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  • Writer's pictureEmily Berry

Are you assuming your taxes are set as low as possible?

It's time for a second post challenging assumptions I think folks might be making about our school district.

The assumption: That the school district carefully considers its necessary expenses and has done its best to keep property taxes as low as possible.

The reality: Although the millage rate is very clearly the school board's responsibility, in reality they rely heavily on the superintendent and business manager to write up the budget and recommend the tax rate every year. As I detailed in my last post, the board does not conduct line-item analysis of the district budget or generally spend a ton of time on discussing property tax. This is a product of their governing model, which calls for the board to stick to setting policy and monitor the way the district is operating -- there is no finance committee, no work sessions to examine or discuss funding priorities, or discussion with department heads to review budget requests. The Oct. 23 meeting when the board approved its final budget took 11 minutes.

So, let's talk about the property tax rate. The jargony word for this is the "millage rate." Right now it's 13.88. This is the amount you are charged as a property owner for every $1,000 dollars value of your property. So, if your home is assessed at $300,000 you would owe 13.88*300, which equals $4,164. The school district's tax is not your total bill, of course, but it's generally about 40% of the total - more than the village government, it's worth noting.

Since 2013, Shorewood's millage rate has been the same: 13.88. District leadership has prioritized keeping the rate stable rather than keeping it as low as possible.

As anyone who has received a tax bill more and read it closely can tell you, though, the school district's portion of your property tax bill has almost certainly not been the same every year since 2013. That's because property values have generally been going up. To collect or "levy" the same dollar amount every year, the district would have had to lower the millage rate to balance out the higher value of most homes.

The school district's business manager, Patrick Miller, takes pride in presenting the budget every year with a 13.88 millage rate. But a predictable school district millage rate does not mean that property owners can predict their tax bill from year to year. That's because a) property values change, and b) our tax bills include village and county taxes along with the school district, and those change from years to year. Mr. Miller told school board members that it's common for school districts to use the strategy of keeping millage rates at the same amount. This isn't the case. They might be targeting some degree of stability, but we are one of very few that have had exactly the same rate for more than two or three years in a row. Looking at historical tax data collected by the state, of the 400+ districts in Wisconsin, only two others have done it -- New Glarus and Prairie du Chien, and Fall Creek district came very close, lowering their millage rate by .02 in 2014, and keeping it the same since then. Keeping the millage rate exactly the same does now appear to be a common strategy. It's not really a reflection of fiscal discipline -- it's not the same as keeping the budget stable, since each of these years the 13.88 tax rate has meant more revenue thanks to rising property values.

Every year since 2014, the district has taxed property owners more in total, while state aid has been fairly flat.

You might assume the district needs more each year because expenses have gone up and more families with children have moved into the district. Or maybe they have been paying teachers more every year, which would be a great investment.

But our enrollment this year is just about 2.6% higher than in 2014, while the district's total tax levy is 16% higher now compared to 2014. Teachers got a 3.88% boost to base pay this year on average. In other words, your bill has grown by more than what it cost to give teachers raises and create space for new students.

We are not paying higher taxes because we want to properly compensate teachers or invest in instruction. To be fair, it's not the school board's choice not to funnel more revenue to teachers -- thanks to the Walker administration, the district is actually limited in how it can compensate teachers, and how much it can tax us for operations, including the money it uses to pay for facilities upkeep. So rather than lower taxes, the income above and beyond the operating budget has gone to pay down debt. Keeping the millage rate at 13.88 regardless of the operating budget or property values was a strategic financial decision that I think most people don't realize was made on their behalf. In an email to the district last month, I asked expressly whether this decision to set the millage rate at the same level year over year was up to the board or the business office. Through Dr. Davis, Mr. Miller responded that he and the superintendent can make recommendations, but ultimately this decision is the board's responsibility. I can tell you that at the many board meetings I've attended, there's been little to no discussion over this strategy and why it is the best for us. The money the district has levied above and beyond our state-set revenue limit has gone to repay debt early - a strategic decision the board did not request, or discuss in great depth, either.

In fact, this year, property values came in higher than projected in preliminary drafts of the budget, but Mr. Miller kept the 13.88 millage rate on the proposed final budget for the board's approval. He raised the estimated tax levy and moved the "extra" funds to further early debt repayment, and the school board didn't discuss this aspect at all prior to approval in October.

Next, I'll write about what this tax and debt repayment strategy means in terms of the proposed $65 million borrowing that is expected to be on the ballot April 2.

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