Spencer referendum will define district’s financial future

Spencer School District Board of Education members and administrators are painting the revenue cap exemption referendum going before voters on April 5 as a defining decision for the district’s future. If the referendum passes, they say, the district can bring its staff back to full strength and even expand some areas such as counseling. If it does not, spending cuts will come and students may leave the district to open enroll to schools that have the offerings they want.

The Board held a March 16 public information in the LuCille Tack Center for the Arts, and explained there that the money being requested in the referendum is strictly for operational expenses. None of it will be used for building expansion/renovation, they said, and this referendum is in no way tied to the recent dome addition project. The Board is also asking this time for a recurring referendum, meaning that additional tax revenue would not sunset after a few years. That, school officials said, should mean the district will not keep having to ask for more dollars.

A year ago in April, voters rejected the Board’s request to extend a cap exemption referendum of $975,000 by one year. That referendum, the Board said in 2020, was meant to buy time so it could evaluate its long-term financial needs. When voters said no to the request, the Board had to make do without the extra local funding. It did so by cutting one teacher each in the high school, middle school and elementary school, and reducing course offerings. It also used about $140,000 of federal COVID-relief money to offset the revenue loss.

That federal revenue will no longer be available, and Board members and administrators said last week that another referendum failure will mean further cutbacks that would include elimination of a music teaching position, a reduction in high school course offerings, elimination of the business education program, a cut of one middle school teacher and three elementary-level teachers, and larger class sizes in some areas.

If the referendum passes, all those cuts can be avoided, and the district would be able to bring back what it reduced this year (including Spanish and business ed offerings) as well as add a counselor to address student mental health issues, create a middle school English period, and add a math interventionist position to help struggling students before they fall behind.

Board member Becky Gorst said the referendum is a decision on the Spencer school’s future ability to offer students a competitive education.

“The voters need to decide what’s important,” she said. “If the school is important, then we need to make that decision. If not, then we don’t.”

District Administrator Mike Endreas said the Board is trying to make Spencer a place where families want to send their children because of the high educational quality. Schools compete for students in open enrollment, he said, and families will send their kids elsewhere if they see better opportunities.

“With open enrollment now, parents have choices to where they’ll take their children, and they’ll shop,” Endreas said. “We’re not talking about anything extravagant here. If they don’t have choices here, they do have choices to go elsewhere.”

Gorst said the district would have to cut $1.4 million from the next budget alone if the vote fails on April 5. While she said the district may not attract more kids if the referendum passes, “If we cut $1.4 million, we can guarantee that kids are gonna’ leave.”

The Board in this referendum is asking for $925,000 in

“The voters need to decide what’s important. If the school is important, then we need to make that decision. If not, then we don’t.” -- Spencer Board of Education member Becky Gorst additional local tax revenue next year. In the second year, that $925,000 would stay, and an additional $725,000 would be added. Another $525,000 would be added in the third year, $225,000 more in the fourth, and $150,000 in the fifth. Those amounts would then be part of the district’s permanent tax revenue, and would bring in additional state aid revenues.

Gorst said the Board decided to use this “recurring” type of revenue because it addresses the district’s longterm needs. A “non-recurring” exemption, such as the ones the district has passed in the past, sunset after a specified time, leaving the district with little choice but to ask taxpayers for more money again.

“That’s another piece we’re trying to address here is that we don’t have to come back every five years,” Endreas said.

Gorst said passage of this referendum should give the district financial stability going forward.

“We’re righting the ship,” she said. “This is a longterm solution for a long-term problem. We’re optimistic that this is a solution for well into the future instead of just five years.”

If the referendum passes, taxpayers would see their school-purpose property tax levels return to where they have been in recent years. Prior to last year, when the $975,000 exemption was still in place, the local school tax rate was $11.50 per $1,000 of property value. That rate dipped to $8.71 after voters last April rejected the exemption extension. That meant an annual tax savings of $279 for the owner of a $100,000 home.

Even if this referendum passes, the tax rate is projected to fall even more, to $8.47 next year, before it would then rise to $9.92 in the second year, $10.70 in the third, $10.90 in the fourth, and $10.95 in the fifth. If other economic conditions remain similar, Endreas said taxpayers could then expect to see a steady rate in the future.

“After our last referendum, what we heard was that we (taxpayers) want a controlled tax rate,” he said.

Gorst said passage of the referendum would allow the Board to attain its goals of keeping class sizes low for more one-on-one teacher attention, addressing mental health concerns, getting students career-ready, and growing enrollment.

The mental health concern, Gorst said, is a major part of the district’s effort to improve Spencer schools. It now has one counselor for every 304 students, but that number would fall to 203 if another counselor could be hired.

“We all know that mental health is a huge concern, not just during COVID but overall,” Gorst said. “We really felt strongly that we need more emotional support for the kids.”

Asked what the Board will do if the referendum fails, Board member Jordan Buss said that scenario has not yet been addressed.

“Obviously, we would re-evaluate,” Buss said. “What would happen then, honestly, I can’t tell you.”

Endreas said it would be a clear message of what voters want.

“That’ll tell us the direction of this district then,” he said.

Construction project costs lowered While the revenue cap exemption being proposed by the Spencer Board of Education would ultimately raise local taxes if passed, taxpayers will see a lower-thanexpected impact on their taxes due to the recent dome addition/school renovation project. The district is enjoying favorable loan interest rates and will be paying the loan back more quickly than planned, both of which will save significant dollars.

Prior to asking voters to approve $5.98 million in local taxes to fund the construction project, the Board was anticipating a loan interest rate of 4.5 percent and was planning on a 20-year payback. The interest rate actually came in at 1.71 percent and the district was able to reduce the payback length to 15 years, which will result in a savings of $1,652,801 over the life of the loan.

The district also planned its project cost on the assumption that it would not receive a Federal Emergency Management Agency (FEMA) grant to help pay for a dome. When it was awarded a grant of almost $3 million, that not only allowed the Board to address more building issues -- such as district-wide restroom renovations -- but have $1.1 million left in funding. It will use that money to pre-pay loan principal, which allows the payback term to be reduced even further, to 12 years. That means another $308,198 in total project costs savings.