Wednesday, March 17, 2010

A $30 Million Puzzle 'Solution'? What We Have Here Is a Failure to Communicate

Like many citizens, journalists, and some of my fellow board members, I have been struggling to make sense of the projected $30 million budget or tax gap. Like others who have tried to understand how we got to the number "$30," I have tried several approaches to see if I could come to the same conclusion. Some of them focused on an unexpected major rise in spending, or, an unexpected or unexplained loss of revenue beyond the $17 million in state cuts. (See Susan Troller's Madison School's 'Budget Gap' is Really a Tax Gap, for example.)

The answers for the portion of the gap that I could not understand or explain kept coming back to the tax levy. District staff were patient and helpful in trying to answer my questions, but we still didn't understand each other. The shortest version of the tax levy explanation comes from the district's Budget Questions and Answers handout.

To recap, the MMSD $30 million budget gap has been explained thusly by
administration. There are two parts to the gap, $1.2 million in expenses that cannot be met, and $28.6 million shortfall from a combination of state funding cuts and tax levy. 

This (first) gap is $28.6 million. This total is composed of three parts: 
  • $9.2 million cut in state aid the MMSD sustained this year;
  • $7.8 million cut in state aid the district will sustain next year;
  • $11.6 million of increased costs that come with levying authority - broken out in two parts:
-- $7.6 million of increased costs in order to deliver the same services next year that the MMSD is delivering this year, and which the state funding formula allows; 
-- $4.0 million of increased costs and with levying authority from the approved 2008 referendum)
$28.6 million Tax Shortfall Total
For me, and for others, the sticking point has been the idea that additional levying authority through the referendum and the state funding formula, would add to the shortfall in funds to run our schools. That is, how could more funds turn into a funding loss? Or, put in mathematical terms, how could -17 + 11.6 become -28.6?  My math is rusty, and I don't understand connected math, but it did seem to me that it was unlikely that a negative number would get larger after adding a positive number to it.

We came closer to figuring out the understanding gap early this week, after a friend suggested that the only way the components could add up to a $30 million shortfall is IF the board decided to not use its levying authority under the 2008 referendum ($4 million) and the escalators built into the revenue caps ($7.6 million).


Since many board members expressed reluctance to raise taxes BEYOND the increases approved through the referendum, it is likely that the $30 million is as much a miscommunication as anything. The message that there is reluctance to raise property taxes beyond what voters did for us in 2008 got translated into a very literal "no tax increase, including the approved referendum funds." How that happened matters less than the fact that no one on the board said that they would not raise taxes by the $4 million approved through the recurring referendum, nor did they say that they would reject the increases that are part of the annual funding formula adjustments.

So what does this mean? Well, assuming that the board will use its levying authority under the referendum and the state funding formula, the gap is smaller than the reported (and internalized) $30 million. It is probably more like the $17 million in state aid cuts plus the $1.2 million in budget items for which there is no funding source. Or, by higher math, c. $18.2 million BEFORE the board makes its budget adjustments and amendments. (This process will take place between now and the final vote on May 4, and will likely involve a combination of cuts recommended by administration and cuts proposed by the board.)

This means that the draconian school closings and massive staff layoffs reported earlier are unlikely to happen. Indeed, the board added one cut to the list at Monday's meeting when it voted to cut $43,000 in funding budgeted to produce a communication plan.

Dates to watch:

March 22, 6 PM, Villager Mall, Park St. - PUBLIC HEARING on the budget

April 1 - Board receives the budget detail

April 5 - Board budget workshop instead of committee meetings

April 12 - Regular board meeting

April 18 (Sunday) - Warner Park Community Recreation Center - PUBLIC HEARING on the budget

To comment on the budget and proposed cuts, you also may contact the Board of Education directly at