Budget woes loom for Janesville School District
Bill Sodemann was kidding last week when he suggested the school board issue layoff notices to all employees of the Janesville School District.
But the school board president's comment at the board's meeting was meant to stir up serious discussion.
Sodemann was pointing out that the board is likely to pass the classroom-staffing plan at its April 10 meeting, and that vote will lock in more than half of the district's spending for fiscal year 2012-13.
State law requires teachers be notified by May 1 if they are to be laid off for the following school year. That's why the administration has asked that the board approve the staffing plan April 10.
When the board approves the staffing plan, it will lock in 56 percent to 60 percent of its spending for next year, according to district figures. The board probably won't approve a budget, however, until this fall.
It's a backwards way of deciding how to spend more than $100 million of the taxpayers' money, Sodemann points out, but that's how the laws are set up.
Sodemann noted the district could be facing a 2012-13 budget gap of $8 million to $10 million.
The board faced a similar situation last year and cut 110 positions—not just teachers—to help balance the current year's budget.
Next year's staffing plan does cut some teaching positions, mostly in special education, saving an estimated $324,350. However, that's not a lot compared with a multimillion-dollar budget gap.
Without deeper staff cuts, that leaves spending on supplies and capital expenses, which have been cut repeatedly in recent years.
"There aren't enough paperclips and pencils to get us to $8 million to $10 million (in cuts)," Sodemann said.
If further cuts of supplies and teachers are off the table, that leaves a few options, including property taxes.
"People get criticized for voting for or against a tax increase in October, but the reality is, if we vote for (the staffing plan now), there's got to be some kind of tax increase," Sodemann said.
Sodemann said if the board increases school taxes to the maximum allowed by law, that would yield about $2 million in revenue, if you include a bump in state aid that would come with taxing to the max. That's not enough to balance the budget.
District Chief Financial Officer Keith Pennington would not confirm the $2 million, saying the district won't know until it receives its state-aid estimate July 1.
That leaves district financial reserves, often referred to as the fund balance. Using too much of the fund balance might mean the district would have to short-term borrow to pay its bills at some point next year, Sodemann pointed out.
Reducing the fund balance also could reduce the district's favorable bond rating, noted board member Karl Dommershausen.
Sodemann said if the fund balance were used, he would want to replenish it in 2013-14. Dommershausen noted, however, that the current board could not vote to require a future board to replenish the fund balance.
Dommershausen said the board also could call a referendum to increase school taxes. Dommershausen doesn't like that idea, but he said he's keeping an open mind.
The board also could issue bonds to pay for capital expenses without a referendum, Dommershausen said, but it's not clear how much money could be raised that way.
"Outside of a referendum, I think we're going to go heavy into the fund balance," said board member Greg Ardrey.
In short, the choices are unpleasant: Raise taxes and/or use up district reserves. Any bond issue would mean interest costs that taxpayers would have to pay, eventually.
The budget picture brightens in 2013-14, if Act 10 remains in force, because union contracts would run out, and employees would begin paying into their pensions, and the board could shift more health-care coverage costs to employees, Sodemann said.
Ardrey, who is chairman of the buildings and grounds/finance committee, plans a workshop April 17 to discuss the board's options for filling the budget gap.
Pennington said in an email that the administration is working on a plan to balance the budget. So far, the administration has not indicated what that plan is.