2025 OPERATIONAL REFERENDUM

All Wisconsin schools are subject to a revenue limit, which places a cap on the amount of money that can be raised through state aid and property taxes. This revenue limit is fixed, meaning it does not adjust for inflation. A school referendum is a public vote held by a school district to seek approval from local taxpayers for additional funding to exceed that revenue limit.

School districts may initiate two types of referendums to increase funding: capital referendums and operating referendums.

1. Capital Referendums:
   A district may hold a referendum to issue debt for a specific purpose. These are often referred to as “capital referendums” because the funds are typically used for construction and other large capital projects. A capital referendum authorizes the district to issue a specific amount of bonds or notes to pay for such projects.
2. Operating Referendums:
   A district may also initiate a referendum to exceed its revenue limit without issuing new debt. These are known as “operating referendums” and fund operational expenses, such as utilities, routine maintenance, salaries and benefits for staff, insurance, and supplies.

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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. The majority - 82% - of Wisconsin school districts have proposed operating referendums. Since 2018, 83% of operating referendums have passed. 

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A school district can only place a referendum question on a ballot after going through an official process. The referendum process starts when a school board adopts a resolution to exceed the limit. The permission to exceed the revenue limit can be for either recurring or nonrecurring purposes, i.e., can continue indefinitely or be only for a set period. The school district clerk must then submit the referendum to voters at the next primary or general election, as long as at least 70 days pass between the resolution’s adoption and the election. For the Arcadia School District that means we must adopt a resolution for referendum on or before January 21 2025.

*Info provided by the Wisconsin Legislative Reference Bureau

Under the state of Wisconsin’s one-size-fits-all funding mechanism, much of the responsibility for funding schools rests on local property taxpayers. The state legislature has also frozen increases to state aid for public schools for multiple years at a time when districts must address the challenges of rising costs and a highly competitive labor market. Salaries and benefits account for over 80% of our current budget and over 80% of projected expense growth over the next five years.

Our district, like many others, does not receive adequate funding to cover programs and services mandated at the state and federal levels and that are designed to provide equitable opportunities for students to grow and reach their maximum potential. 

A primary example of the lack of state funding and reimbursement to public schools for essential services is special education services. Under federal law, Wisconsin’s public schools are required to meet the needs of students with disabilities, regardless of how much it costs to provide that service. Currently, our public schools receive a base reimbursement rate of 33% from the state to help pay for special education, but this then leaves them to pay the remaining costs. This means the Arcadia School District must pay 100% of the costs for special education services while being reimbursed for only one-third of those expenses.

State reimbursement for required special education services ranges between approximately 28 - 32% leaving school districts to fund the remainder of the required services from Fund 10. 

The Arcadia School District has never passed an operational referendum, but the use of operational referendums across the state continues to increase.

The school funding system was established in 1992 and is outdated. In 2009, the state Legislature decoupled per-pupil revenue limits from inflation, and districts have had to manage tighter budgets ever since, especially as inflation in recent years has exceeded revenue limit increases. Since 1992, 82% of Wisconsin school districts have relied on operational referendums to offset inflationary costs and balance their budgets.

Six of the Seven school districts bordering the Arcadia School District currently utilize operational referendums.  See diagram below of districts with current operational referendums in place (NR=non-recurring, RR=recurring).

 

 

The amount of state funding received by the District is not projected to be impacted by the operating referendum.  The operating referendum increases the total amount of funding the District is able to receive through a combination of state funding and property taxes.  State funding is determined first and the District is allowed to raise the remaining amount through property taxes.  While the funding formula is complex and impacted by many variables, our projections do not show a negative future impact.

 Rising inflation and expenses are the main reasons for the expected funding gaps. Although adding more students would increase revenue, the District would need revenue from 450 new students to fully close the current funding gap. It is also important to note that additional students would require more staff, increased operating expenses, and more educational space. Currently, the District believes it has adjusted staffing levels appropriately to match enrollment, with a student-to-teacher ratio of 1:24-28. The District is using all available funds as well as fund balance to cover rising costs due to inflation. This has contributed to the Fund balance being at this low point as well as the extra borrowing due to cash flow issues. At this time, however, there are no funds available for unexpected facility needs or repairs.

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