Shorewood Referendum Facts

April 3, 2011

Facts about the 2001 Shorewood Schools Referendum

Paul Zovic


Shorewood School Board


Although some may disagree, there should be no doubt that at this point in time, public education in Wisconsin is facing unprecedented pressures (some even claim that an all out attack is under way). Proposed and contemplated State legislation cuts funding for public schools, promotes privatization and removes many, if not most elements of local control. While reasonable people may disagree and can and will argue about the merits of the proposed and contemplated legislation, my purpose in writing today is to address the April 5 referendum for the Shorewood Public schools.


The Shorewood School District, like most public-sector organizations across the country is faced with a budgetary gap between revenues and expenses. A variety of factors have contributed to Shorewood’s gap over the years including significant increases in some operating costs, changing demographics, changes in regulations and State funding levels, and in funding rule itself.


The referendum on the April 5 ballot was developed as part of the District’s longer-term plan to address ongoing financial challenges. The referendum carries the recommendation of an independent committee convened by Village President Guy Johnson and me in early 2010 as a sound financial decision and as the best option available for expense reduction and revenue increase. The referendum will allow the District to (1) refinance the current Wisconsin Retirement System (WRS) debt at a lower interest rate, and (2) fund our currently unfunded obligations to provide Other Post-Employment Benefits (OPEB).

There has been some confusion, some uncertainty and a good deal of misinformation floating about (and delivered via email, dropped on doorsteps and proliferated in the blogs herein) about the referendum, particularly regarding the recent changes in the impact to taxpayers. My remarks here are focused on our changing landscape, on the facts about the current situation and on the truth about the referendum’s impact to the taxpaying public. In the interest of focus and brevity, I direct all interested readers to the School District web site ( for general information on the referendum. The web site maintained by the Friends of Shorewood Schools (an independent group of taxpayers and parents) also contains a good summary of the two elements of the referendum (WRS debt refinancing and OPEB funding) and a solid collection of data and information in support of the Board’s effort (


Last fall, the School Board began public discussion of the referendum and in January gathered a group of community members (which included both school parents , non school parents, working professionals and retirees) to study the referendum option and help the Board communicate the plan. The Board acted in early February to approve the referendum and in February and March the Board convened a series of special meetings and Q&A sessions about the referendum. Additionally each Board meeting since December has included an agenda item for discussion of the referendum.


As the Board and I have been reporting in our recent meetings, listening sessions and outreach efforts, three events have occurred since the initial drafting of the referendum language in early February that reduced the size and overall cost of the referendum:

1. In late February, the Shorewood School Board and the Shorewood Education Association completed negotiations on the contract for 2009-2011 school years. The contract (which expires on June 30, 2011) included several powerful concessions. In total, the concessions will reduce annual operating costs by at least $130,000 next year and reduced the total OPEB liability from $13.2 million to $9.7 million. I must note here that even when the total unfunded liability was at $13.2 million (and even before the Governor’s Budget Repair Bill), the Board had planned to only fund an OPEB trust to a maximum of $10 million ($3.2M less than the total OPEB liability at the time). In light of the contract concessions, the Board saw that a $10 million OPEB borrow was foolish (we are not fools) and that even funding an OPEB trust at $9.7 million was unwise. We then looked at the tax levy impact of an $8M OPEB borrow (plus the $3.64M WRS refinance).

2. Governor Walker’s Budget Repair Bill was signed into law (or so it seemed), giving the Board some certainty about our ability to reduce even further our annual operating costs (eg, insurance for current employees) and make changes that could significantly reduce our OPEB liability. The Board saw that the best move might be to only fund an OPEB trust for the current (fully vested) retirees. Because the evaluation and discussion of just how many changes might be made in retiree benefit plans, and what the savings plan-design changes or carrier changes might provide are not yet complete, we saw that announcing the impact based on an $8M OPEB borrow was (although likely overly conservative) was best.

3. The Governor’s proposed biennial budget Bill released in March included a $1.2M drop in revenue for Shorewood schools next year. When we net out the drop in levy created by the State budget, the impact of an $8 million OPEB borrow and a $3.64 million WRS re-finance, becomes .21/$1000, or about $63 for a $300,000 property

The good news and my simple message is that the maximum impact of the referendum in light of the changes and events summarized above is now $.21 per $1000 in assessed value, or about $63 for a $300,000 property.


I believe also it is important to provide several additional comments:

• As required by law, the referendum question was drafted in early February and cannot be changed. Furthermore, passage of the referendum does not require the District to borrow $13.64 million. The referendum asks for authority to borrow up to $13.64 million. Frankly, we have too many other financial challenges; over-funding an irrevocable OPEB trust (a trust that can only be used for OPEB expenses and that cannot be dissolved until there are $0 in OPEB liabilities) is not something we will do.

• The District has up to 5yrs to borrow the funds and as stated above, it cannot use the money for anything other than what the referendum authorizes. Based on changes in the law, further contract concessions, and the recognized need to control taxes, it is safe to report (and in my mind certain) that we will in no way borrow the full $13.64 million (or even the $11.64M currently calculated to cost $.21/$1000).

• The referendum will allow the District to refinance the current WRS debt (given to Shorewood by the State); and move from a 5.62% interest rate to a rate of 5% or less on a 15yr note. The WRS refinance is a $3.64 million piece of the total referendum expense.

• The proposed State budget significantly reduces both State aid and revenue limits for public school districts in the State. The reduction in revenue limit and aid creates a $1.95 million gap in Shorewood schools budget for 2011-2012. The referendum does not provide for any new spending; it allows the District to offset part of the $1.9 million budget gap. There are many other reductions and changes that will be made to close the gap (staffing changes, program changes, additional insurance modifications, other cuts). Monies from moving the OPEB and WRS to the long-term debt fund is the single largest gap filler available and when combined with contract recent concessions and other actions afforded by the Budget repair/adjustment bill will cover over $1.5 million of the budget gap. The Board must aggressively and judiciously use all available tools to not only balance next year’s budget, but provide a sustainable future for our District.

• Since 2001, the Board has approved over $6.6 million in budget reductions and almost $1.7 million in revenue increases. These reductions and increases are documented in several reports available from the District. Every year the School Board convenes a number of budget hearings and listening sessions and works with the Superintendent to balance the budget and addresses the challenges of maintaining high quality schools. This year’s meetings began in December and will continue through April. I encourage anyone concerned about District spending and finance to attend, learn and engage in the process.


Shorewood schools are a tremendous asset to our community. I have proudly served as a Shorewood School Board member since 2001 and I maintain a staunch commitment to local citizen control, to local decision-making and to high quality public education in Shorewood. The 2001 Shorewood schools referendum is an important part of our District’s long-term financial plan and the misinformation propagated and disseminated by opponents of the referendum is not supported by facts. I encourage every Shorewood citizen to learn more about the referendum by visiting either of the web sites noted above and vote on Tuesday April 5. I also encourage anyone with questions or comments to contact any School Board member. I can be reached at anytime at 414-659-2350 (or at

Thank you.



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