Long Range Budget Review - Funding Unmet Needs

Three Realities Combine to Squeeze the School Budget

The Board of Education's Budget and Finance Committee began its work on the 1998-99 budget in September 1997, reviewing financial forecasts, budget constraints and options for next year's budget. Budget review normally would not have started until May 1998, but the committee started months early this year to wrestle with three factors that create fiscal dilemmas for the district:

the state-imposed revenue cap on school budgets which limits the revenues available to schools;
extensive deferred maintenance of school facilities, 70% of which are at least 30 years old; and
an ongoing need to invest in technology or, at the very least, simply maintain the technology the schools already have.

Living Within the Revenue Cap

State law imposes a revenue cap on school district budgets which limits the increase in the revenue behind each student. The Board made more than $635,000 in cuts to the 1997-98 budget to keep it within the revenue cap and free up money to invest in deferred building maintenance.

Because the cap is linked to student enrollment, the district will face an even bigger budgetary dilemma in the future when enrollment is expected to decline in Madison. The first revenue cap reduction due to enrollment decline is expected in 2000-01, when a shortfall of $3.5 million is projected. By 2001-02, the shortfall is expected to grow to over $5.9 million, and the forecast shows it reaching $9.4 million by 2002-03 and $13.8 million by 2003-04.

In other words, the Board will be forced to make increasingly large cuts by the turn of the century just to keep the budget in line with the revenue cap, making it all the more difficult to accommodate unfunded facility maintenance and technology needs.

Filling the Facility Maintenance Gap

According to an independent facility audit conducted in 1996 by a team of private sector engineering, construction and facility management firms, the district needs to invest $218 million in building upkeep over the next 20 years, an average maintenance expenditure of $10.9 million a year.

Despite cuts made in other parts of the operating budget in order to increase the maintenance budget by $500,000 in each of the last three years, the district still had a base budget for facility maintenance of only $2.1 million coming into 1998-99, leaving an annual shortfall of $8.8 million. The result of this budget gap is that needed maintenance has been deferred.

Paying the Admission Fee to the Information Age

A private consultant, the Center for Educational Leadership and Technology (CELT), recommended that the district invest $59 million over the next five years in classroom technology, network links and technology infrastructure, and staff training. The heart of the recommendation is a goal of having a computer for every teacher in the district and one computer for every four students.

District technology specialists evaluated the plan and identified savings that would allow implementation of CELT's technology blueprint at a cost of $10 million a year for five years.

Even if budget constraints prevent full implementation of the CELT plan, the district faces a significant fiscal challenge simply to keep existing technology from becoming obsolete. Just to maintain and periodically replace the technology already in the schools would require an estimated annual expenditure of $2 million that cannot be accommodated in the district's budget with the state-imposed limits on allowable revenues.

MMSD Budget Issues