09/10/2025
The Appleton Area School District Board of Education met 09/09/2025. One of the items they reviewed was the 2024-2025 Fiscal Year Summary. Over the year, the District had $234.3 million in revenue and $248.5 million in expenses for a deficit of $14.2 million. They had $15.2 sitting available in in their unassigned and unrestricted accounts/funds which they used to cover that deficit. That means for next year, they only have around $1 million remaining of available funds to cover future deficits. They had some one-time expenses in 2024-2025 that had not been budgeted for, so in the 2025-2026 fiscal year they are anticipating a deficit of only $13 million. Their goal for the 2025-2026 fiscal year is to not have that deficit increase beyond $13 million.
A transcript of the discussion is available for download on the All Things Appleton website: https://allthingsappleton.com/2025/09/10/aasd-board-of-education-reviews-2024-2025-fiscal-year-summary-discusses-13-million-deficit-expected-for-2025-2026/
The District’s two largest funds are Fund 10 (the General Education Fund) and Fund 27 (the Special Education Fund). For this last year, they had originally expected those funds to have $214.4 million in revenue, but they actually ended up bringing in $216.5 million in revenue which was $2.1 million more than expected. Half of that increase was because the Fed did not reduce interest rates this last year. The other half was a combination of smaller things such as different grants and state funding.
The slide about revenue also included a bullet point saying that private school vouchers increased by $843,286. This, however, did not increase AASD’s revenue although it is part of the local tax levy. Because it is included as part of the tax levy, on paper AASD acts as a passthrough for the funds as they make their way to the schools with students who have vouchers. In actuality, the state collects the money and it goes right out to the schools with students who are utilizing vouchers.
The 2024-2025 expenses for Fund 10 and Fund 27 were also higher than budgeted for by about $5.4 million. Factoring in the increased revenue, these funds ended the year with a $3.2 million deficit. AASD’s Executive Director of Finance Holly Burr noted that, while $3.2 million was a large number, as a percentage was around 1.3% of AASD’s total budget which was well within a normal variance range for the year. “So, although we, none of us, like it, we don't like to see that kind of a change beginning of the year to the end of the year, it is not out of the realm of normal.”
The main drivers of increased expenses were staff compensation and then a whole bunch of little overruns for operational expenses. Ms. Burr said contracted services was a big chunk of that, “Anytime we have to contract work out, which we do have to do sometimes, those costs are increasing. Unfortunately, in this particular case, some of this stuff is increasing at a faster rate than what we had anticipated. Other example, you know, we do our best to anticipate, you know, utilities, insurance, and all of that, but bottom line sometimes that it just costs—plain costs more by the end of the year.”
Superintendent Greg Hartjes also explained, “In some of the areas, and as Holly talked about in operations, we might budget for a 10% increase, and it might be a 20% increase. So, something as simple as we can't repair our elevators; we have to have those repaired by an outside contractor. And so, we might budget for a 10% increase, and it might be 20%. Our property insurance has been going up considerably because of just different ways that insurance is being written in terms of how we have to insure our buildings. We haven't changed anything in how they function or any possible catastrophes to them, but insurances are charging us differently.”
Board member Ed Ruffolo asked if general fund dollars had been used to cover a shortfall in special education funding. Ms. Burr said that they had budgeted $29.9 million for special education and received $29.7 million from the state, so they were on target with their budget.
Board member Ruffolo followed up and said, “But if I remember, we were at about a 30% in the end, 30% reimbursement rate from the state. I know they were at 32 but it was sum certain, not sum sufficient, so it's always a little bit less. So, it would be fair to say at $29 million, if not—if they had the reimbursement rate for special education had been at 60% which it traditionally is, we wouldn't be having this conversation. We wouldn't even have a shortfall this year. In fact, we wouldn't have a deficit. If in the last four years that have been at 60%—just simple math—we wouldn't have a deficit at all. Is that fair?”
Ms. Burr responded, “That is a fair statement.”
Overall for the 2024-2025 year, AASD had $248.5 million in expenses but only $234.3 million in revenue which left a deficit for the year of $14.2 million. They had $15.2 sitting available in in their unassigned and unrestricted accounts/funds which they used to cover that deficit. That means for next year, they only have around $1 million remaining of available funds to cover future deficits. They expect future recurring deficits to be approximately $13 million if they don’t change anything.
At the next Board meeting, they will start talking about how they can start chipping away at that deficit. Per Ms. Burr, “The goal for '25-'26 is to not have that increase. So, we will take a look at, okay, if we if we have known increases in certain areas, then are we able to make reductions in others? So, the goal moving forward is to not to have that deficit increase anymore, but we will be starting with that number. From there, we will add on—okay, new revenues from the state. We know we're getting $10.3 million-ish in new monies. What are our new expenses going to look like? So, subtract those back off. So, we'll—we're going to talk about more about that.” She went on to say, “We won't have a balanced budget going into next year, but we do not want this $13 million to get any higher.”
Ms. Burr and Superintendent Hartjes discussed issues surrounding cash flow. They only have around $1 million in unrestricted funds and $35.6 million in overall general funds. That $35.6 million is only around 15% of total District expenditures. Their goal is to have the general fund balance be between 20-25% of total expenditures. Being at 20-25% supports the District’s bond rating which allows them to borrow affordably for capital projects and also ensures they have proper cash flow throughout the year.
A general fund balance of only 15% along with the timing of the distribution of state funds to schools means that AASD will be 5 months through their fiscal year before they receive a significant amount of money from the state in December. The $35 million in the general fun will need to cover payroll, insurance claims, and retiree payments. Per Ms. Burr, “The biggest issue is the cash flow. We have to be able to make payroll through November, not that we won't have enough money. After all, it's just, just like, you know, making it to pay day. Our pay day is December. So, we have to figure out how to cash flow our money until we get to that point.”
When school districts do not have enough cash on hand to cover payroll, the most common solution is to borrow funds for a short term. That is common, but it costs additional money to borrow. AASD would like to avoid having to pay extra to borrow funds, but if they have to they will. Ms. Burr noted, “It's been a number of years since Appleton has had to short term borrow. But if we have to do that again, we will have to do that again.”
View full meeting video here: https://aasd.granicus.com/player/clip/110
View Board of Education agenda website here: https://www.aasd.k12.wi.us/district/leadership/board-of-education
