Operational Budget

Hudson Faces Budget Challenges Similar to Other K-12 Schools in Wisconsin

In a recent presentation by Anne K. Chapman, Research Director for the Wisconsin Association of School Business Officials (WASBO), the following statewide budget challenges were highlighted. 

Wisconsin has 421 public school districts. K-12 school aids account for one-third of the state’s general fund. In 1993-1994, the state implemented levy caps (revenue limits) for school districts assuming that state aid would adjust as appropriate based on inflation. Per-pupil revenues had lagged behind inflation by more than $3,200 since 2009 when inflationary adjustments stopped. In 2002, Wisconsin was ranked #11 in the nation for per-pupil spending (11% above the national average). In 2020, Wisconsin had dropped to #25 in the nation (5.6% below the national average). With the recent freeze in per pupil funding, Wisconsin is likely positioned at an even lower in comparison to the national average. 

Over the past ten years, 259 school districts (~62%) have gone to referendums to raise revenue limits.

In the 2021-23 state budget, lawmakers used COVID relief funds (ESSER) for public schools keeping revenue flat for two years. Wisconsin was one of the only states who took this course of action.

With historic inflation and frozen revenue limits, many districts in the state have been forced to use ESSER funds for ongoing operating costs in addition to COVID expenses. As a result, school districts are facing budget holes and a looming fiscal cliff. 

The Impact of Declining Enrollment

Almost 75% of school districts across the state have declining student enrollments as compared to 57% in 2007. School district revenues are determined based on the number of students enrolled. As enrollments decline, revenues decline. However, expenses don’t decrease proportionally. For example, the costs related to maintaining a school building remain relatively the same whether the student population is at capacity or if it drops by 100 students. 

To cope with the pressures of flat revenue from the state, increased inflationary expenses and declining enrollments, school districts are forced to turn to operating referendums. In 2022, there were 92 operating referendums on the ballot. This past spring, 54 school districts held operating referendums.

Budgeting Amid Uncertainty

Thanks to the support of our Hudson community, we are moving forward with needed maintenance and upgrades at three of our schools due to the passage of the capital referendum. At the same time, voters did not approve an operational referendum to provide the funding needed to maintain class sizes, current course offerings, and competitive salaries to recruit and retain high-quality staff.  

A clearer picture of the School District’s budget will be available once the legislature approves the 2023-25 state budget. With a historic state revenue surplus, we are hopeful the legislature will provide some increase in state aid to public schools. However, the School District is projecting an annual operating budget shortfall of up to $8 million in the next five years. 

Regardless of the state’s final budget and per-pupil aid, the School District has identified staffing reductions due to lower student enrollments to delay or reduce the likelihood of Hudson reaching a fiscal cliff. Going into the 2023-2024 school year, reductions in classroom teachers have been made at the elementary, middle, and high school levels. Two Assistant Principal positions will have a reduction in the number of days in their contract. These staff reductions total nearly $643,000 in budget savings. 

The Board of Education cannot cut $8 million from the budget without significantly impacting the educational opportunities this community has come to expect. Over the summer, the Board of Education will review the operational referendum survey feedback to determine how best to approach our budget challenges. Tough decisions lie ahead, and it will take our collective effort to solve our challenges.