Debt payment causes school budget controversy

By FINN ASKIN

Ozaukee Press staff

The Northern Ozaukee School District  approved its 2023-24 budget, which includes prepaying more than $1 million of debt, at its annual hearing Monday night.

About 30 residents were present at the meeting and five people spoke on whether the board should approve the contentious prepayment of debt, two of which were staunchly against the move.

Mark Giese and Peter Kowalchuk, both of whom wrote letters to the editor in Ozaukee Press, called the plan “insane” and a way for the district “to bail out investors who bought watered-down bonds years ago.”

Giese, a Fredonia resident who open enrolls his kids in the Port Washington-Saukville School District, argued that the prepayment is irresponsible because none of the money will help students.

“There’s not one dollar that will go to the schools or the kids,” he said adding Fredonia residents “pay more in taxes than 360 districts in the state.”

This statement was regarding NOSD’s tax rate, which was $9.41 per $1,000 of equalized value last year. The owner of a $200,000 home would pay $1,882 in taxes.

According to the Wisconsin Department of Instruction, NOSD’s tax rate was higher than 378 districts in the state last year.

However, the district’s tax rate fell to $8.35 for this year’s budget.

There will be no way of knowing where the district stands in comparison to other districts this year until all budgets are reported, Director of Business Services Joshua McDaniel said.

Giese also said he called DPI and asked if other school districts have prepaid debt to which DPI responded saying “no” and that prepaying debt is “idiotic.”

This statement is false, McDaniel said. Quarles and Brady, a Milwaukee law firm, stated more than 70 districts in the state are prepaying debt.

Before ending his comments, Giese said he is “more qualified to make this decision than anyone else in the room.”

Kowalchuck brought up inflation in his argument and said the district shouldn’t prepay debt because taxpayers are paying “more for everything these days.”

He also said the district is feeling the financial strain of declining enrollment.

“Most of the things needed for increasing enrollment are out of the school board’s control, but what they can do with the prepayment of debt, they aren’t doing. The board needs to press the pause button on this,” Kowalchuck said. “I do support the district, I have for 22 years, but not this decision.”

This year’s student count exceeded original projections for 2023-24, as the September head count was the highest since September 2018, Supt. Dave Karrels said.

Additionally, the district saw a positive swing in both more open enrollment students choosing NOSD and fewer open enrollment students choosing another district.

“There are many districts that would take this increase in open enrolling and the number that are open enrolling out,” Karrels said. “Much of this is credit to word of mouth. A certain level of humility goes a long way when we are trying to improve.”

Previously, district officials said it is prepaying debt in order to pay down the principal of its loan faster. Doing so helps the district get out of debt quicker while also saving money by reducing interest charges.

Outside of Giese and Kowalchuk, public comment from community members was positive.

Ben Rosewitz, who has one child in the district and another one joining NOSD soon, worried about how declining enrollment would affect extracurricular activities. However, he said the prepayment of debt would help the school.

“The board is constantly promoting community awareness. If the prepayment of debt assists the school in reaching its goals, then I see no reason for this not to happen,” he said.

Tom Miller praised the way the district has moved past financial shortfalls in years past.

“For years I don’t think we got anything done. It was all Band-Aids,” he said. “I once thought about sending my kids elsewhere, but in the last seven or eight years I’ve seen this school stabilize. I’ve seen Dave (Karrels) do a great job, and I am proud to be here.”

Miller added that the district is the “biggest community asset” Fredonia has.

Kellee Sheik, a longtime volunteer at NOSD, agreed.

“This school is an asset in our community. The opportunities that we are afforded with these small class sizes, you cannot put a value on that. We’ve lived here for 20 years and we know this community is a family,” she said. “This school is a gem.”

The budget is supported by a tax levy of $7.56 million, which decreased by $49,502 from last year, or .65%.

The district’s general fund balance, or “savings account,” is expected to be $5,202,468 — a number McDaniel called the best the district has seen the past 20 years.

The budget and prepayment of debt were both approved, 6-1, with Rick Hamm voting no on each.

NOSD will hold a Spring referendum, which Vice President Dan Large said will help the district immensely.

“We will stop paying the loan down as aggressively as we have and shift it into an operational bucket so we can use it immediately,” he said.