School board rejects plan to tax less; risks cited

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Frank Schultz
Wednesday, July 24, 2013

JANESVILLE—A plan to shift funds, resulting in a lower tax increase in the coming year, failed on a 4-4 vote at the Janesville School Board meeting Tuesday night.

Opponents said the plan posed too great a financial risk.

The ninth member of the board, David DiStefano, was absent. Motions fail on tie votes.

Bill Sodemann proposed the plan. It would alter the past year's budget, shifting $1 million from district operational reserves to a fund dedicated to paying early-retirement benefits, known as Fund 73.

Because of state school-funding rules, the fund shift would have resulted in more state aid and less of a tax increase, if the board taxed to the maximum under the state revenue cap.

The board had already approved a similar move of about $1 million that was budgeted but not spent over the past year.

Shifting an additional $1 million would mean the maximum tax increase on a $114,000 house would drop from $19 to $4.

District Chief Financial Officer Keith Pennington has said shifting too much money could cause trouble in a future year's budget, causing a bigger tax increase.

Sodemann, however, argued that a bigger tax increase in a future year would, at worst, add up to the same multi-year tax increase.

“I don't see how we can lose in this deal,” Sodemann said.

Sodemann also noted the board had created the fund to cover early-retirement benefits six years ago and has yet to put a penny in the fund.

While the money would move from one fund to another, it could be withdrawn later to cover the district's early-retirement costs for the coming year, Pennington said.

Deborah Schilling compared the fund shift to a homeowner moving the money for a mortgage payment from one account to another: The money is still available.

But in this case, taxes would not be as high, said Schilling, “which ultimately has been a goal for many of us.”

Karl Dommershausen said the district can't rely on state lawmakers to maintain school funding in future years. Funding could be cut if economic growth is not as good as expected and the state gets into financial trouble, Dommershausen said, and making this move now could come back to haunt a future school board.

“I'm just scared it's going to come out of the schools again. I'm tired of cutting,” Dommershausen said.

Dommershausen also worried that reducing district reserves too much could harm the district's bond rating. Sodemann and Scott Feldt disagreed.

Kevin Murray suggested that the board wait until the end of the 2013-14 budget year and decide then whether to shift more funding to what is known as Fund 73.

Murray said the board could also wait until it sets the tax levy in October and decide whether reserves could be used to hold down taxes.

Sodemann said that taxing to the maximum this year is likely, but his plan would have reduced the maximum allowed under the state funding formula.

“I think it's too aggressive,” said Cathy Myers. “I think there's a lot of uncertainty as to the kinds of funds we can expect from the state in the future.”

Superintendent Karen Schulte backed Sodemann.

“We're on the road to recovery, to being able to do some things we haven't been able to do for two to five years,” Schulte said.

Voting against the plan were Dommershausen, Myers, Kristen Hesselbacher and Murray. Voting in favor were Greg Ardrey, Feldt, Schilling and Sodemann.

Feldt then moved that $400,000 instead of $1 million be shifted. The same tie vote resulted.

Feldt invited opponents to name a number that they could accept. None did.

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