Schools

To Borrow or Not to Borrow, That's the Referendum Question

A quick summary of the Shorewood School District's Tuesday referendum question.

Shorewood voters on Tuesday will be asked whether to allow the school district to borrow up to $13.645 million to refinance its Wisconsin Retirement System debt at a lower interest rate and fund a trust to pay for retiree benefits other than pensions.

So, what does it all mean?

The district wants to fund a trust that would pay retiree benefits other than pensions, a move that would effectively shift the liability out of its operating fund, freeing up more funds for classroom operations. This accounts for $10 million of the $13.645 million.

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However, officials now say they will not borrow the $10 million they originally planned to, as they won’t need to. Their debt has decreased as a result of concessions made by . Instead, officials say the district will borrow no more than $8 million to fund the trust, and do not plan to borrow the other $2 million at this time.

The district wants to borrow the other $3.645 million to refinance its WRS debt. According to School Board President Paul Zovic, the district will move from a 5.62 percent interest rate to a rate of 5 percent or less on a 15-year loan, if allowed to borrow the $3.645 million and refinance its debt.

Find out what's happening in Shorewoodwith free, real-time updates from Patch.

Why does the district need to borrow the funds?

The referendum measure is a part of plan that aims to make the district financially stable by 2016. Over the last eight years, the district has cut its budget by about $7 million, but has still been able to maintain class sizes and quality programs, school officials say.

The district initially said it would ask taxpayers to allow the district to borrow millions to address a more than $700,000 budget gap next year, but now .

, the referendum is the most important aspect, school officials explain.

"The referendum is still the single largest budget gap filler we have," Zovic said.

But the hit to the taxpayer has now decreased, Zovic said. In addition to state aid cuts, the governor’s budget mandates a freeze on any tax levy increase, other than that from a referendum or development.

Since the district won't be allowed to increase its tax levy other than through the referendum and it has decreased its retiree benefit debt and plans to borrow $8 million instead of $10 million, property owners will see the district's portion of the property tax bill increase no more than 21 cents per $1,000 of assessed property, or $63 for a home assessed at $300,000 for next year's tax bill.

The increase will be on the tax bill for five years.

The district says it still needs to focus on increasing resident enrollment, fundraising and creating an endowment as long-term measures to become fiscally stable.

Residents concerned about referendum passage

Shorewood resident Joe Peterlin said if the school district were focused on the budget 10 years ago, taxpayers wouldn't be presented with a referendum question come Tuesday. He added, after five years have passed and the referendum is off the tax bill, will there be another increase of the tax levy or will the levy decrease? He added the district hasn't been forthcoming with all the facts on the referendum including the terms the district would borrow under.

There has been a general lack of long-term planning on the behalf of the School Board, he said, and the referendum is another example of year-to-year planning by the district. They need to present a 20-year plan to residents, so the average property tax increase is more reasonable.

Some have also said borrowing to pay for benefits is a terrible practice and the additional tax dollars are not for the creation of new jobs.


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