Nicolet High School District 2011 Referendum Frequently Asked Questions March 8, 2011

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1 Transforming knowledge into wisdom Nicolet High School promotes intellectual discovery, inspires creativity, embraces diversity, and encourages students to become enlightened, humane, responsible citizens. Nicolet High School District 2011 Referendum Frequently Asked Questions March 8, 2011 Dear Community Members, For decades, Nicolet High School has been one of the finest high schools in Wisconsin; it is the perfect place to launch academic dreams. Nicolet offers engaging, challenging, and intellectually stimulating opportunities for secondary learning while providing and encouraging a multitude of extracurricular clubs and activities. The faculty and staff maintain a holistic approach to student development; they are cognizant of the social adjustment and wellness of students along with expectations of academic achievement. On a national level, Nicolet has received much recognition. It was one of three Wisconsin high schools awarded the title of Blue Ribbon School of Excellence by the U.S. Department of Education for its exceptionally high performance. In addition, in two of the last four years, Nicolet was also named by the U.S. News & World Report as one of America s Best High Schools based on standardized test performance, student proficiency rates, and challenging college-ready curriculum. Our School District, like others across Wisconsin, needs to address the gap between allowable revenue under the State s revenue limit formula since 1993 and expenditures in order to meet its current and long term obligations. If it does not, the top-notch education the District provides will be seriously compromised. Among the factors for the gap are: declining enrollments and new accounting standards. The School Board sent a community survey in fall 2010 to garner feedback on a variety of topics including Nicolet s program offerings and class sizes. The feedback provided told us that you generally like what Nicolet offers and are not in favor of reductions in program offerings or increased class sizes. The results of the survey also directed us to look into K-12 consolidation with the three public K-8 school districts that feed into Nicolet. We have started those discussions. The results of the survey spurred the School Board to put an operating referendum question on the spring 2011 ballot as a short-term solution for the next five years. With the approval by voters of the April 5, 2011 operating referendum, the School District can continue to take cost effective measures in its yearly budget process while continuing to ensure diverse program offerings, reasonable class sizes, classroom excellence, and financial stability. Please learn more by reading the following Frequently Asked Questions.

2 Frequently Asked Questions What is the proposed operating referendum? The proposed operating referendum is a resolution authorizing the school district to exceed the revenue limit by $2,150,000 per year for five years for non-recurring purposes. Non-recurring purposes creates a definite end date, and means the additional $2,150,000 a year ends after the 2015/2016 school year. Why is this referendum necessary? The school district has attempted to balance the budget during the last six years of declining enrollment through a series of budget reductions. Every attempt has been made so the effect of the budget reductions would minimally affect the school s diverse program offerings - and reasonable class sizes. Since 1993, school districts in Wisconsin have been under a revenue limit formula that limits the amount of money a school district can take in from state aids and property taxes. The revenue limit controls approximately 93% of Nicolet s revenues, which in turn effectively controls 93% of Nicolet s expenditures. Also starting in 1993 and continuing through June 2009, collective bargaining in Wisconsin was dictated by a law known as the Qualified Economic Offer (QEO). For 16 years, the amount of allowable increases to school district revenues was less than the amount of allowable increases to its largest expense under the QEO (personnel). This disparity created structural deficits for Wisconsin school districts over the years. Our state s funding formula has been fundamentally flawed, as allowable revenue increases fail to keep pace with inflation and other costs. Declining enrollment has only exacerbated the problem. If enrollment is declining, why does the school district need more money? The Nicolet High School District is not alone. More than 70% of Wisconsin districts have declining enrollment. School costs don t fall proportionately to a drop in enrollment. If a class with 25 students becomes a class with only 22 students, there is virtually no savings to the district, even though revenue that comes from the state will drop. And the cost of many school necessities (staff, transportation, utilities, insurance, and textbooks) continues to rise each year. As enrollment goes down, it actually costs MORE per student to educate them. Why pursue the referendum now? The reductions made over the last six years, while leading to slightly increased class sizes (as a result of teaching staff reductions), also greatly affected support personnel, i.e. fewer guidance counselors, social workers, classroom aides, administrators, and secretaries. While enrollment has declined by approximately 18% since , personnel positions have declined approximately 23%. The school district s focus has been to maintain our diverse program offerings, high quality services, and reasonable class sizes. We are now at the point that future reductions will have a detrimental affect on programs offered and class sizes. The governor s budget proposal has increased the potential reductions that would be needed without a referendum from $800,000 to $1.3 million PER YEAR.

3 What amount did the community say it would support in the Nicolet High School survey distributed in fall 2010? Over 1,000 residents took the Nicolet High School survey in the fall 2010, which is statistically significant. A majority of respondents (52%) said they would support an annual increase of $60 on a property valued at $250,000 through an operational referendum to help the district maintain current programs and services. What will the referendum cost? How does it impact me? Much will depend on what is approved in the State s Biennial Budget later this year. Per Governor Walker s biennial budget proposal, a school district s tax levy is frozen. In addition, under the governor s proposal, Nicolet s revenue limit would decrease 5.5%. This equates to a 6.3% tax levy decrease, or about a $62 reduction on a property valued at $250,000. If the referendum is approved and the governor s proposal is passed,, the annual Nicolet High School District property tax would increase by approximately $27.32 ($2.27 per month) for every $100,000 of property value. For example, the impact to a property valued at $250,000 would be $68.29 per year ($5.69 per month); a property valued at $500,000 would increase by $ ($11.38 per month). Passage of the referendum will eliminate the need for approximately $715,000 of reductions per year for five years. These monies will help preserve Nicolet s high quality programming, stabilize class sizes and retain critical teaching staff. If the governor s budget is approved as written, budget reductions will be necessary even with the passage of the referendum. What if the referendum fails? If the referendum fails, based on the school district s revenue limit formula and state aid formula under the governor s budget proposal, the community would expect a 6.3% property tax decrease in , and the property tax frozen for the following year, It is difficult to predict if the governor s budget bill will become law. Action on, and the funding results of the State s budget, are not typically known until June (at the earliest) and October (at the latest). If the referendum fails, the community can expect an average of $1,300,000 of new reductions each year for five years, or about 6.8% of the budget each year, with a cumulative 5 year reduction total of $6.5 million. The School Board will need to close the gap(s) by making other changes that may include: Reduction in program offerings Reduction in teaching staff - increased class sizes Reduction in support services (guidance and classroom aides) Reductions in classroom supplies and materials Reduction in capital expenditures (technology) Reduction in facility expenditures (scheduled roof replacements, etc)

4 If the school district would make $1,300,000 in reductions a year for five years, why is the school district seeking a referendum of $2.15 million per year for five years? The cumulative effect of reductions of $1,300,000 per year for five years is $19.5 million (see chart below). When a reduction is made, the item reduced is typically lost forever. When you pass a referendum to save items, the attempt is to save the item for the long term. Each year, new reductions would be necessary without the passage of the referendum. We actually are asking for less than what is currently needed at this time. Even with an operating referendum totaling $10.75 million over five years, the School District will need to make cost effective decisions to limit the effect of reductions. The dollar amount and the number of years for the operating referendum were determined during a lengthy process by the Nicolet School Board. Residents of the Nicolet community were engaged in this process and approached the School Board with their opinions and concerns. This group of taxpayers felt the fall 2010 survey did not fully explain the school district s financial situation and the reductions that would be necessary without a referendum. The residents also felt strongly that a two-year referendum was insufficient and the referendum should be for a longer term. In addition to speaking to the School Board publicly, the residents started an campaign in support of a referendum request for $2,150,000 for 10 years. School Board members received over 300 s of support for this specific proposal. After much debate and discussion, the School Board agreed that the community request of $2,150,000 would address our most pressing financial needs. However, the School Board felt it was more appropriate to set the expiration date on the referendum to five years (2015/2016 school year) rather than the suggested 10. At the time of the School Board Meetings with community feedback, the governor s biennial budget had not yet been released, and budget shortfalls were based on the current law at the time. The $2,150,000 amount per year for five years would have covered all but $85,000 per year of costs. Unfortunately, as you can see from the chart below, that is no longer the case. Year Cumulative Costs Referendum $1,300,000 $2,150, $2,600,000 $2,150, $3,900,000 $2,150, $5,200,000 $2,150, $6,500,000 $2,150,000 Totals $19,500,000 $10,750,000 Short ($8,750,000) If the referendum passes, is the school district still going to need to make reductions? Yes. The passage of the referendum will provide approximately $715,000 of the $1,300,000 costs for each of the next 5 years. That would leave the school district with the need to make approximately $585,000 of reductions in that would continue each year for the next five years.

5 What have we already done to reduce costs? Due to declining enrollment, 25.8 full-time equivalent (FTE) teaching positions have been eliminated (44.8 FTE s for all employee units: teachers, administrators, secretaries, custodians, and paraprofessional aides) since Some of the ways the reductions have affected students at Nicolet include: Reduced Teacher FTE s have caused fewer sections of classes, and caused increased class sizes A variety of course offerings reduced in many departments Latin and Chinese languages eliminated Librarian and library paraprofessional aide eliminated At-Risk Coordinator position eliminated 9 th and 10 grade guided study personnel providing academic support eliminated Math support program eliminated 1.9 FTE Social Workers eliminated 2.5 FTE Guidance Counselors eliminated 9 th grade AVID program reduced to one semester Phase out of Alternative Program to be completed June 2011 All Department Coordinator positions changed so they teach a full-time schedule Athletic Director and Recreation Director combined into one position Athletic and Recreation Department staff and services merged into one office Academic Success Center created to consolidate student support programs Three Assistant Principal positions reorganized into two positions Director of Curriculum and Instruction position eliminated. Duties distributed to Superintendent, Principal, and Director of Technology All Department Secretary positions eliminated Custodial Staff reorganized for operational efficiency Hall aides reduced Human Resources administrative assistant eliminated Business Services administrative assistant eliminated Operational budgets for departments have been reduced significantly. While the overall district operational budget is nearly the same as , resources have shifted to utilities, transportation, and other non-educational expenses Increased premium share contributions and co-pays by employees for health insurance Increased private/community donations to fund projects What other costs are available to cut? Over the last several years, the school board has tried to make cuts that would have the least impact on our quality educational programs. Further cuts in the budget would have a drastic effect on the quality of programs currently being offered. Unfortunately, we are at the point that despite the reductions listed above and being prudent financial stewards, we have no other sources to tap into without jeopardizing class sizes and our proven educational programs and services. Turning to the community for support through referenda is a last resort to a very pressing problem.

6 Why doesn t the Board increase fees? The district does charge fees to participate in activities. Fees have been raised to help offset costs. It is a priority of the Board that fees remain reasonable for students and families. Fees do not raise enough money to offset the budget problem. The administration has proposed school fee increases for the school year that would bring in an additional $50,000 of revenue. School fee increases can help alleviate the funding shortfall, but by no means can it solve the funding shortfall. 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 increased, though limited, school fees, parking and athletic and co-curricular fees. Private grants and donations have also continued to help create additional revenue. Financial support from the Nicolet High School Foundation has been substantial. Their fund raising has helped offset the cost of classroom learning materials, classroom technology with Smart Boards and other devices, and funded valuable classroom and school-wide presenters on a wide range of educational and societal topics. Won t Governor Walker s budget repair bill that increases employee participation in their pensions and health care help solve Nicolet s budget shortfall? No. First, the proposed legislation is a bill, not a law yet. If this part of the bill becomes law, it will likely save the school district about $550,000, by shifting those costs from the school district to Nicolet employees. Another part of the bill would decrease allowable revenue to Nicolet in the revenue limit formula by $874 per pupil. The effect of this provision would reduce Nicolet s ability to raise revenues by approximately $1,050,000. Again, it is too soon to tell what will finally be approved, but as proposed, any savings from shifting benefit costs currently being paid by the school district to employees won t provide any relief due to an offsetting bill proposal to decrease allowable revenue in the revenue limit formula by $874 per pupil. In fact, if both of these provisions become law, the school district will be $500,000 further in the hole. What will teachers and administrators get in future wages? Is this a referendum to increase wages? While we don t know the outcome of the governor s budget repair bill or the state s biennial budget yet, the governor has proposed that only wages could be bargained under collective bargaining. The bill proposes that the amount of a wage increase could not exceed inflation, unless there was a referendum specifically on the ballot to increase wages above inflation. Nicolet s proposed operating referendum is not a referendum to increase wages. Nicolet got a facilities facelift due to the unfortunate July 2010 flood. Can t money that would have been spent on facilities be shifted to operations? Nicolet did make the best of an unfortunate situation. Much of the work, including boiler replacements, new electrical switchgear, computer restorations, flooring replacements (classroom and hallway tiles, the wood gym floor, the theatre stage and auditorium seating area flooring, the dance studio wood floor, and the technology education wood floor), asbestos abatement, HVAC work, and furniture replacements were not, for the most part, items on the school districts long-term capital improvement plan. So while the district got a facelift, we still have 6.5 acres of roofs that are scheduled for replacement under a continuous 20-year

7 replacement cycle, parking lots that will need to be reconstructed, window replacements for a 55 year old facility, and many other smaller in scope projects listed on a facilities plan that extends beyond ten years. If the operating budget question is approved this spring, will we need to go to referendum again? If so, when? After the school district makes about $585,000 of reductions for , the proposed revenue limit question is expected to provide the district with adequate support for basic operations for at least five years. However, many different variables that directly impact our operating budget are difficult to predict too far in the future, including changes in state funding, enrollment, staffing, and utility costs. It s especially difficult in today s economy and the state of State government to project how long additional funds will last before we may need to return to voters for a future referendum. Does Nicolet have any reserve funds? If so, why not tap into those funds? Nicolet s reserve fund, also known as fund balance was defined by school board policy in The fund balance at June 30, 2010 (the end of the district s fiscal year) was approximately $5.4 million. Due to late course sections added in September 2010 for the school year, and an estimate of uncovered flood losses, the fund balance is projected to be approximately $5.0 million at June 30, The 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 increasing the school district s credit rating. When the school district does need to borrow money, it can borrow money at the lowest interest rates in the marketplace. A healthy fund balance also lessens the impact of unavoidable shortfalls and unforeseen expenses (like the late course additions and the 2010 flood) that occur on an annual basis. For a $20 million budget, the school district would need 40% of its budget in a fund balance to avoid cash flow borrowing. The school board policy requires a 25% fund balance to provide some reserves, with the goal of limiting cash flow borrowing. 40% fund balance would be $8 million 25% fund balance policy is $5 million Annual amount of cash flow borrowing is $3 million Even with the $5 million fund balance, the school district is out of cash by the end of October. The district annually borrows in October to provide for cash flow needs until property tax revenues arrive in mid-january. If the school district s fund balance was less than 25%, 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 keep the fund balance near the 25% threshold.

8 In summary, it would be short-sighted and a loss of fiscal integrity for Nicolet to use its fund balance when economic conditions are weak and there isn t a mechanism to rebuild the reserves once they are used. What is the School District s Credit (Bond) Rating? Nicolet High School issued general obligation bonds in This was the first time the school district had borrowed money (other than short-term cash flow borrowing) since the 1989 school remodeling project. In 1989, the district was assigned a rating of Aa by Moody s Investors Service. When the district issued bonds in 2006, the district was assigned a bond rating of Aaa by Moody s, which is the highest rating available. At the time, there was only one other school district in Wisconsin and 25 nationwide with a Aaa bond rating. In August 2010, when the school district was issuing bonds for the Nicolet Library Renovation, Community Room, and Academic Success Center Project, Nicolet was assigned a bond rating of Aaa once again, in spite of the flood that had caused in excess of $12 million in damages to the facility. Some of the basis for the Aaa rating was excellent property insurance coverage, long-range facilities and technology plans, well managed financial operations with historically stable reserve levels, and a favorable debt profile. Why not consolidate Nicolet and its public K-8 feeder schools into a K-12 district? The school district asked in the fall 2010 survey, Consolidation: Currently the communities of Glendale, Fox Point, River Hills, and Bayside are served by three K-8 school districts and the Nicolet High School District. Although this structure does provide more local control, it results in each household being taxed by two separate districts. It may be possible to reduce staff and overhead costs if these districts were consolidated into one district. Should the District explore consolidation with the Glendale-River Hills, Fox Point-Bayside, and Maple Dale-Indian Hill School Districts? Parents and non-parents alike responded with approximately 80% answering Yes. The Nicolet School Board has directed Dr. Monroe, Nicolet s superintendent, to hold meetings with representatives of the three K-8 school districts regarding consolidation. Representatives from the four school districts had an initial meeting recently that included a presentation from representatives of Robert W. Baird and Company regarding the costs of a financial study of consolidation. The entire process of studying consolidation, making consolidation recommendations, holding community referendums for consolidation, and finally implementing a consolidation plan, can take a minimum of three years. While consolidation deserves serious evaluation because it may help Nicolet and the three K-8 school districts with costs in the longrun, it is not a short-term solution that will help the school districts right now. How do I get an absentee ballot? Not sure if you can make it to the polls on April 5 th? Complete an ABSENTEE BALLOT instead. Residents may vote absentee anytime starting Tuesday, March 15 th by mail or in-person. Simply complete an absentee ballot application and return it to your municipal clerk. Visit the district website to download the application and for a link to the Milwaukee or Ozaukee County Clerk s website. The deadline to request an application be mailed to you is Thursday, March 31 st, or you can pick one up in person until Monday, April 4 th.

9 When and where do I vote? Election Day is Tuesday, April 5, ALL POLLING PLACES WILL OPEN AT 7:00 AM AND WILL CLOSE AT 8:00 PM. The following polling place locations will be used for the municipalities and/or wards indicated: School District Electors Residing in Village of Bayside (Milw Cty) Village of Bayside (Ozaukee Cty) Village of River Hills Vote at Bayside Middle School E. Ellsworth Ln. Bayside Middle School E. Ellsworth Ln. River Hills Village Hall N. Pheasant Ln. Village of Fox Point Wards 1-4 Fox Point Police Dept N. Santa Monica Wards 5-9 Longacre Pavilion N. Longacre City of Glendale District 1 Wards 1 & 7 North Shore Library N. Port Washington Rd District 2 Wards 2 & 8 Parkway School-5910 N. Milwaukee River Pkwy District 3 Wards 3 & 9 Nicolet High School N Jean Nicolet Rd. District 4 Ward 4 & 10 Good Hope School W.Good Hope Rd District 5 Wards 5 & 11 Glen Hills Middle School W. Mill Rd. District 6 Ward 6 & 12 Glendale City Hall N. Milwaukee River Pkwy

10 Whom can I contact for more information? Dr. Rick Monroe, Superintendent rick_monroe@nicolet.k12.wi.us Jeff Dellutri, Business Administrator jeff_dellutri@nicolet.k12.wi.us You may also contact members of the School Board: Marilyn Franklin President marilyn_franklin@nicolet.k12.wi.us Laurel Bear Vice President lbear@mcw.edu Ellen Redeker Treasurer eredeker@wi.rr.com Kelly Herda Clerk jkherda@att.net Jennifer Peltz Member basket626@aol.com