Pandemic funds fill big hole in school budget

The Northern Ozaukee School District is making good use of the ESSER pandemic relief funds, allocating almost $500,000 to help balance the 2022-23 budget.

“Had we not gotten that, we’d have a big hole,” School Board Vice President Dan Large said during the budget hearing Monday.

Joshua McDaniel, the district’s director of business services, concurred, saying, “If we did not get those, we would be looking at a different picture.”

  Only two residents attended Monday’s budget hearing, during which the 2022-23 budget of $14.1 million and the tax levy of $7.6 million were adopted.

The district’s tax rate will be $9.41 per $1,000 equalized valuation — a decrease from last year’s rate of $10.43, McDaniel said.

That doesn’t necessarily mean, however, that taxpayers will be paying less in school taxes. The district’s property values increased 12.8%, so a house valued at $200,000 last year is now valued at $225,600. The corresponding tax payment for this year would be $2,123 compared to last year’s $2,060.

McDaniel said the increase in valuation isn’t due to a new development but instead due to a general increase in property values, noting that values across the state increased about 11%.

This year’s budget largely maintains the status quo, although the district agreed to add an elementary school counselor to its staff, a position it hasn’t had before.

The board is using ESSER funds to pay for that position during the next two years, he said.

The School Board added the position because of increased counseling needs within the district, McDaniel noted.

This was a tough budget year, McDaniel said.

“Everything is going up,” he said.

Wages are increasing 3.9%, and returning staff members received an extra $1,000. Health insurance is also increasing about 9%.

The administration brought in a “deficit budget,” McDaniel said, noting that ESSER funds and a roughly $300,000 contribution from the district’s fund balance were needed to balance the budget.

In addition to increasing costs, the district is receiving less in aid in large part because of declining enrollment, he said.

The state uses a three-year average student count to calculate the revenue limit, and Northern Ozaukee’s three-year average dropped from 741 last year to 729 this year, McDaniel said.

Those numbers reflect, in part, the fact that the district had a large senior class graduate at the same time a small 4-year-old kindergarten class began school, he said.

“If you look at our district, we really haven’t had a lot of growth,” Large said.

And, McDaniel noted, families are having fewer children than in the past.

At the same time enrollment is declining, the state has frozen the amount of per pupil costs used to determine the district’s revenue limit at $10,270 for several years, McDaniel said.

Historically, he said, the per pupil cost has increase by $100 to $200 per student each year.

The district has received $10,270 per pupil for the last several years, even as costs have increased.

The district is fortunate in that it has set aside $220,000 in ESSER funds to be used to offset the 2023-24 levy, McDaniel said, and it has a strong fund balance to draw from.

But that money is typically used for capital expenses and emergencies, not operating needs, he said.

“Ideally we wouldn’t use fund balance for this,” he said.

The district will continue to look at ways to deal with the ever tightening limits, but there aren’t a lot of options, McDaniel said.

“Our district is run as efficiently as it can,” he said.

Ideally, the Legislature will increase the per pupil aid to determine the revenue limit in the future, but whether that will be enough to offset decreasing enrollment remains to be seen, McDaniel said.

“We don’t know what they’re going to give us next year,” he said, noting the state is working on the biennial budget.

Northern Ozaukee isn’t the only district in the state facing these tough times, McDaniel said. Of the state’s 421 districts, 321 are experiencing declining enrollment.

To help the district as it comes closer to the so-called fiscal cliff caused by the end of pandemic relief funds, declining enrollments and revenue limits, the district is working with Dash Consulting to look at its options, McDaniel said.

Those options include additional budget cuts, changing and trimming programs or going to referendum to seek permission from taxpayers to exceed the revenue limits, he said.

“We’re trying to proactively approach it,” he said.

Jill Huskisson of Dash Consulting told the board Monday that it needs to educate the community about the issues it is facing.

“This isn’t just about a referendum,” she said. “It’s about bringing people into the conversation. You can’t work in a silo. You know that.

“You’re a declining enrollment district and you need to plan for it.”

She said she is working with district staff members on plans for a community leaders forum to begin that process.