Verona Area School District administrative building March 2020

The outside of the Verona Area School District administration building.

The Verona Area School District is receiving “a gift at the right time,” as one-time funds from a City of Fitchburg tax district closure will help close a little more than half of an anticipated $5 million budget deficit for 2022-23.

District assistant superintendent for business services Chad Wiese told the Verona Area Board of Education during its Monday, March 28, meeting that the upcoming closure of Fitchburg’s tax-increment district No. 6 will result in an additional $2.7 million given to the school district. While the funds are considered a one-time source of revenue as the district receives delayed taxes that were part of the tax-increment financing agreement with the city, the closure of the tax district will also bring an additional $110 million of taxable property value online for the school district to help increase its levy in the coming years.

Fitchburg’s tax district No. 6 consists of the Orchard Pointe development on the city’s northwest side, which is anchored by big-box stores such as the Super Target and Hy-Vee. With the closure of the tax district, Fitchburg will also get a boost of a few million dollars in back-taxes, coming at a time when it’s looking to invest in infrastructure, stormwater and various other projects with millions in federal American Rescue Plan Act funding.

For the school district, the funding can help plug the deficit holes in the budget that have been created by no additional per-pupil taxing authority in the state’s ’21-23 biennial budget, as the Republican-controlled legislature reasoned that districts across the state should use their one-time federal stimulus funds to balance budgets instead. The district’s budget has also grown tighter as inflation rates have pushed the cost of living adjustments to nearly 5%, Wiese explained, meaning that any wage adjustment less than the cost of living adjustment will mean an effective pay decrease for teachers and support staff.

The district will likely still need an operating referendum in the coming years, as budget deficits are projected to grow past 2022-23, with an anticipated shortfall of $13 million by the 2026-27 school year even with no referendum or cost of living wage adjustments for educators. But what that referendum looks like, and the impact it will have on the mill rate, will need to be recalculated based on the temporary revenue stream.

The vast majority of the district’s operating budget goes toward staff costs, as salaries and benefits packages are expected to take up $51 million of the overall $77 million expenditures budget for the 2022-23 school year.

Prior to the announcement of the tax district funds, the district was looking at using federal stimulus funds to balance the budget and still come up short – but now, there’s a chance that the mill rate could even go down as a result, Wiese said.

“We can really use ESSER funds, and now in terms of this fund balance strategy, to work our way through what is a good couple-year plan as we’re working our way through toward November,” he told the board. “The other variable that comes along with taxing related to mill rate is how much that property’s worth, adding value to the property tax base in our district is a good thing, because we’re spreading out how much we have to tax.”

Any referendum questions the district will ask in November are still being explored, and will not be final until the board votes to approve them later this summer. In January, Wiese and finance director Pete Grender laid out a proposed plan for a four-year, $13 million recurring referendum that would gradually boost the district’s levy from the current $44 million by $4 million each year in 2023 and 2024, $3 million in 2025 and $2 million in the final year to a total of $57 million in 2026. 

It’s a plan that would keep the district’s mill rate relatively stagnant if approved, Wiese explained at the January meeting, as board members can take advantage of having overpaid on its debt related to the new high school campus referendum. If the referendum was approved by voters in November 2022, the district would lower its pre-payments on debt to match how much more it was levying for operational costs.

The school board first raised the possibility of a referendum in December, as Wiese talked about “the perfect storm” created for school districts across the state caused by the no additional per-pupil taxing authority for 2022-23 and high cost of living adjustments that is more than twice the rate of what the district has approved for educators in the last decade.

“(It’s) a big number with no new funds available to pay our staff,” Wiese said in January.

The board is likely to be back for another facilities referendum in a few years, as an anticipated growth of 75 to 100 students each year will have it looking at needing a new elementary school. That projected $45 million referendum, which wouldn’t be brought forward for a vote until at least fall 2024, would also take advantage of the board’s debt prepayment on the high school and would allow the district to keep the mill rate level. 

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