Education Funding – Part III of Series – Referendums

EDUCATION FUNDING PART III OF SERIES

Referendums

In Wisconsin, current law limits the annual amount of revenue each school district can raise, this is called the Revenue Limit or Revenue Cap.  What a school can spend on education for a year is a set limit, comprised of two factors, the state aid and the levy amounts (the amount the schools tax locally). If the state provides more state aid, the amount the locals can tax reduces to keep them under the revenue limit or cap. If the state provides less aid, the amount the schools can tax locally goes up. If a school wants to spend more money than what is allowed under their revenue cap they must go the local property tax owners and ask for permission to increase local taxes. For the purposes of this report, we will only discuss three types of referendum questions – questions to issue debt, questions to increase the revenue cap for a certain amount of time (non-recurring), and questions to increase the revenue cap on an on-going basis (recurring).

A referendum is an individual question, asking the voters if they will approve or disapprove the school district spending money beyond their revenue cap or to issue debt.  While many people think of a referendum as an event, it is actually the individual question. The passing of 2017 Act 59 (the biennial budget) means that as of January 1, 2018, a school district can only hold two referendum questions in one calendar year to be held on regularly scheduled spring and fall election days, with the exception of districts who have faced a natural disaster. In the case of a natural disaster, a district may have a special referendum within the six months following the disaster but no sooner than 70 days after the adoption of the resolution.

Schools hold referendum usually for two reasons, to exceed the revenue limit to maintain programs and staffing, or to issue debt, generally used for building or material needs like computers or equipment. From 1999 through July 1, 2018, Wisconsin residents approved $9.7 billion in referendum questions. Most of those funds are issue debt by school districts. The average amount of money asked for in a referendum question, except for recurring referendum questions, has increased, with a spike in 2016.

A referendum may be held by a school district to exceed its revenue limit. The school board must approve of the resolution supporting inclusion of an amount in the school district budget that will exceed the revenue limit of the district (via Legislative Fiscal Bureau). A referendum may be recurring or non-recurring. If a recurring referendum is passed, then the revenue limit for the district will increase by that amount in the following year. If a non-recurring referendum is passed, the revenue limit is not increased the following year.

In order to hold a referendum, a school district must follow a series of guidelines set by the Wisconsin Statutes. To have a referendum on the spring or fall ballot to incur debt, a school board must adopt a resolution no less than 70 days before the election. They must publish the adoption of the resolution within 10 days of adoption and notify DPI about the resolution. For a resolution to be on the fall ballot, the resolution must be adopted and posted by about Labor Day, and to be on the spring ballot, it must be adopted and posted by about the end of January.

The percentage of referendums (all types) passed is going up, particularly for issue debt. The percentage of overall referendums passed in 2018 (up to July 1, 2018) is at 85%, with recent years having 60-80% of all referendums passed. In comparison, the early 2000s had a passing rate of 25-60%. Recurring and non-recurring referendums have been presented at a steady rate, not increasing or decreasing dramatically, and have been passing at a steady increase. The Walker Administration has seen more referendums passed than any other administration over 20 years.

While the total amount of issue debt referendums, along with recurring and non-recurring referendums, being held each year is seeming to be on a downward trend, the amount of money per referendum is tending to increase. Districts are asking for more money less often. It is likely that districts would hold referendums more often if they could. The highest amount from an issue debt referendum was from Verona Area in April 2017 to construct a new high school and auditorium, renovate and reconfigure the current Verona Area High School and Badger Ridge Middle School, district-wide capital and building infrastructure improvements and repairs and related furnishings, fixtures and equipment. They had asked for $162,760,000.00. The least asked for in an issue debt referendum was in 2006 by Tigerton to fund roof repairs on the elementary school and buy a new school bus.

In 2016, the Madison Metropolitan School District asked a recurring referendum for $26 million, the largest recurring debt in the last 20 years. The smallest recurring debt was $19,250.00, asked by Stoughton in 1999. The average amount to be asked for in a recurring referendum has seen an increase, but not necessarily a consistent increase as it has gone down in the last few years. The number of recurring referendum passed has gone up exponentially since 1999.

The average and median amount of money asked for in a non-recurring referendum has seen an increase, along with the number or non-recurring referendums passed. In 2017, the Green Bay Area asked for $165,000,000.00 to exceed their revenue limit by $16,500,000 each year for 10 years, in order to approach the state average in educational programming and class sizes and to retain staff. The lowest amount asked for in a non-recurring question was $45,000 by Phelps in 2009 to improve the school fitness facilities.

For additional information on school referendums, read the FOCUS by the Wisconsin Policy Forum (formerly the Wisconsin Taxpayers Alliance).

 

Thank you to DPI and Legislative Fiscal Bureau for their assistance in gathering data and answering questions pertaining to school referendum.