The motives of the Frederic School District administration and school board are curious if not disturbing. A $12.7-million referendum? A $500,000-per-year increase in our tax levy for the school? It looks like very little of that money will go to expand or improve the educational experience of Frederic School District students.
We are told this will all be done without any increase in our tax burden. That is mainly the case because the district is within a few months of paying off a large debt on the 6-12 building and a few years from becoming debt free. Nothing upsets elected officials and public administrators more than the possibility of becoming debt free. Only elected officials and public administrators could make being debt free look like a bad idea.
I have been told that some school board members have said that if they pay off the debt and don’t incur more debt, they will lose state aid. I have had some conversations with a couple of people at the state Department of Public Instruction and they say that is true – sort of. Prior to the early 1990s the state aid formula only applied to direct educational costs. If a district voted to build or remodel buildings, the local real estate tax payers made the payments until the debt was repaid and the real estate taxes for debt service ended. The debt service payment had no bearing on the state aid formula. In the early 1990s, according to DPI, the state Legislature, in its never-ending effort to shaft taxpayers, changed the formula for state aid. They decided that all money spent in the district was for educational funds and factored in to the state aid formula. So, when a district built or remodeled buildings, as Frederic did, the local real estate tax was increased to pay for the debt service. When the debt gets retired, as Frederic is about to do, the state aid formula lowers state aid to the district by an amount equal to the annual debt service.
The formula sees the end of the debt service payment to be an increase in available funds in the district so the district is believed to be richer by the amount of the annual debt service payments and thus the aid to the district is decreased by that amount. The school board is left with a choice of operating with decreased funds or raising the local tax levy to maintain funding. So the school board raises the local tax levy by the amount that it would be lowered by paying off the debt and the real estate tax continues at the same level as when the debt was being serviced.
The school district receives the same funding but less of it comes from state aid and more comes from real estate taxes. Funding for the school stays the same. Funding to the district from the state aid formula is reduced – a nice deal for the state and since the real estate taxpayers never benefit from paying off a debt, a bad deal for local taxpayers.
It’s a rotten deal when the state manages to lower its financial obligation to the district through the state aid formula by sticking it to local real estate taxpayers. The state’s bad behavior assures that whenever a district votes to spend local tax money on buildings, the cost of servicing that debt will never end, even when the debt is paid.
Just vote no.