To attack projected budget shortfalls, Madison schools Superintendent Daniel Nerad on Monday unveiled a plan that asks voters to approve raising more money but also uses accounting measures that would lower local property taxpayers' bills after one year.

Several School Board members quickly expressed support for many elements of the plan.

Nerad proposes that the School Board ask voters to approve a series of tax increases, phased in over three years, that would allow the Madison School District to permanently exceed state revenue limits by $13 million a year.

The referendum on the Nov. 4 ballot would generate $5 million for the 2009-10 school year, when the district faces a projected $8.1 million budget gap.

The measure, a "recurring referendum," would give the district permission to build on the previous year's spending limit increase by additional amounts of $4 million in 2010-11 and another $4 million in 2011-12. The measure would permit a total increase of $13 million — a change that would be permanent, unlike the impact of some other referendums that end after a specified period.

Approval of the referendum would cost the owner of a home with an assessed value of $250,000 an estimated $27.50 in additional taxes in the 2009-10 school year. That represents an increase of 1.1 percent of the School District's portion of the tax bill.

But for at least the next two years, the schools' portion of that homeowner's tax bill would decline even if the referendum is approved, under the plan developed by Nerad and Erik Kass, assistant superintendent for business services.

They estimate the tax bill for 2010-11 would be $27.50 lower than it is now, and the bill the following year would be about $100 below its current level if voters back the referendum and the School Board implements proposed changes in accounting measures.

One change would draw $2 million from the $2.2 million balance of the district's Fund 80, a fund that provides for community and after-school programs. This would reduce taxpayers' burden for the 2009-10 school year.

Nerad and Kass also suggest creating a Capital Expansion Fund to spread the cost of facility maintenance projects over a longer period — a maneuver that would allow the district to send less money to the state under the state's school finance system, requiring less money from local taxpayers.

Under the state system, Madison School District taxpayers send about $1.60 to the state for every $1 they receive back in state aid because the district has relatively high property values and per-pupil spending levels.

This year's budget, which has been estimated at $367.8 million, is in good shape. However, according to newly revised estimates, the district faces a budget shortfall of $8.1 million in the 2009-10 school year, $4.4 million in 2010-11 and $4.3 million in 2011-12.

Plan is praised

Several members praised Nerad and Kass, who began working for the district on July 1, for quickly developing a strategy.

Lucy Mathiak told them "bravo" for suggesting the creation of the Capital Expansion Fund to reduce the transfer of local property tax dollars to the state.

Arlene Silveira, board president, said the plan takes into account the difficult economic conditions confronting many residents.

Marj Passman said the public needs to know "we're desperate and we need this passed and even if it is passed we're not adding anything back." After the meeting, Passman said she's not ready to say she supports Nerad's plan, but it appears likely a referendum is needed.

Beth Moss said she was "thrilled" by aspects of the plan and added, "I don't see that we've got any choice but to go to the taxpayers."

Johnny Winston Jr. repeatedly has said he'll support a referendum.

Called a partnership

Nerad described his plan as a "partnership" with the community, as taxpayers are asked to make sacrifices but the School District also operates efficiently while maintaining high educational standards.

Even if the referendum is approved, the district faces a budget gap of about $3 million in the 2009-10 school year. Nerad proposes addressing that shortfall by using $2 million from the district's general fund balance to avert program and service cuts.

Also, Nerad proposes reducing the number of budgeted staff positions for elementary grades for 2009-10 — a change that would save $600,000 in the budget but wouldn't actually cut the number of workers in the schools.

He says the remaining $400,000 gap would be closed "through a commitment to reduce various budgets throughout the district."

The state's revenue caps, which have been in place since 1993, limit how much school districts can raise from property taxpayers. Districts must ask voters for permission to exceed those caps. Or they can find ways to operate more efficiently, or eliminate programs and services when expenses are growing faster than the caps are rising.

Possible cuts listed

Nerad also released a list, compiled with the help of district managers, of broad categories of school operations that could be affected if the School Board decides not to pursue a referendum or if the measure is defeated by voters.

The potential cuts would lead to larger class sizes, fewer services for special education and struggling students, less support for teachers, reduced analysis of test scores and other data and scaled-back maintenance services.

Madison School District voters approved a $23.6 million referendum in 2006 to build Olson Elementary, refinance the remodeling of Leopold Elementary and refinance loans. The year before, voters rejected two of three referendums, approving $26.2 million for maintenance and technology but rejecting a permanent $7.4 million per year increase in operating revenue and $14.5 million for a second elementary school at the Leopold site.

Statewide, voters since 1993 have approved 126 recurring referendums while rejecting 254 — a passage rate of 33 percent.

IF YOU GO

The School Board plans to vote on the proposed referendum and other financial measures at its meeting at 5 p.m. Monday at the district's headquarters, 545 W. Dayton St. Residents will be allowed to offer comments.

Comments may be e-mailed to the board and administrators at comments@madison.k12.wi.us.

Updated information will be posted by late today on the district's Web site, www.mmsd.org.