Accounting moves could save Janesville School District taxpayers
JANESVILLE—A Janesville School Board member has an idea that could trim a projected property-tax increase.
Bill Sodemann outlined his thoughts at a board finance committee meeting Tuesday.
The board already has approved shifting unspent money from the recently completed fiscal year to a fund that will pre-pay early-retirement benefits. That amount is now estimated to be around $1 million, but the fiscal year's accounts are not all settled, yet.
The state counts the fund shift as spending in the 2012-13 fiscal year, and that spending boosts state aid for the coming year and reduces the tax levy by about $300,000.
Sodemann asked what would happen if the board took another $1 million from district operational reserves and put it in the same fund.
The result would be that the owner of a $115,000 house in Janesville would see a school-tax increase of $4 in 2014 rather than the current estimate of $19, said Keith Pennington, district chief financial officer.
That answer is based on the assumption that other factors affecting aid and taxes don't change, and that the school board taxes to the limit allowed by law.
There is no other type of spending at this time of year that the district could do and still be credited for spending in the previous year.
So why not shift even more money to the fund to reduce taxes even more?
That could get the district into trouble down the road, Pennington said.
If the district doesn't spend to the same level overall in the following year, then state aid would decrease, and the maximum property tax would rise, Pennington said.
The district might avoid that result for a few years, but in the end it could be forced into a big tax hike.
Sodemann asked Pennington for the Goldilocks amount: Not so much that it hurts taxpayers down the road, but not so little that taxpayers don't get as much help as possible in the coming year.
Pennington said he would not add more than $1 million to the approximate $1 million already committed.
“We need to manage it carefully so it doesn't boomerang on us in the future, but that can be done,” Pennington cautioned.
Pennington also warned about drawing down the reserves so far that the district would not have money on hand in emergencies—a boiler that suddenly needs replacing, for example.
Board member Karl Dommershausen warned that another $1 million could be too much—if state lawmakers decide to cut school funding again.
Current state budget estimates are based on an improving economy, but if the economy does not improve, lawmakers might have to cut school spending again, and district finances would suffer, Dommershausen said.
Dommershausen said he'd be willing to spend no more than $200,000 to help with the tax situation. The tax benefit, apparently, would be proportionately less than Sodemann's $1 million proposal.
Board member Cathy Myers also said $1 million seems like a lot. The public might see this as funding teacher retirements rather than investing in classrooms, she said.
The fourth committee member, Chairwoman Deborah Schilling, said Sodemann's idea sounded like a win-win.
Schulte said she liked Sodemann's idea, but she said it might be difficult to explain to employees.
The committee did not vote, but it will forward the discussion and possible action to the full board, which meets Tuesday.