MONROE — School District of Monroe taxpayers may face yet another referendum question in the coming months, as the 2024-25 operational budget deficit continued to grow despite nearly $1 million in cuts made earlier this year. The district last passed an operational referendum in 2016, and most recently in 2022 passed an $88 million capital referendum to build a new high school and update Abraham Lincoln Elementary.

At its meeting on June 10, the School District of Monroe Board of Education approved a temporary operating budget for the 2024-25 school year, which stands in to keep operations running until the public annual meeting in October. However, hard decisions remain in regards to the operating budget moving forward.

Last year, the district faced a growing deficit in its operational budget. Years of a lack of state funding and an expiring operating referendum meant the district would facing more than a $3 million shortfall this upcoming school year. Painstakingly, the district found a way to save more than $900,000 through a combination of cuts in staff and third-party vendors. 

Unfortunately, the district also found out there will be a 1.4% increase of expenditures, which practically offsets those previously made cuts, district business administrator Ron Olson said.

Revenues were down 2.69% last year. Part of that is related to COVID-19 ESSER Funds and the retiring 2016 referendum. Then there are the problems of rising health insurance costs, declining enrollment and a lack of state funding that has failed to keep up with the costs of expenses. That formula means one thing: A budget deficit even larger than expected, despite those previously made cuts.

“The fact that we’ve contained our expenditures, but our revenues are moving backwards is why our deficit isn’t where we’d like it to be,” district business administrator Ron Olson said. “Budget development has been going on for a long time. We had a discussion earlier in the year and actually made a number of cuts.”

Monroe went from a $3.2 million deficit, and with the $900,000 in cuts, reduced it to about $2.3 million. With the change, as it stands now, the deficit number has risen even higher to $2.69 million at no fault of the district. 

If there is any relief coming from the state, the numbers can’t come soon enough. The estimated state equalization aid amounts won’t be given to the district until July 1, with the final numbers until Oct. 15. 

“All the reality is, is does it really mean anything at this point? The revenue limit dollars are either going to be equalization aid or the tax levy. The more that comes in for equalization aid, the less on the tax levy,” Olson said.

The situation isn’t unique to Monroe, but rather statewide. 

“At the next board meeting, we’ll be talking more about the state of school funding and board referendums and what’s really been driving that across the state — and why so many districts are in that boat. … Funding hasn’t been keeping up with the cost of expenses,” Olson told the board. “That’s why you’ve seen a wealth of referenda questions this last spring, as well as looking forward into the fall. You had zero dollar increases during the two-year biennium prior to this … If you look at it as a continuum, you need dollars increasing. Here it fell, and it’s starting to go up, but it never put us back in line of the trend that we need. Across the state, operational referendums have become not only a normal cost of doing business, but it’s becoming incrementally more and more the cost of doing business.”

The number of referenda going in front of voters has increased dramatically since 2012, the year after Act 10 was signed into law, which limited many districts on how much it could tax its base to continue operations. In 2018, 90% of referendums across the state were passed, according to the Wisconsin Policy Forum. 

However, voter fatigue has started setting in, it seems. This past spring election, the state saw the highest number of referenda questions in more than 20 years, but only 62 out of 103 (about 60%) were approved by voters. That continued the trend of declining approval rates in both 2020 and 2022. 

This November, just as many — if not more — referenda questions are expected across the state compared to the spring, experts say, as many districts are also trying to close the gap on their deficits.

Compared to other school districts — especially those in the Rock Valley and Badger Conference — Olson said that Monroe spends less per student than many others, so the situation could be worse.

“When you look at how much we’re spending on operating referendum per pupil compared to most of our neighbors and those in the districts of either the Rock or the Badger, we’re significantly less,” Olson said.

He again clarified that there are multiple budgets the district accounts for, and those dollars don’t transfer from one account to another. For instance, the $88 million capital referendum passed by voters in 2022 can only be used for construction projects at Abraham Lincoln and the new high school, and not be diverted to salaries or vendor costs. There are separate budgets for food services, special education, activities, the Monroe Public Library and the school resource officer (SRO).

Board member Mike Froseth asked about how long is the leash for the “burn rate — when will we run out of money?”

Olson said to run out of money, it would be about four years, but realistically after two years the district would reach a point where they would be under the amount to be able to afford short-term cash borrowing, which he said is equivalent to living off of a credit card, and would add higher interest costs to the bank.

“I always say you would much rather spend tax payer’s dollars on people and programs than spending them on interest to a bank because you have to short-term cash-flow borrowing,” Olson said. “Four years is the real answer, until you would run out or be churning through it all. Two years until you would have to look to that short-term cash-flow borrowing.”

Frankly, Olson said, the time could be coming to soon ask the tax base for more money through another operational referendum.

“We’ve been living in revenue limits since 1993 — so 31 years. All the easy cuts that could have been made, have been taken away already — all the things you can take away without hurting kids is gone,” Olson said. “If you don’t do an operating referendum, we can live for a little while, but yes, at some point we’ll have to run that question — whether it’s now or later — or we’ll have to make deeper reductions.”

“We’re on the precipice, it looks like,” board member Terri Montgomery said.

Froseth agreed with Olson: The reality is that the district cannot operate very long in the red, so the board will have to look at either a referendum, “and a significant one,” or a minimum large reduction in budget and educational programing.

“I would argue we don’t really have time. The budgeting process for a school district is monumentally slow,” Froseth said. “We can’t wait until next year and say, ‘Ope, we ran out of funds for the following year,’ because it’s almost too late at that point.”

If the board were to wish to ask district taxpayers to pass an operational referendum, it would need to be done by late August in order to be on the ballot for the Nov. 5 election. The deadline to put a question onto the August primary ballot has passed, let alone the fact that further discussion and wording would need to be worked out in order for the board to approve approaching taxpayers to pass the measure.

“We’ll be discussing this much more at the next meeting (June 24), and at the meetings in July and as we move forward. There’s a lot of steps in this process, but it will be a regular theme in the coming board meetings over the next three months,” Olson said.

At the June 10 meeting, the board also:

●  Approved its Wisconsin Association of School Boards (WASB) membership

●  Heard an update from activities director Jeff Newcomer on participation rates of high students in extra curriculars (sports and clubs) for the 2023-24 school year

●  Heard an update on student performance from curriculum director Todd Paradis

●  Heard summer school began with more than 1,000 students taking part in programs at Monroe Middle School.

To watch the full school board meeting, as well as archived meetings and student activities from the district, go to https://www.youtube.com/@monroeschoolswi.