During the Appleton Area School District Board of Education meetings on 02/24/2025 and 03/10/2025, the Board discussed the $10 million+ structural budget deficit that AASD is facing and options for dealing with that deficit. The most likely response will be to go to referendum in the spring of 2026.
I’ve prepared a transcript of each of the discussions for download:
During the 02/24/2025 meeting they had a mid-year budget review.
The total revenue that they budgeted for in 2024-2025 year was $214.3 million. The total expenses they budgeted for was $225.3 million which was $11 million more in expenses than revenue. The increase in expenses was driven by increases in staffing and compensation and increases in employee benefits. It was noted that the staffing increases were largely due to added STEM positions, Sandy Slope administration, and maintenance at the middle schools, all of which had been approved in the 2022 referendum.
Although they budgeted for roughly $11 million in expenses, current expense projections were running higher than anticipated, mainly due to health insurance costs. So, they were possibly facing a deficit of $12.5 million; although Executive Director of Finance Holly Burr hoped that that projection would come down by the end of the fiscal year.
The District’s General Fund started the year with a balance of $49,805,516. Using that fund to cover the roughly $11 million deficit budgeted for this year would bring that total fund balance down to $38,868,386. If the deficit was higher than budgeted for the fund would have to be depleted more.
Board Member Ed Ruffolo noted that in order to raise $12 million through taxes they would have to ask to raise the mill rate by $1 per $1,000 of valuation which would result in a $250 per year increase in taxes for a home valued at $250,000.
Mr. Ruffolo also raised the point that AASD was spending $23 million more on special education than it was receiving in compensation for special education. That lack of compensation was almost double the current deficit. [I took his point to be that if AASD was fully compensated for their special education costs, it would not be facing a structural deficit.]
During the 03/10/2025 Board of Education meeting, they reviewed the District’s current financial outlook. Ms. Burr went through the projected deficits for the 2024-2025, 2025-2026, and 2026-2027 fiscal years.
For the 2025-2026 school year, she projected an 8% increase in health insurance costs. She said that was very modest given that the industry standard was a 10% increase every year, and keeping it at 8% would require making some changes to the plan. They had already discontinued their HRA plan as of 01/01/2025 so these changes would be beyond that.
Superintendent Greg Hartjes also commented on the health insurance costs saying, “[W]hen we first brought this information to you, looking at a three-year fiscal cycle, it wasn’t as dire as it is today as we share it with you. And the biggest reason is this year in the first iteration of this back in September, we only had an increase of our health plan of $2.5 million. As you see here, it’s now $4.4 million. So, it’s gone up by just under $2 million this year alone. And so that’s one of our largest increases. And certainly that carries over. And so, as Holly said, next year, to only get a $3 million increase in our health plan, that’s an 8%, we would have to see some things improve for us, because we have not gotten 8% in many years.”
The 2025-2026 projections also included the possibility of changes to paid time off benefits.
None of the projections included estimated increases to staffing or compensation, and any such changes would impact the deficit.
In terms of steps they could take to balance the budget she said, “[W]e all know it takes several forms. And you know, in my mind, it’s more most likely going to be a combination of increased aid from the state, us taking a look at our operations and where we can make cuts without truly hurting education (but some of those could be significant if we don’t find funding elsewhere), and going to our taxpayers through an operating referendum, would also be an option.”
Superintendent Hartjes said that the 2026-2027 fiscal year would be the time to try to correct AASD’s structural deficit. As fall approached they would have a better idea of exactly what the deficit would be and how to respond to it. He noted that the deficit could be made up through a combination of cuts and an operational referendum. Using $10 million as the overall deficit figured he raised the possibility of doing $2 million in cuts and seeking $8 million through a referendum or possibly splitting it 50/50.
Ms. Burr believed the best time to plan to put forward a referendum asking for more money would be April of 2026. For budgeting purposes holding a referendum and receiving an answer from taxpayers in April was less complicated than holding a referendum in the fall.
They discussed desire to make cuts in a way that minimized the impact on students, by focusing not on classroom teachers but on things like the Equipment and Facilities Budget and the Tech Services Budget, but those were hard to make because of inflation.
There was discussion about the costs of special education and the reimbursement that the District receives from the state. The state sets an exact amount that they will reimburse schools for special education students. As a result, even if the school’s costs to educate that student increase, the amount they receive from the state stays the same, so over time as costs increase the local school takes on a greater percentage of the cost of educating that special education student.
Ms. Burr told the Board that if the state reimbursed AASD for 60% of their special education costs, that would fix the District’s structural deficit.
Board member Jason Kolpack asked “What would we say to a community member who come would come in and say, ‘We just gave you $130 million; how can you possibly be in this situation?’”
Superintendent Hartjes responded, “I think what’s really important is that we look at our tax rate, where our tax rate has been, where it is today. I’ve shared that my taxes have gone up $31—my school taxes—in 15 years. We feel like we’ve been good stewards of the taxpayers’ dollars. We feel we’ve been fiscally responsible. We—you know, when we when we had the last referendum that passed, we timed it to have other referendum debt that was falling off, so it had minimal impact on our local property taxes, and so, you know, that was capital projects. This is about operations. And just the fact that when we get two to 3% increases or no increase in our revenue, which is controlled by the state (we have no control over that), and our operational expenses go up due to inflation by 8 to 10 to 15%, there really is no answer to that other than we have to either cut costs or we have to ask for more money from our taxpayers. And that’s really—in 1993 when the revenue limits came in, they came into place at a time, and the explanation from the legislature was that if your community feels you need more money for schools than what the state is providing, then you need to go to referendum and ask your community for those dollars. And that’s what schools have been doing. School districts have been doing. Especially over the last year, as we all had the same issue with two years in a row of no increase from the state in revenue that overlap with high inflation. So that’s our only recourse—really, well, two things—right?—cut our costs, but really it’s about looking at more revenue.”
He followed up by saying that the 2022 referendum had a facilities component to build Sandy Slope and expand the middle schools. It also had a operational component that was aimed at lower class sizes in Kindergarten – 2nd grade and adding elementary STEM classes; however, “As far as I know, we have not gone to operational referendum just to continue with the same services we’re providing students. We’ve gone to operational referendums to add services for students. This would be just to simply offer the same education that we’re offering now that we currently can’t afford, and we’re using our savings, our fund balance, to offset that deficit right now, knowing that we can’t do that after ’26 – ’27.”
[This has nothing to do with AASD in and of itself, but I cannot help but come away from this discussion with the impression that the way we handle education in the country is deeply, grossly, systemically fiscally irresponsible. The amount of regulations, the many disconnected layers of funding, and the lack of any way to maintain expectations for the end result seem guaranteed to result in runaway costs. It would probably be more fiscally sound to just get rid of schools as government entities entirely and provide tax subsidies directly to students so that they can as individuals pursue the educational opportunities that best fit them.]
View 02/24/2025 meeting details here: https://go.boarddocs.com/wi/aasd/Board.nsf/goto?open&id=DCVUE87BA9F5
View 02/24/2025 meeting video here: https://www.youtube.com/live/ZhWSwv6eqEc?si=vR-skSQDv04A0m1L
View 03/10/2025 meeting details here: https://go.boarddocs.com/wi/aasd/Board.nsf/goto?open&id=DE8N725E7BC7
View 03/10/2025 meeting video here: https://www.youtube.com/live/J3TM_BUtEag?si=ncK70ZyT32_3rh7z
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