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0707, 03 Oct 18

Evers’ failed logic and Cedarburg’s folly

Here is my full column that ran yesterday in the Washington County Daily News.

In justifying his call for a massive spending increase on public schools, Democratic gubernatorial candidate Tony Evers cites the fact that local school districts have been passing referendums as evidence of a pent-up demand for more taxing and spending by everyone. Not only is Evers’ argument flawed, but he conveniently overlooks how dishonest many school districts are being to get their referendums passed.

More than 25 years ago, Wisconsin imposed a limit on how much local school districts can raise the local property tax levy, but the state allowed school districts to exceed the levy limit if local voters approved through a referendum. Recently, there has been a spate of school referendums being approved.

Where Evers’ logic fails is if the fact that some school districts passed referendums is evidence of an overall desire to increase taxes, then the opposite must also be true. The fact that the vast majority of school districts did not pass a referendum must be evidence that there is not an overall desire to increase taxes. The fact is only a small minority of the 421 school districts in Wisconsin have passed a referendum in recent years. Many of them have not even propositioned the voters with the question. If a majority of districts did not pass a referendum, would it not stand to reason that the majority of voters do not want a tax increase?

The recent surge in referendums passing is primarily due to two reasons. First, thanks to the booming job growth and increasing wages, we are living in a time of plenty. It is easy for voters to feel generous when times are good. They often forget that the $300 or $400 property tax increase they approve when the bank account is flush may not still be there when the next recession hits and they are looking for work.

The second reason referendums have been more successful lately is because many school districts have found a formula, based on gross misinformation, which increases the odds in their favor. Let us look at the referendum in Cedarburg as a perfect example.

First, the school district builds the facade of support through a stacked community advisory group and a phony propaganda survey. There are builders, architects and survey companies who have made it their business to help school districts run this sham process and Cedarburg engaged the infamous School Perceptions to conduct their advocacy survey. As designed, the survey in Cedarburg came back showing support for a referendum.

Second, the school district tries its best to hide the real costs of the referendum. In Cedarburg, they are saying that it will cost $59.8 million. That is completely false. The Cedarburg District wants to borrow $59.8 million. As anyone who has borrowed money to buy a home, vehicle, or anything else knows, there is a cost to borrowing. The total actual cost of the referendum, depending on the interest rates and term, is more likely between $90 million and $105 million.

Third, school districts play down the tax impact. In Cedarburg, they are claiming that such a massive debt would “be an increase of $58.00 per $100,000.00 of a home’s value.” That is a grossly incorrect portrayal. According to the district’s financial disclosure, the cost of the referendum would be $181 per $100,000. The $58 number is because the district plans to retire some old debt, so the net tax increase would be $58. But if the voters vote down the referendum, they will actually enjoy a tax decrease of $123 per $100,000 of home value when that debt is retired.

Not to mention that there are not a lot of homes in Cedarburg that cost $100,000. According to Zillow, the median home value in Cedarburg is about $300,000. So the total cost for the owner of a median Cedarburg home is $543 per year – or $10,860 over the 20-year term of the loan.

Fourth, every school referendum is different, but they usually share some similarities in their justifications for needing more money. In Cedarburg, they cite growing enrollment as a need for more space. The problem is that the Cedarburg School District, like most Wisconsin public school districts, has been experiencing a decline in enrollment. Kindergarten through 12th grade enrollment in Cedarburg is down 6.5 percent since it peaked in the 2004-2005 school year. And if you subtract the kids who open enrolled into the district (a number that the district can control), kindergarten through 12th grade enrollment was actually down 10.5 percent since the 2004-2005 school year.

Cedarburg District officials insist that enrollment is about to explode even though census data and state projections predict a continued decline in enrollment. Cedarburg officials rest their predictions on a bizarre analysis of residential development in the district. The problem is that history does not support their projections. In short, district officials are claiming that the district will add far more kids per new development than has been the case for the last 10 years or more.

Fifth, the school district leadership stonewalls anyone who might ask tough questions. In the case of Cedarburg, the superintendent declined to comment on the referendum and pointed to the district’s website for all inquiries.

If the voters in Cedarburg are smart, they will see through the balderdash that their school district is trying to sell them and vote down their referendum. If not, and they choose to foist a huge tax increase on themselves, it is certainly not an indication that anyone else in Wisconsin wants a tax increase too.


0707, 03 October 2018

1 Comment

  1. Mark Hoefert

    I would like to see a breakout of how much of these referendum requests are going for operating expenses (due to declining state aids) versus going for capital (maintenance/building repairs/upgrades versus new construction).

    From what I can tell, $183,000,000 of the $1,400,000,000 is being requested for operational needs = 13%.  In the meantime, some of those capital referendums include athletic fields, performing arts centers, swimming pools, new gyms, etc.  Hardly indicative of school districts that have their backs against the wall and won’t make payroll next year because of lack of funds.

    I also noticed that the largest operating referendums are school districts under 3,000 enrollment.  Rhinelander (2480) is seeking $17M over 4 years – that is $1713 per year per student.  Whitewater is seeking $16.6M over 4 years = $2085 per year per student.  Fox Point (708) is seeking $12.4M – that is $4379 per student per year.  2015/2016 cost per student:  State average – $12,942; Rhinelander = $13,768; Whitewater = $12,767; Fox Point = $15,660.

    I also notice that those districts don’t do very well on state aids, so the burden shifts to the local property tax payer.  That might be more of an issue with the way the formulas are set up.





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