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1052, 31 Mar 17

Wisconsin Republicans Propose Reforms for Referendum Process

When the state passed Act 10 in 2011, it did a few things. It pulled back state funding, but gave districts much more freedom to actively manage their budgets. The intent was that school districts would be prudent stewards of the taxpayers’ money to provide the best possible education for the kids. Act 10 also left in place the ability for local district voters to decide for themselves whether or not to raise taxes and spending in their district via the referendum process. And oh, did some districts take advantage of that process.

In the past few years, school districts all around Wisconsin have passed massive building and tax increase referendums. The end result is that taxpayers are taking on massive new debt and increasing taxed. In the past 13 months alone, school districts in Wisconsin have taken on about $2 Billion in new debt. That’s a lot of money.

School Districts have sold some of these referendum like used car salesmen (no offense to used car salesmen) by being deceptive or downright untruthful about the finances. For example, in Kewaskum, the school officials flat out refused to talk about the total cost of the referendum including the interest payments. They would only talk about the actual loan amount as if the interest was not paid with real money. Some districts are drawing out the loan payments for 15 or 20 or more years to pull down the yearly payments, but increase the overall cost. Almost all districts sold their referendums by the tax levy increase instead of talking about the total amount. You heard the rhetoric: “your taxes will only go up by a $100 and who can’t afford $100 for THE CHILDREN!?!?”

(I will give credit to the West Bend School District in their last referendum. Although I opposed it, I thought that their discussion and “selling” of it was, for the most part, honest and straightforward.)

The problem with the referendum process is that while it does give the local school district voters the ability to raise (or, theoretically, lower) their taxing and spending in the spirit of local control, it is not just the local taxpayers who foot the bill for that decision. In Wisconsin’s system of shared government, state taxpayers fund a portion of every school district in the state – some more than others. So when Milwaukee or Arrowhead school district voters decide to pass that massive referendum, the citizens of West Bend and Green Bay get to pay for part of it too. Shouldn’t local control also mean local cost? If a school district’s voters want to jack up their spending and taxes, why should people in other districts, who have made a different choice, have to pay for it?

This is the problem that Republicans have set out to reform in a series of of six bills. Some of the reforms are better than others, so let’s take a look at them as characterized in the Madison State Journal.

Bill #1:

A separate bill authored by Rep. Janel Brandtjen, R-Menomonee Falls, and Stroebel would eliminate what are known as recurring referendums — ballot questions that raise property taxes permanently — and cap any referendum for operating costs at five years.

For school districts that have already successfully asked voters to approve recurring referendums, like the Madison School District did in 2016, the school board would have to return to voters in five years from the passage of the bill to seek another referendum.

Toward the end of his life, Thomas Jefferson was an adherent to the belief that no government should ever be able to bind future citizens to anything. In essence, he advocated a perpetual revolution whereby each succeeding generation of citizens would remake their government in their own image.

In the real world away from Monticello, this doesn’t work. Governments have to make decisions that may span years or generations. This is why our Constitution is still relevant today even though not a single American living was ever consulted on its creation. Yet there are boundaries that make sense. In a local school district, should the voters of 2017 be able to raise the taxes in perpetuity so that their grandchildren’s grandchildren have to pay it? Or, if those future generations object, couldn’t they just pass another referendum to lower those taxes? Theoretically, yes, but the insipid nature of government is to expand – not contract.

In the end, this is a good bill. We could argue over whether it should be five years or three years or 10 years, but there should be some reasonable sunset for tax increases that exceed what is already allowable under state law.

Bill #2:

Another bill authored by Stroebel and Rep. Tom Weatherston, R-Caledonia, would reduce state aid for districts that exceed their revenue limits through a referendum. The reduction in aid would be equal to 20 percent of the amount the district raises property taxes above their revenue limits. That state aid would then be redistributed to the rest of the state’s school districts through the state funding formula.

This is really the heart of the issue. If a district decides to increase their taxes, then why should the rest of the state’s taxpayers subsidize that decision? Again, we could debate the amount, but this protects taxpayers in frugal districts from the wasteful ones in other districts. And notice that the bill does not decrease aggregate state school spending. It merely redistributes the spending to other districts.

Bill #3:

When school boards could ask voters to approve spending and building projects would be limited to spring and fall general elections…

These next couple of bills are designed to prevent school boards from playing the election calendar lottery in search of a low-turnout election where special interest groups have more sway. This bill absolutely makes sense.

Bill #4:

Districts also would be required to include the cost of debt and interest payments in the total referendum amount presented to voters, which is currently not required, under a bill from Sen. Chris Kapenga, R-Delafield, and Rep. John Macco, R-Ledgeview.

(Ahem, Kewaskum). I remember a time when liberals were up in arms about predatory lending by mortgage firms and credit card companies. One of their criticisms were that these companies duped homeowners and credit card customers into making poor financial decisions by being intentionally misleading on what the real costs were – including interest and overall debt. Consider this bill the Schumer Box for school referendums. It requires that school districts be honest about the totality of the financial decision they are asking of taxpayers.

Bill #5:

School boards also would be required to vote on seeking a referendum at their regular meetings, and boards could only vote on referendums that issue debt at their annual meetings, under a bill authored by Stroebel and Rep. Dave Murphy, R-Greenville.

I like the annual meeting part, but the first part seems unnecessary. There are already laws requiring that school boards give adequate notice about agenda items in upcoming meetings. Sometimes it might make sense to hold a special school board meeting to talk about just a school referendum so that it doesn’t bog down other district business. I don’t have a problem with that as long as there is plenty of notice.

Bill #6:

And a bill authored by Stroebel and Rep. Joe Sanfelippo, R-New Berlin, would provide 50 percent matching state funds for school districts that set aside money they receive under their revenue limits in a fund for maintenance and construction projects. If the district seeks a referendum within 10 years of using the matching funds from the state, the money is reimbursed to the state through a reduction in the district’s state aid.

I’m a little more uncertain on this one. While the goal is laudable in encouraging districts to save up and pay for new facilities with cash – the cheapest way to build anything – I am dubious about state taxpayers subsidizing it. Perhaps there are other ways for the state to encourage this prudent financial behavior?

It’s good to see the Republicans taking a serious look at this issue. In Owen’s perfect world, state school aid would not exist except in very targeted areas( like helping extremely rural districts) and every district would completely pay for itself. In that case, these kinds of laws would not be necessary and local voters would have full local control – with the full burden of the cost for their decisions. But as long as we have this Byzantine school finance system with a combination of state and local funds, the state voters have a vested interest in making sure local school districts are good stewards of the trust reposed in them.



1052, 31 March 2017


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