Wisconsin school districts face a conundrum: declining enrollment, rising inflation, and the inability to increase funding without voter approval. These conditions make referendums a critical tool for districts to maintain operations, yet they also raise concerns about fairness, transparency, and cost for taxpayers. Proponents and critics offer compelling arguments on both sides of this divisive issue.

The Case for School Referendums

Supporters argue that referendums are essential for sustaining quality education in the face of structural funding challenges. Wisconsin’s school funding formula ties budgets to student enrollment, creating financial instability for districts with declining numbers. This formula, while equitable in theory, fails to address fixed costs like building maintenance, teacher salaries, and transportation. Inflation exacerbates this issue, making it difficult for districts to cut costs without reducing educational quality.

Local referendums offer districts a lifeline. By approving additional funding, voters can help districts offset declining budgets and ensure their schools remain competitive. Recent state budget increases, including $325 more per student annually, have provided some relief, but as opponents note, this funding does not address the shrinking pie of total district resources. For many districts, particularly those with lower property wealth, referendums enable them to access additional state aid under the shared costs system.

In essence, referendums empower communities to decide the value they place on education and give schools a chance to survive and thrive despite external pressures. 

Concerns About Referendums

Opponents of referendums highlight several challenges, particularly for taxpayers. While framed as local decisions, the implications of passing a referendum often extend beyond district boundaries. For districts with limited property wealth, increased spending may trigger additional state aid, indirectly affecting taxpayers statewide. This system creates disparities, as wealthier districts primarily rely on local funding and receive less state support.

Critics also point to the lack of transparency in how referendums are presented to voters. School districts may use complex financial mechanisms to obscure the long-term tax impact. For instance, balloon loans, which defer larger payments to the future, can mask the true cost of borrowing. Similarly, districts often fail to inform voters how property taxes might decrease if a referendum is rejected, skewing perceptions of the stakes involved. 

Another common concern is the relationship between mill rates and property valuations. Districts sometimes emphasize stable mill rates without clarifying that rising home values will increase the actual tax burden. This confusion undermines voters’ ability to make informed decisions, leading to unintended financial strain.

It begs the question, would taxpayers were made aware of the true costs of referendums, would they vote for them. 

Striking a Balance

Wisconsin’s school referendums represent a vital yet imperfect tool for funding education. While they allow communities to address immediate financial needs, the broader implications for taxpayers and the potential for misrepresentation warrant careful scrutiny.

The Wisconsin Institute for Law & Liberty (WILL) has proposed measures to increase transparency in how referendums are presented, ensuring voters can make fully informed decisions. WILL recommends that school districts include clear disclosures when presenting referendums, such as the estimated net tax impact per $100,000 of property value, the total cost of a capital referendum including principal and interest, and how much tax rates would decrease if the referendum is not approved. These measures aim to provide taxpayers with a more accurate understanding of the financial implications, reducing confusion and fostering trust in the referendum process.

Reforms like these, combined with stricter borrowing practices and enhanced state-level support for districts facing declining enrollment, could help ensure referendums remain a balanced and effective tool for supporting education without unfairly burdening taxpayers who are left in the dark on the true cost.