Voters reject spending referendum in district that blew through $17.5 million in reserves
Taxpayers in the West Allis-West Milwaukee School District on Tuesday rejected a $12.5 million operating referendum proposal aimed at putting the school district back on a sound financial footing.
The district sought the referendum after acknowledging that it had plowed through its entire reserves — $17.5 million — over the course of a decade.
Without it, Superintendent Marty Lexmond had told voters, West Allis-West Milwaukee faced a $2.5 million budget gap for the 2017-18 school year. And, he said, it could be forced to cut programs, such as art and music, and shelve ideas for new ones — a language-immersion school, for example, or a next-generation high school — that are designed to keep families in the district.
"All of those ideas take money," Lexmond told the Journal Sentinel in February. "We can't spend all our efforts cutting things. We have to build new things so we can attract families and keep families here," he said.
The referendum proposal failed 56% to 44%.
MORE ELECTION COVERAGE: State school superintendent | Milwaukee wheel tax | Milwaukee Municipal Court | Milwaukee County Circuit Court | Milwaukee School Board
ELECTION RESULTS: Statewide and Milwaukee area | Appleton | Fond du Lac | Green Bay | Manitowoc | Marshfield | Oshkosh | Sheboygan | Stevens Point | Wausau | Wisconsin Rapids
The district had sought approval to exceed its revenue limit by $2.5 million in each of the next five years, or about $290 per student. The financial impact would have been $58 a year for every $100,000 of assessed value. The district said the money was needed to maintain and expand programs, but also to rebuild its reserves.
West Allis-West Milwaukee can trace its financial problems to 2006 when it agreed to invest $20 million — half of it borrowed — in high-risk financial instruments known as CDOs, or synthetic collateralized debt obligations, as a way to fund health care and other benefits promised to retirees. The investment tanked in the financial meltdown of 2008, and the district lost it all.
It filed a lawsuit, along with four other districts in the same boat — together they lost about $200 million — but it was still on the hook for debt payments that reached $2.65 million a year in principal and interest. Instead of building those into its annual budgets, the district began paying them out of its reserves.
It continued to tap the fund balance for other big-ticket items: $1.9 million for a new school building for Lane Elementary and $6.5 million for its district offices and adjacent school on S. 70th St.
In addition, the district overspent its budgets by at least $14 million during the 2013-'14 and 2014-'15 school years alone — on everything from salaries and benefits to teacher training and technology.
