Madison School District PDF:

For MMSD, the most important aspect of multi-year budget planning is the careful use of ‘unused tax levy authority’ which can be carried forward from one year to the next. For 2014-15, the budget has available just over $8.8 million of ‘unused tax levy authority’ which was carried forward from 2013-14.1

The 2014-15 budget calls for use of $5.1 million (or 58%) of this carried-over tax levy authority, with the balance of $3.7 million preserved and carried forward into the 2015-16 budget. Partial use of the carried-over tax levy authority was targeted early in 2014-15 budget development to support the new technology plan. It also supports the compensation increase included in this budget recommendation. We believe this is an appropriate extent of use and caution against any additional use of the $8.8 million in the 2014-15 budget year.
There are two primary reasons for this recommendation, both of which lie ahead in the 2015-16 school year and beyond.

First, greater use of ‘carried-over tax levy authority’ to support additional spending this year will decrease equalization aid next year. Equalization aid, which is the district’s second largest source of revenue (behind only property taxes) is based on a formula which contains disincentives for spending above a prescribed level (the ‘secondary shared cost ceiling’). For example, a sharp increase in shared cost per pupil in 2012-13 contributed to an 11% equalization aid loss in 2013-14.

Looking ahead to 2015-16, depending on the state budget, MMSD is expected to see a 5-10% aid loss next year. Additional spending in 2014-15 would only increase the expected aid loss. For every two dollars ($2) MMSD spends above the secondary cost ceiling, we lose one dollar ($1) in equalization aid.

Second, the 2015-16 revenue budget forecast is very uncertain. It is outside of the current two-year state budget, the framework which determines school district revenues. Therefore, we recommend carrying over the $3.7 million to provide sufficient revenues to meet the needs of the 2015-16 school year.

The uncertainty of 2015-16 revenues, along with anticipated cost pressures on next year’s budget, including health insurance costs and increased technology investments, to name just two factors, make it essential that unused tax levy authority is preserved and carried-over into 2015-16.

1. Facing a major aid loss in 2013-14, the district ‘under-levied’ by $8.8 million to hold the tax levy increase to 3.384% on 0.35% tax base growth.

The District continues to use a single data point analysis for “State Aid” or redistributed state dollars. The District received a substantial increase in state tax dollars during the prior year….

Much more on the District’s 2014-2015 budget, here.