Fox Point-Bayside School District Replacement Referendum - November 6, 2018 Frequently Asked Questions

Updated 9.14.18

What is the proposed operating referendum that is on the ballot Tuesday, November 6, 2018?

The proposed operating referendum is a resolution authorizing the school district to exceed the revenue limit by $3,100,000 per year for four years for non-recurring purposes. Non-recurring purposes creates a definite end date, and means the additional $3,100,000 a year ends after the 2022-2023 school year. The funding will be used to maintain instructional programs, class sizes and effective operations.

What will appear on the November 6 ballot?

The formal resolution passed unanimously by the Fox Point-Bayside School Board requests permission to exceed the state-imposed revenue limit. The question will appear as follows on the November 6 ballot:

Shall the Joint School District Number 2, Villages of Fox Point and Bayside, Milwaukee and Ozaukee Counties, Wisconsin be authorized to exceed the revenue limit specified in Section 121.91, Wisconsin Statutes, by $3.1 million per year for non-recurring purposes for the 2019-2020 school year through the 2022-2023 school year, in order to maintain and support instructional programs, services, and class sizes?

What will it mean if a majority vote “yes”?

If the referendum passes, the District will be able to maintain instructional programs, class sizes and effective operations. The annual property tax would increase on average by $79 per year for every $100,000 of property value, starting with the bills issued in December 2019. For example, the impact to a property valued at $400,000 would be $316 more per year ($26.33 per month).

What does it mean if a majority vote “no” and the referendum fails?

If the referendum fails, the District would need to close the budget gap(s) by making 21.7% across-the board reductions in personnel and operational expenditures. The potential impact of these cuts could include:

• Reductions of approximately $2,068,00 of salary and benefits: o Reduction of approximately 16 of 87 professional staff positions: administrators; grade level,

world language, performing arts, academic elective, and specials teachers; and student support (guidance counselors, psychologist, librarians, etc.) professionals.

§ Reduction of 10 full time classroom teachers, one per grade level, would increase the average class size from approximately 21 students to 27 students per class.

§ These reductions would result in increased class sizes and reduce the variety of specials (general music, art, physical education, and data), world languages (Spanish and French), performing arts (choir, band, and orchestra), and academic electives (creative writing and journalism) offered.

o Reduction of approximately 10 of 44 support staff positions (supervisory, secretarial, paraprofessional aide, custodial and maintenance employees).

• Reductions of approximately $1,032,000 of operational costs: o Reduction of approximately $763,000 from utility, pupil transportation, professional services

(legal, audit, communication and educational consultants), and postage/telephone. § Utilities and transportation costs are relatively fixed which means larger than 21.7%

reductions out of instructional budgets may be required. o Reduction of approximately $153,000 from instructional supplies and non-capital equipment. o Reduction of approximately $101,000 from instructional capital equipment (instructional

technology). o Reduction of approximately $15,000 from district dues and fees.

• Some of the other ways these reductions could affect students at Stormonth Elementary and Bayside

Middle School: o Reduction in specials courses such as vocal and instrumental music and art, which could mean

fewer student exhibits and performances. o Reductions in world language offerings, such as Spanish and French. o Reduction in the number of athletic and co-curricular programs. o Adjustments to enrichment opportunities for all students as well as intervention services for

individual students.

What will the referendum cost individual property owners?

If the referendum is approved, the annual Fox Point-Bayside School District property tax would increase by approximately $79 ($6.58 per month) per year for every $100,000 of property value for four years.

Why is this referendum being proposed now?

Starting in the 2010-11 school year the school district initiated a thoughtful and deliberate process to more effectively manage the annual budget through a series of budget reductions due to declining enrollment. In April 2015, the Fox Point-Bayside community approved a $950,000 per year operational referendum for four years from July 1, 2015 through June 30, 2019 to maintain instructional programs and preferred class sizes in the midst of declining enrollment. The proposed 2018 referendum replaces the original four-year operating referendum from 2015, and will allow the district to continue funding the essential programs and services that were maintained over the past four years. The 2018 referendum will last for four school years, or through June 30, 2023 of the 2022-23 school year.

Since 1993, school districts in Wisconsin have been under a revenue limit formula that restricts the amount of money a school district can take in from state aids and property taxes. When enrollment is declining, restricted funding is exacerbated. The Fox Point-Bayside School District resident enrollment used for revenue limit purposes (based on a three-year rolling average) peaked at 758 resident students in 2010-11 and declined by 71 students over 7 years to 687 resident students in 2017-18. Resident enrollment is projected to continue to decline by 44 students over the next five years, which has been factored into our budget planning.

If enrollment is declining, why does the school district need more money?

Unfortunately, school operating costs don’t fall proportionately to a drop in student enrollment. If a class with 25 students slowly becomes a class with only 22 students, there is virtually no savings to the district, even though revenue that comes from the state per student will drop. And the cost of many school necessities (staff, transportation, utilities, insurance, technology and resource materials) continues to rise each year. As enrollment goes down, it actually costs MORE per student to educate them.

In recent years, increased inflation pressures have affected the majority of the district budget, personnel costs, as annual wage increases are tied to cost-of-living adjustments as published by the Wisconsin Employment Relations Commission (WERC). In the last three years, the cost-of-living increases for wages has increased from 0.12% to 1.26% to 2.13%. Wage increases are estimated to increase to 3.0% by July 1, 2019.

There have been recent discussions regarding K8 and K12 school district consolidation. Where did those conversations end up?

The Fox Point – Bayside School District participated in a preliminary study regarding K12 consolidation with the Nicolet High School District, Maple Dale-Indian Hill School District, and Glendale – River Hills School District. Robert W. Baird and Co, Inc. provided the financial review and Robert Butler, co-director legal counsel with the Wisconsin Association of School Boards (WASB) provided the legal overview for K12 consolidation.

Both Nicolet and Fox Point – Bayside school boards had interest in a further qualitative consolidation study that would consider potential administrative and support staff duplicate reductions/offset by expertise additions, building usage efficiencies, economies of scale from a larger pool of employees, and the elimination of duplicate professional and personal service contracts and systems between the districts.

The Glendale – River Hills school board members have stated their disinterest in any further study. The Maple Dale – Indian Hill School Board is not interested in a K12 consolidation study or a K8 only consolidation with Fox Point – Bayside. The disinterest by two of the three K8 districts ended the willing possibility of either a K8 or K12 consolidation study at the present time.

How did the Fox Point-Bayside School Board determine the District should pursue the $950,000 referendum in 2015?

The district conducted a community survey in the fall of 2014. Approximately 938 district residents took the survey.

The vast majority of resident respondents (89%) said they would support the district selling the Dunwood School property and surrounding land to help pay for projected capital expenditures.

Forty-two percent (42%) of resident respondents said they would support an annual increase of approximately $71 per $100,000 of property value through an operational referendum of $1.25 million per year to help the district maintain current programs and services for four years.

A majority of resident respondents (61%) said they would support an annual increase of approximately $49 per $100,000 of property value through an operational referendum of $950,000 per year to help the district maintain current programs and services for four years. The school board followed the survey preference and this referendum question was approved by voters in April 2015.

What have been the financial effects on the Fox Point-Bayside School District from the 4-year, 2015-2016 through 2018-2019, $950,000 per year operational referendum approved in spring 2015?

The last operational referendum came up short of maintaining class sizes, instructional programs, and services by $926,800 over the four years. As a result, the district used fund reserves to meet these needs.

A few items account for the majority of the revenue shortfall:

• The district learned in spring 2015, after approval of the operational referendum language was approved for the April 2015 ballot, that the YMCA would no longer be a renter at Dunwood School.

o This rental loss reduced district revenues by approximately $157,000 per year starting in the 2015-16 school year.

• The actual 2016-17 and 2017-18 resident student counts for revenue limit and categorical aid purposes were 29 and 31 students less, respectively, than forecasted prior to the referendum.

• The 2018-19 resident student count is projected to be 44 students less than forecasted prior to the referendum.

o These lower than projected resident student counts produced approximately $232,000 less revenue over the four years.

The loss of the YMCA as a Dunwood School renter and the lower than projected resident enrollments have exacerbated the problem of providing sufficient revenue to maintain class sizes, instructional programs, and services. In hindsight, it would have been financially helpful if the previous $950,000 operational referendum amount would have been set at the higher proposed $1.25 million per year for four-years.

The net effect of the current $945,110 2018-19 budget deficit and estimated $920,157 (7.26% of budgeted expenditures) fund balance at June 30, 2019; the need to replace the expiring current four-year $950,000 per year operational referendum; and the projected future lower state aids and projected future higher cost-of-living expenses; combine for the district to propose the $3.1 million per year for four years, 2019-20 through 2022-23 operational referendum.

How did the district determine a $3.1 million referendum would meet the district’s needs?

In the years ahead, $3.1 million will allow the District to meet the following needs:

• $950,000 Existing Referendum - Replace the current referendum funding to maintain instructional programs.

• $945,000 Budget Deficit - Fund the current budget deficit due to greater than anticipated resident enrollment declines, which caused expenditures to exceed available revenue.

• $635,000 Reduced Revenues - Pay for anticipated revenue losses associated with the projected four-year decline in enrollment as well as account for future cost increases due to inflation.

• $100,000 Technology Budget - Replace and upgrade critical infrastructure and classroom technology to support 21st century innovative learning.

• $290,000 Facilities Budget - Create a facilities budget to pay for much needed repairs and replacements as well as ongoing maintenance to our school buildings.

• $180,000 Fund Reserves - Replenish fund reserves to strengthen the District’s long-term financial stability.

What actions has the district already taken to reduce costs?

For the 2018-19 school year, three teacher position openings due to retirement were replaced through attrition from within (rather than new hires), while maintaining preferred class sizes, which was possible due to declining enrollments:

• Grade 1 Teacher to Stormonth Gifted/Talented Coordinator • Grade 2 Teacher to Stormonth Librarian • Grade 4 Teacher to Bayside Grade 6 Math Teacher

When facing budget reductions in the past, the district has made difficult decisions to reduce operating expenses. Some past cost saving measures include:

• Contracting with Nicolet High School, Glendale – River Hills, and Brown Deer School Districts for the following shared services:

o Superintendent 40% o Business Manager 40% o Accountant 60% o Director of Facilities 40% o French Teacher 80% o English Language Learners (ELL) Teacher 50% o School Nurse 33.3% o Physical Therapist 50% o Snow removal, buildings and grounds maintenance, summer student work crew

• Deferring building maintenance at Dunwood School. • Eliminating gas and electric service at Dunwood School when the building sale was imminent. • Requiring increased employees premium share contributions and co-pays for health insurance. • Per state statute, requiring employees to contribute 50% to the state pension system. • Shifting local pension benefits away from health insurance to 403(b) annuities to eliminate medical

inflation exposure. • Relying on increased private/community donations to fund projects.

If the 2018 operating referendum passes, will the district still need to make reductions?

Ideally, we will not need to make additional reductions, but there are several factors we cannot control or predict. Based on our current long-range budget forecasts, which are always subject to change with the state of Wisconsin’s legislative biennial budget process, we believe our budget projections will allow for sustainable academic programming. Legislators and the governor will deliberate the state’s budget in the springs of 2019, 2021, and 2023, before the proposed referendum expires on June 30, 2023. Unforeseen changes may occur during those deliberations.

The operational referendum question on the November 6, 2018 ballot for voters is for a stable or level funding amount each of the next four years; however, the yearly projected need is not quite so even. The level approach we are proposing will require tight budgeting to ensure the needed resources are available during the last two years of the non-recurring “window,” factoring in the potential for changes handed down at the state level.

The following line charts detail the level referendum funding versus the uneven budget needs for the current 2015-16 through 2018-19 referendum and the proposed 2019-20 through 2022-23 referendum.

The proposed $3,100,000 per year referendum request for 2019-20 through 2022-23 is significantly higher than the current $950,000 per year referendum request for 2015-16 through 2018-19, as the current operational referendum is projected to be short revenues by $926,800 over the four years.

$950,000

$411,744

$790,212

$1,629,734

$1,895,110

$0

$200,000

$400,000

$600,000

$800,000

$1,000,000

$1,200,000

$1,400,000

$1,600,000

$1,800,000

$2,000,000

Actual 2015-16 Actual 2016-17 Budget 2017-18 Budget 2018-19

2015-16 through 2018-19Level Referendum Funding vs Uneven Budget Needs

Level Funding Uneven Need

If the operating referendum is approved this fall, will we need to go to referendum again? If so, when?

The proposed revenue limit referendum question is projected to provide the district with adequate support for operations for the next four years. However, many different variables directly impact our operating budget making it difficult to predict too far in the future, including changes in state funding, enrollment and next generation academic standards.

It’s especially difficult in today’s economy and with state government funding priorities continually in flux, to project how long additional funds will last before we may need to return to voters for a future referendum. If the November 2018 referendum is approved, we don’t expect to return to the voters for a future operational referendum before this one expires on June 30, 2023.

With that said, the district will likely need a capital referendum prior to June 30, 2023, to address the district’s building maintenance needs, which are in addition to its operating needs. The proceeds from the $2.71 million sale of Dunwood School in December 2017 were used to address deferred maintenance issues. Approximately $2.5 million of the Dunwood sale proceeds were used for Stormonth and Bayside site reconstruction work completed in the summer of 2018 for parking lots, sidewalks, curbs, fencing, playgrounds, softball field, and relocation of utilities.

The district hired Mr. Del Wilson for a building evaluation/initial property condition report during the 2017-18 school year. Mr. Wilson coordinated with professional engineers from mechanical, electrical, plumbing/fire protection, and roofing system disciplines. The report provides an initial assessment and is not to be construed or used as detailed final engineering study. The building sites, building envelope, interiors, mechanical equipment, electrical equipment, plumbing/fire protection, and roofing systems all need attention. The report breaks down the facility needs by four levels of priority based on life safety risk: immediate ($210,000); 1-2 years

$3,100,000

$2,621,852

$2,901,905

$3,234,438

$3,641,805

$0

$500,000

$1,000,000

$1,500,000

$2,000,000

$2,500,000

$3,000,000

$3,500,000

$4,000,000

Projected 2019-20 Projected 2020-21 Projected 2021-22 Projected 2022-23

2019-20 through 2022-23 Level Operational Referendum Funding vs Uneven Budget Needs

Level Funding Uneven Need

($612,000); 3-5 years ($6,315,000); and 5-years plus ($4,143,332). All amounts are based on current costs net of inflation. The school board will continue to review and discuss next steps for addressing the needs identified in Mr. Wilson’s report.

What have we done to generate revenue or seek alternative funding?

While we are limited in our ability to generate funds due to state law, we have been creative in our efforts to offset costs. We have realigned school fees and increased them toward specific consumable student supply costs. Private grants and donations have also continued to help create additional revenue. Financial support from the Fox Point Bayside Educational Foundation and PTO have been substantial. Their fundraising has helped offset the cost of classroom learning materials, makerspace technology, Smart Boards, and funded valuable classroom and field trip experiences on a wide range of educational topics.

How did the district use the proceeds from the sale of Dunwood School?

The proceeds from the $2.71 million sale of Dunwood School in December 2017 were used to address deferred maintenance issues. Approximately $2.5 million of the Dunwood sale proceeds were used for Stormonth and Bayside site reconstruction work completed in the summer of 2018 for parking lots, sidewalks, curbs, fencing, playgrounds, softball field, and relocation of utilities.

Does Fox Point-Bayside have any reserve funds? If so, why not tap into those funds?

The Fox Point-Bayside School District reserve fund, also known as “fund balance” has been aggressively tapped into during the recent past. The fund balance was approximately $3.2 million on June 30, 2006; approximately $1.8 million on June 30, 2015 (the fiscal year end prior to the current four-year operational referendum); and is projected to be approximately $920,000 by June 30, 2019.

For comparison purposes, school districts will state fund balance as a percentage of expenditures at the end of a fiscal year (June 30). On June 30, 2006, the Fox Point – Bayside School District’s General Fund Balance was 30.41% of General Fund Expenditures. By June 30, 2015, the start of the current operational referendum, the General Fund Balance had dropped to 15.65% of General Fund Expenditures. The projected General Fund Balances for the partner school districts at June 30, 2018 as a percentage of 2017-18 Budget Expenditures are:

• Maple Dale – Indian Hill S.D. 42% General Fund Balance as a Percentage of Expenditures • Nicolet High School District 33% General Fund Balance as a Percentage of Expenditures • Glendale – River Hills S.D. 16% General Fund Balance as a Percentage of Expenditures • Fox Point – Bayside S.D. 15.65% General Fund Balance as a Percentage of Expenditures

The following chart details the general fund revenues, expenditures, surplus (deficit), fund balance, and fund balance as a percentage of expenditures historical data:

The Fox Point - Bayside School District’s fund balance is used to lessen cash flow borrowing. Having a healthy and stable fund balance puts the district in a favorable position to lower interest costs by maintaining the school district’s Aa1 credit rating. When the school district does need to borrow money, it can borrow money at the lowest interest rates in the marketplace because of its high credit rating. A healthy fund balance also lessens the impact of unavoidable shortfalls and unforeseen expenses that occur on an annual basis, as it did recently with an emergency boiler replacement and unplanned roof repairs.

For a $13.0 million budget, the school district would need approximately 40% fund balance (as a percentage of the general fund expenditure budget) to avoid cash flow borrowing. Fox Point - Bayside’s school board policy requires a 12% fund balance (of general fund expenditures) to provide some reserves, with the goal of limiting cash flow borrowing.

• 40% fund balance would be $5.20 million • 25% fund balance would be $3.25 million • 12% fund balance policy is $1.56 million • The last cash flow borrowing in 2017-18 was $3 million when the June 30, 2017 fund balance was

$1,865,267 or 14.95% of expenditures.

The district annually borrows in September to provide for cash flow needs until property tax revenues arrive in mid-January. If the school district’s fund balance was less than 12%, the district would have to borrow earlier, for a greater amount, and likely at a higher interest rate. The School Board reviews the fund balance at the close of each fiscal year, and makes adjustments to attempt to keep the fund balance near the 12% threshold. The

projected general fund balance at June 30, 2018 is $920,157 or just 7.26% of general fund expenditures, well below the 12% school board policy.

In summary, Fox Point - Bayside has used its fund balance and part of the need of this referendum is to rebuild the reserves to a financially appropriate level.

What is the School District’s Credit (Bond) Rating?

The Fox Point – Bayside School District last issued general obligation bonds in 2010, approximately 8 years ago and was assigned a bond rating of “Aa1” by Moody’s, which is the second highest rating available. There are only two school district in Wisconsin and 25 nationwide with a “Aaa” bond rating, the highest rating. The district’s use of fund balance in the last two fiscal years could jeopardize the district’s current Aa1 bond rating.

When and where do I vote?

Election Day is Tuesday, November 6, 2018. ALL POLLING PLACES WILL OPEN AT 7:00 AM AND WILL CLOSE AT 8:00 PM. Wisconsin voters are now required to show an acceptable photo ID in order to vote. Additional voting information can be found on the district website: www.foxbay.k12.wi.us/district/referendum.cfm

The following polling place locations will be used for the municipalities and/or wards indicated:

School District Electors Residing In: Polling Location:

Village of Bayside (Milwaukee County) Bayside Village Hall 9075 N Regent Road

Village of Bayside (Ozaukee County) Bayside Village Hall 9075 N Regent Road

Village of Fox Point (Wards 1-4) Fox Point Police Department 7300 N. Santa Monica Boulevard

Village of Fox Point (Wards 5-9) Longacre Pavilion 7343 N. Longacre Road

Whom can I contact directly for more information?

Dr. Robert Kobylski, Superintendent 414-247-4164 rkobylski@foxbay.org

Jeff Dellutri, Business Administrator 414-247-4163 jdellutri@foxbay.org

You may also contact members of the School Board:

Lisa Drouin President ldrouin@foxbay.org Mike Weidner Vice President mweidner@foxbay.org

Angela Walmsley Treasurer awalmsley@foxbay.org Debbie Roesner Clerk droesner@foxbay.org

Tina Kreitlow Member tkreitlow@foxbay.org