Madison Metropolitan School District
Madison, Wisconsin

Daniel A. Nerad, Superintendent
BOARD OF EDUCATION
Minutes for Special Meeting - Open Session
August 25, 2008
  Doyle Administration Building
545 West Dayton Street, Auditorium
Madison, Wisconsin

Special Meeting of the Board of Education was called to order by President Arlene Silveira at 5:09 p.m.

MEMBERS PRESENT: Maya Cole, Ed Hughes, Lucy Mathiak, Beth Moss, Marj Passman, Arlene Silveira, Johnny Winston, Jr.

MEMBERS ABSENT: None

STUDENT REPRESENTATIVE PRESENT: Sarah Maslin

STAFF PRESENT: Sue Abplanalp, Steve Hartley, Erik Kass, Dan Mallin, Pam Nash, Dan Nerad, Ken Syke, Barbara Lehman-Recording Secretary

1. Elvehjem Parent-Teacher Organization Donation to MMSD of fully installed Boundless Playground Equipment

(Packets included a letter from the LVM Dreams Big subcommittee (8/19/08) and proposed motion language from legal counsel (8/21/08). Copies are attached to the original of these minutes.)

It was moved by Arlene Silveira and seconded by Johnny Winston, Jr. that the Board accept the donation from the LVM Dreams Big subcommittee of the Elvehjem Parent-Teacher Organization (PTO) of the Boundless Playground equipment that has been installed at Elvehjem Elementary School, said donation having a value estimated by the donors of approximately $191,153. Student Representative advisory vote was aye. Motion unanimously carried.

2. Public Appearances

Deb Gilbert, Leopold parent, supported the use of a three-year recurring referendum to address the budget deficit that provides the district and community the time it needs to engage in the long range planning process. She provided a handout illustrating her points numerically (a copy is attached to the original of these minutes). She was concerned that the shared commitment laid out in the district's proposal was a bit too much in terms of preliminary reductions over the next three years that could potentially be very divisive so soon after the long range planning portion has begun because it will really impact the kids. Her handout proposed alternatives.

David Glump, 37-year resident in the Meadowood Neighborhood, stated that his children were Madison graduates but he was opposed to the referendum--not because he did not believe more funds are needed, but because of the recurring nature of the referendum which allows the district to exceed the state's spending cap. He looked at it as a "blank check" and that the district would never have to do the "heavy lifting" of long-term cost savings. He was very impressed and encouraged by the selection of Daniel Nerad as the new superintendent but he felt that the current budget dilemma was largely of the Board's own making. He wanted to be shown and assured that the taxpayers can trust the administration with its tax dollars, in particular with regard to collective bargaining agreements. He asked the board to do budgeting now and prove that it can cut fiscal waste and things which directly impact student educational outcomes.

T.J. Mertz applauded the work in the proposals to address the budget gap through 2011-12. He suggested also asking for $6 million in the first year of the referendum stating that he and the people he represents would support and work hard for it. However, when he saw the $3.7 million in cuts for the next three years, his heart sank. He thought that as their organization fights for state finance reform, having to say that the MMSD is cutting this amount would not help their case. He added that schools are under-funded and that people should go to the legislature with that message. He did not agree that the $13 million is a "blank check"; it has a number on it. That confusion has got to stop.

Don Severson, representing Active Citizens for Education, stated that an enormous amount of confidence is developing in the community because of the work of the Board and Daniel Nerad and Erik Kass. He appreciated their helpfulness in providing information and insights. He felt that this developing trust may be put in jeopardy by going to referendum at this time. ACE recommended that the decision be delayed to give additional time and lay out more specifics in terms of evaluating programs; both business and educational. He felt it would be critical for the Board to communicate the criteria, strategies, processes, and standards that will be put into place to do those assessments and evaluations and used as a platform for more enlightened decisions down the road. He added that if the Board does decide to go to referendum, it should consider non-recurring vs. recurring because at the end of three years it would come to the same amount of dollars. The difference is to have established a new base. He asked the Board to table the motion for at least 90 days to get concrete information out to the public.

Thomas Kozlousky stated that the Board has to continuously cut programs or go to referendum. He felt that a recurring referendum is best at this point to get the money for a number of years so the district can plan ahead. He added that if the district tries to go to referendum every year, people will say that it was just passed last year. There is no other way to tax other than through the property tax. He did not want corporations running the schools. Unless the amount of property that is taxed can be increased in the city, the district is still going to run into this problem. Maintenance has to be included because once that problem is not addressed, then the district always has to come back to that. The schools have to be kept in good condition. He agreed that the Board needs more money for the schools and students and teachers and the programs.

3. Projected Future MMSD Budget Gaps

a. Options for addressing the MMSD's projected annual budget gaps and overall tax levy beginning in the 2009-2010 Fiscal Year:

i. Cost/program reductions within the budget

ii. New efficiencies

iii. Revenue enhancements and revenues outside of the revenue limit calculation

iv. Changes affecting state aid and shared costs under the revenue limit formula

v. Expenditure of fund balance

vi. Referendum

b. Administrative recommendation for a plan to address the 2009-2012 projected budget gaps and the tax levy impact of a recommended November 2008 referendum to exceed the revenue limits

c. Board action related to options for addressing projected future budget gaps and overall tax levies, potentially including specific direction on a referendum question to be prepared for final adoption at a future Board meeting.

(Packets included a revised memorandum on the budget gap recommendations (8/25/08), an executive summary of the three-year financial forecast (8/18/08), an explanation of the projected referendum impact on state aid (8/22/08), and proposed motions addressing the projected budget gaps (8/21/08) (copies are attached to the original of these minutes.)

Dr. Nerad gave an overview of the recommendations noting the work that was done to balance the needs of the kids with the needs of the taxpayers. Every conversation has been about both of those things. He hoped people would understand that the administration is highly committed to addressing both needs and that is the foundation behind the recommendations. He knew that this would be the first thing to address as the new Superintendent. He reviewed the board meetings that have taken place to address these issues: on July 28 they discussed the nature of the gap; on August 4, they talked about specific options; public forums were held in the community and the input was categorized. Responses were made to that input and the input was considered as the recommendations were shaped. Recommendations were presented last week on the 18th and were before the Board tonight. He noted that the issues with the current funding formula are happening across the state and that everyone is facing this deficit. This district has made reductions and looked at other efficiencies; he reiterated the administration's commitment to continuing that conversation keeping the core mission in mind that children get well educated. They know the amount of the 2009-10 gap and could reasonably say that, if all things remain the same, referendum money could be used in the future years.

Dr. Nerad indicated that the administration was recommending a three-year recurring referendum and explained their proposals. The proposal would allow the district time to redefine its strategic plan by some time later this spring, fully engaging the community in that discussion and transparent process. Until that is done and the priorities are determined, he felt it hard to come before the Board about what should be reduced at this time. The Superintendent and Erik Kass, Assistant Superintendent for Business Services, outlined in detail the proposals to address the gap for the 2009-10, 2010-11, and 2011-12 school years: approving a plan for a three-year recurring referendum, utilizing the General Fund Balance, reducing unallocated staff positions, reducing various budgets, returning funds from the Fund 80 balance to taxpayers, and creating Fund 41. All the tax impact scenarios were reviewed. They also explained the effect on state aid. The district's goal was to demonstrate how the implementation of Fund 41 can improve the situation of negative tertiary. Dr. Nerad summarized by saying that the work was done as a partnership effort between the district and the community. It is a transparent plan that holds things steady until the district priorities are determined, adding to the base under the revenue cap to avoid asking for a huge amount in another year.

i. It was moved by Arlene Silveira and seconded by Johnny Winston, Jr. that the school board direct the superintendent and administration to undertake the following tasks as further identified in the superintendent's August 25, 2008 recommendation for addressing the projected school district budget gap and overall tax levy in 2009-2010 through 2011 2012:

(1) Take the steps that are necessary for the district to create and utilize a School Capital Expansion Fund (Fund 41) beginning with the tax levy to be certified in October 2008; and

(2) At the appropriate time, prepare a budget proposal for the 2009-2010 fiscal year that decreases the 2009-2010 tax levy for Fund 80 through the one-time use of up to $2,000,000 in Fund 80 equity and, to the extent necessary to address a gap between revenues and expenses, also reduces the budget for unallocated elementary school positions by up to $600,000, identifies up to $400,000 in other specific cost reductions within departmental budgets, and incorporates the use of up to $2,000,000 in Fund 10 equity for necessary expenses.

Student Representative advisory vote was aye. Motion unanimously carried.

ii. It was moved by Arlene Silveira and seconded by Johnny Winston, Jr. that the school board direct the administration and legal counsel to prepare the resolutions necessary for the board to approve exceeding the revenue limit imposed by Section 121.91, Wisconsin Statutes, and to submit the question of exceeding the revenue limit to a referendum election to be held at the general election on November 4, 2008. The question to be approved and submitted is as follows:

BE IT RESOLVED by the School Board of the Madison Metropolitan School District, Dane County, Wisconsin that the revenue included in the School District budget be authorized to exceed the revenue limit specified in Section 121.91, Wisconsin Statutes, for recurring purposes by: $5,000,000 beginning in the 2009-2010 school year; an additional $4,000,000 beginning in the 2010-2011 school year (for a total of $9,000,000); and an additional $4,000,000 beginning in the 2011-2012 school year (for a total of $13,000,000 in 2011-2012 and each year thereafter).

Student Representative advisory vote was aye. Motion unanimously carried.

Each of the Board members shared their rationale behind their decision. The following are some highlighted points made during the meeting:

Looked at whole variety of options.

This type of operating referendum solves the problem with the gap.

A non-recurring referendum would, in the fourth year, result in a potential referendum of about $17-$18 million. No revenue stream would address that type of gap.

If it does not go forward, the district would be in the immediate position of reducing $8 million, $3M would be addressed by this plan, but the remaining $5M would require reductions in programming.

District knows how to do drastic cuts but that would be precipitous at this time.

No additional programs would be brought in but it makes the additional from getting any larger.

Important step--difficult decision to ask voters to increase their taxes. Aware of the significance of that and are not taking this lightly.

Need to control what can be controlled which is overall district spending for 2009-10; the rest is out of our hands. Salaries and benefits are compelled to go up at least 3.8% per year (should lobby the legislature because we are bound to follow that). Remainder of the budget is spending that is not on salaries that is projected to go up 3.78% compared to the consumer price index which has gone up 5.6% since July of 2007.

Confronted with an $8M deficit and can either go to referendum or cut; those are the options. But cutting is a poor choice at this point and is a very painful exercise. Very time consuming process that takes away from improving student learning. Results in poor decision making.

Do not think we have $8 million to cut and maintain the quality of the schools. Board will be looking for additional efficiencies but not $8 million without serious impact.

Decision now is compelled by having to deal with the 2009-10 budget between now and next spring, voter turn-out in the last couple elections, ability to get a broader sense of the community, having to certify the question in early September.

Why three years instead of one year? It is a drain and debilitating to do this year after year. It will be more than a one-year process to determine priorities and align resources and make efficiencies; it must be done right. Gives breathing room to engage in a deliberative process.

Why have it recurring rather than non-recurring? Recurring because it is the honest approach. Increases revenues for operating expenses that continue year after year. Expenses increase. Non-recurring referendum results in a problem at the end of year three having to face a $17 million budget deficit that we would have to go to referendum for. Cannot talk about a deficit that is that large.

Let's have the discussions now. Board and administration are being honest. No budget shorthand. Not leaving it for future boards. Respecting the wisdom of the voters.

Why not ask for more? Why not restore some cuts? It is important to do it the way we are doing it. No way to determine where it should go. Answers will emerge organically from the review process in a more careful way. This is a reasonable approach.

Hoping for a civil community discussion. If some worthwhile cuts are identified, that will be something we will pursue.

Value of a strong public school system to a community. Cornerstone of a thriving community. Strong system to prepare our youth to be successful. Goes beyond the numbers.

Structural deficits from the state. Districts are hard pressed. Can go to referendum or make detrimental budget cuts or both.

Understand economic concerns. This is a partnership plan helps to address the needs of the community and the district they are not separate needs. That balance is important.

Board is committed to working with the superintendent and the community as we move the district forward in a positive direction. Strategic planning process will be very important to all of us. Board is in full agreement with doing that.

New governance focus on student achievement and efficiencies that will benefit students and the community.

We are not coming to the community saying give us the money or something gets whacked. Asking the community to work with us to solve very critical problems for our schools. Schools are city services. The miracle is that our schools are continuing to function but do not know for how much longer. In the end, you do the best you can. There is a lot of work to do.

This referendum and discussions signal two important things--pattern of change in fiscal management--what has already been done have don ready other piece how much long-term planning and program management. How our district is growing spatially. Also talking about curricular program revenues. Has not been helping that we have the best programs. Parents question that. Need to be more responsive Do not do it in three months. Invest resources where they might be better used. Not a blank check but the opposite.

We know this is not going to change until state finance changes. We also know that wishing that to happen will not work. If we want schools that do the best job of educating our children, we have to admit and say we cannot continue to go forward in this manner. Need to increase the base. We understand the time and stresses we are in. Believe the superintendent has been sensitive.

This is a reasonable question to take to our community. Districts are facing the same thing across Wisconsin. Increases in fuel, utilities, and food. No wiggle room. What we control is very small. Shared responsibility to do this while still lowering the tax rate. Hope community members will take the time to become informed about what this question means; gaining revenues and lowering the property tax rate.

Our intention is to change business as usual. Have to consider what we have already given up. Trust this new deal. Need a new strategic plan. We are only maintaining. Actions will reduce the tax rate. Keeping needs to a minimum. Still in need of greater funding for mandates. We can work together. We want to return once again to the only reason we exist, to pass on knowledge from one generation to the next and provide for children the joy of learning.

Have looked at state funding for a long time. Doubts about when the legislature will help out districts like Madison. Have to be more proactive on both sides of the aisle. State gets most of its taxes from individual income. Corporations give about 10%. Really an atrocity that we are still stuck with this. Governors say they will be for education ad we sit and wait. First time that I have heard some comments about when we can bring things back. Hope to do new things like Four-Year-Old Kindergarten. Agree that we need to prove ourselves and continue to work hard. Citizens consider this an investment in our future. This is the beginning. Stabilizes that house that Art built and improves so many good "bones" here. We are not asking for more but a home equity loan. Trusting that this district is going to be better than it has ever been. We can rise to the occasion because doing this together. Looking to increase our enrollment and keep families in the district. We are asking the community to look at what we have already done. Committed to communication and collaboration. If anyone thinks that we can cut $17 million, they are kidding themselves.

We are doing the right thing by supporting the superintendent's recommendation. No question about it. Knew we would do the right thing several months ago when we started the discussion. Last referendum was tough and it will be tough again. Hope we continue the discussion that the superintendent has started with the community, especially people that we do not hear from. Giving people the facts so we can have the district we want to have.

As a student in the MMSD I have faced the results of budget cuts. Many complaints from students in the daily school life. Concerns me that every year we see programs and resources being depleted. Decisions made by taxpayers affect us. Fully support this referendum and urge everyone to do the same. Vote.

Dr. Nerad appreciated the discussion and promised that the district would work in the manner that the board has asked. It is about communicating, engaging, and sharing the message. That is the commitment. We will make ourselves available to the community and will have a more formal communications plan on September 8 along these lines.

4. Adjournment

It was moved by Beth Moss and seconded by Ed Hughes to adjourn the meeting at 7:27 p.m. Student Representative advisory vote was aye. Motion unanimously carried.

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