07/08/2025
In early June during the 06/09/2025 Appleton Area School District Board of Education meeting, the Board continued their ongoing discussion of how to address AASD’s $11 million structural budget deficit. (https://allthingsappleton.com/2025/04/17/board-of-education-reviews-presentation-on-causes-of-aasds-11-million-deficit-and-impact-20-million-referendum-would-have-on-property-taxes/) This discussion followed their initial discussion on 05/12/2025 (https://allthingsappleton.com/2025/05/22/board-of-education-discusses-strategies-to-deal-with-11-million-structural-deficit/) and was one in a series of discussions on the matter.
They reviewed their current sources of funding including state aid, state and federal grants, and local sources including local taxes. They reviewed how funding levels are set by the state and the restrictions of use on various types of aid and grants. The impact of inflation on the budget was touched on. They also once again talked about how the 30% reimbursement schools receive from the state for special education aid was inadequately low and how upping the level of reimbursement to 60% would solve a large amount of AASD’s deficit issues. This discussion took place before the state budget was approved which increased the special education reimbursement rate to 42% in the first year and 45% in the second year. (https://weac.org/state-budget-what-an-educator-needs-to-know/)
There was also discussion of the different types of referendums that could be pursued. AASD has traditionally always held one-time recurring referendums that provide ongoing increased taxpayer funding as opposed to non-recurring that increase local taxpayer funding for only a set number of years, but the financial benefit of recurring referendums ends up being cancelled out/overridden when the state increases the revenue ceiling.
It was stressed during the meeting that AASD’s budget deficit was not the result of poor fiscal choices. Board member Jason Kolpack stated, “the situation we're in is not a result of a lack of fiscal responsibility, or because we're being frivolous with the funds that are provided by the public. Simply the cost of things has gone up, and in fact, we're […] statutorily limited from spending more than the revenue limit, right?”
Toward the end of the meeting, Board member Nick Ross commented, “[W]e are not only talking about increasing revenues; we will be talking about possibilities to reduce expenses,” but Board member Ed Ruffolo expressed skepticism about the end result of that, stating, “I don't know how much efficiency we're going to find, because, both by philosophy, but also just by necessity, we've been very efficient these last 30 years.:
[In some respects I don’t really understand the point of these discussions because it sounds like the Board is just going to talk about it a bunch and then go to a referendum. Why not skip the endless discussion and just go straight to the referendum which everybody already knows is what they are going to do? But I guess the Board likes talking.]
A transcript of the discussion is available for download on the All Things Appleton website: https://allthingsappleton.com/2025/07/08/aasd-board-of-education-discusses-different-categories-of-funding-district-receives-and-types-of-referendums-they-could-pursue/
EQUALIZATION AID – Equalization aid (https://dpi.wi.gov/sfs/aid/general/equalization/overview) accounts for 53.4% of AASD’s general funding. Per AASD Executive Director of Finance Holly Burr, “At the state level, equalization aid helps balance property wealth disparities between districts. This aid increases as enrollment increases, but also decreases if enrollment declines. Likewise, it adjusts based on prior year usage or need. If we spend more in one year, we are eligible for additional aid in the next. The reverse is also true. This aid is subject to revenue limits and subject to the state budgeting process.”
The fact that equalization aid decreases if a district underutilizes it was important in relation to a referendum. If Appleton were to pass a referendum, that would increase the funds available to them but they would still need to make sure they spent all of their equalization aid money or else it would essentially look like they were overfunded and have their equalization aid decreased the following year.
Superintendent Greg Hartjes said they prioritize spending 100% of their equalization aid because if they don’t the difference has to be made up by taxpayers locally.
CATEGORICAL AID – Categorical aid (https://dpi.wi.gov/sfs/aid/categorical/overview) is aid targeted at specific programs or groups of pupils and can only be used for the designated activities. The District receives $742 per pupil or $10.4 million total.
SPECIAL EDUCATION AID – Special Education aid (https://dpi.wi.gov/sfs/aid/special-ed/sped-sap/overview) is state aid, per Ms. Burr, “reimburses a portion of the cost for educating and transporting pupils enrolled in special education. Eligible costs include salary and benefits for staff directly supporting a student's IEP, vendor costs for the same, and specialized transportation.” AASD received around $11.6 million in special education dollars during the 2024-25 school year.
Ms. Burr indicated that the state act that originally created special education funding initially said that reimbursement from the state was suppose to be at a rate of 66.7%. Currently, only 30% of the cost of paying for special education students is covered by the state with the remaining 70% being covered by the local school districts. This was because during the last budget, the state set aside a specific amount (sum certain) of money to go toward special education costs and that amount had to be spread out across all schools. AASD would prefer for the part covered by the state to be increased to 60% and for there to be no set bucket of money that was allocated for that purpose (sum sufficient); that way, all the schools could be reimbursed 60% for their actual costs instead of having to proportionally allocate across all schools a set amount of money that can run out.
Board member Ed Ruffolo pointed out that if the special education reimbursement rate was increased to a 60% sum sufficient reimbursement, that would result in AASD receiving an extra $11.6 million which would largely eliminate the District’s deficit.
At the time of the discussion, there was hope that this change would be made, but the state budget has now been set for the next two years and it increased the reimbursement rate to only 42% the first year and 45% the second year, nor was the funding changed from sum certain to sum sufficient.
REVENUE LIMIT – Per the Department of Public Instruction, the revenue limit “is the maximum amount of revenue that may be raised through state general aid and property tax for the General, Non-Referendum Debt (authorized after August 12, 1993) and Capital Expansion Funds.” (https://dpi.wi.gov/sfs/statistical/basic-facts/revenue-limits). State equalization aid is subject to revenue limits, but categorical aid (per pupil aid and special education aid) is not subject to the revenue limit. If equalization aid decreases the difference can be made up with local taxes which will increase the portion that local taxpayers have to shoulder.
At the time of the discussion, they were expecting the revenue limit to be increased to $325 per student which would have been an increase of 2.7% and result in $4,733,000 additional funds. The recently passed budget actually raised the revenue limit to $334 in the first year and $345 in the second year which is slightly more than their estimate. (https://weac.org/state-budget-what-an-educator-needs-to-know/)
Ms. Burr noted that the estimated 2.7% increase looked good on paper but in reality it didn’t even meet the Consumer Price Index which increased by 2.95% this last year. Additionally, Superintendent Hartjes pointed out that while AASD’s entire budget was around $250 million only a portion of which (roughly $115 million) was able to increase with the revenue limit increase; however, all of their costs would increase with the CPI, not just the costs that are covered by portion of the budget that can increase with the revenue limit.
Board member Jason Kolpack described the situation thusly: “[T]he situation we're in is not a result of a lack of fiscal responsibility, or because we're being frivolous with the funds that are provided by the public. Simply the cost of things has gone up, and in fact, we're statutory—statutorily limited from spending more than the revenue limit, right? Like, with some, you know, certain exceptions, but it's just if the funding mechanism does not keep up with the increase in cost, the only way to make that up is either to get more funding or to reduce services and reduce cost.”
Ms. Burr agreed, saying, “That is our single largest problem as the funding mechanism has not kept pace with expenses. We have not been frivolous. We are very fiscally responsible at the school district, but, yeah, bottom line is the funding formula simply is not keeping up.”
STATE AND FEDERAL GRANTS – AASD receives 12.2 million from the federal government for general and special education operations and $3.3 million in state grants. While not the bulk of the District’s budget, they did offset the local tax burden and fund program enhancements; however, they often had restrictions attached and did not necessarily continue from year to year. Superintendent Hartjes noted that they would be losing $350,000 in Title 1 funds next year.
Ms. Burr said that they had not heard of any other significant cuts on the federal level, yet, but she was worried about what might happen with Medicaid-related funding.
Board member Ed Ruffolo noted that Omoladé Academy was funded through a five-year federal grant and was worried that might be cut or eliminated.
Finally, although the District pursued other grants, they could not use grants to fund an existing position or existing program. Grants needed to be used only for supplemental positions and programs, and if grant funding dried up for a specific position or program the District was not allowed to start using federal dollars to maintain that position and program.
OTHER LOCAL REVENUE SOURCES – AASD receives additional dollars through students enrolling from outside the District into AASD as well as through smaller gifts/donations/grants, and student fees. Ms. Burr noted that students that open enroll into AASD are not included in equalization aid or per pupil funding.
If a local school district wants to increase funding beyond what they are currently allowed to raise in taxes and receive from the state and federal government, they have to go to a referendum and ask the local taxpayers to approve an increase in funding beyond the revenue limit. There are two types of referendums:
RECURRING REFERENDUM – A recurring referendum is a one-time referendum that raises taxes forever (sort of) going forward. The problem is that the state allows school districts to only raised a certain amount of revenue per student which is called a revenue ceiling. Right now, that amount is $11,000 per student. If a recurring referendum is approved if/when the revenue ceiling set by the state ends up catching up to and outstripping the increased taxes from the referendum, then the benefit of the referendum goes away. Beyond that, a district that has a failed referendum is not allowed to get an increase in revenue for the three years following the failed referendum. (https://wisconsinexaminer.com/briefs/bill-would-allow-several-school-districts-to-benefit-from-raised-revenue-ceiling/)
NON-RECURRING REFERENDUM – A non-recurring referendum increases taxes/funding for a set number of years. Unlike a recurring referendum, the increase in taxes is not connected to a district’s base so is not impacted by changes to the revenue ceiling. However, the problem is that such referendums need to be held every time the tax increase is set to run out and if at some point the local voters decide not to pass a referendum, a district would be looking a sudden sharp decline in revenue. AASD has only ever held recurring referendums, but there are some districts that run them, typically every four or five years but up to for as long as 20 years. It was noted Racine just passed a 20-year non-recurring referendum.
[After listening to all of that, it seems to me it would be way more straightforward and fiscally responsible for the state to stop funding schools directly at all and simply provide a set dollar amount per student to be used in the manner their parents belief best meet their educational needs. Things are way too complicated now.
I also don't understand, given the budget issues, why AASD through the truancy initiative is putting in an outsized effort to bring in students who will be the most costly and will possibly not bring in any revenue.]
View full meeting video here: https://aasd.granicus.com/MediaPlayer.php?view_id=1&clip_id=80
View full meeting agenda here:https://d3n9y02raazwpg.cloudfront.net/aasd/ee877c4e-269f-11f0-9f54-005056a89546-2171d860-3ac4-49db-84a5-200d91432c4c-1749239393.pdf
