preliminary budget, he said. It also can only be used for specific purposes, such as special education or math and reading instruction in schools with low-income students.
So what does all of this mean? Look for an increased tax bill later this year. How big, at least Unified's share, must be determined by Oct. 15. The School Board will hold a public hearing on the budget in August before voting on the final budget for the 2009-2010 school year.