Sun Prairie finance director warns of ‘‘fiscal cliff’’ as state funding lags and ESSER aid ends

Phil Fry, director of business and finance for the Sun Prairie Area School District, said in a screencast for the school board that a combination of state policy changes and the end of one-time federal COVID relief will leave the district facing a ‘‘fiscal cliff.’’ He said the district is roughly $3,300 per student behind where it would be under the old inflation-linked revenue-cap formula, which multiplies out to about $27–28 million for Sun Prairie’s roughly 8,400 students.

Fry traced the change to revenue limits first adopted in 1993, which were originally tied to inflation, and a 2009 legislative change that removed the inflationary index and replaced it with annual per‑pupil increases set by the legislature. “Revenue caps were tied to increases to inflation,” Fry said, and after the 2009 change “there’s been a dramatic variance between what inflationary increases would have been and what the actual per‑pupil increase has been.”

He pointed to statewide trends he said underscore the local impact: Fry said Wisconsin’s share of general purpose revenue spent on public education fell from about 43.1% in 2003 to 36.6% in 2023. Using the $24 billion figure he cited for the state’s general purpose revenue, he described the shift as roughly $1.5 billion less for public K–12 overall. Fry noted the state’s reported fund balance — about $6.7 billion as of December 2023 — and questioned why that reserve has not been used to restore school funding.

Fry also described the most recent biannual budget, which he said allowed public districts a $325 per‑pupil revenue‑limit increase for each of the two covered years, and contrasted that with larger per‑pupil increases he said went to voucher and charter programs (examples cited by Fry included nearly $1,500 for some K–8 private voucher pupils, more than $2,000 for independent charter students and $3,342 for some high‑school voucher students). Fry cited the Wisconsin Department of Public Instruction and the Legislature Fiscal Bureau as the sources for the per‑pupil figures shown in his slides.

Locally, Fry said the $325 increase equals roughly a 2.5% revenue uptick on Sun Prairie’s $13,260 revenue‑cap base, while actual district costs have risen faster: staffing costs rose about 7% in the current fiscal year, utilities rose more than 10%, and the district expects staffing costs to rise roughly 5% next year. He also said the district’s bus contract — a more‑than‑$5 million contract — is rising by about 6%.

Fry said Sun Prairie passed a three‑year operating referendum in November 2022 that provided $3 million in each of three years to help preserve class sizes and programming, but that the referendum did not close the gap created by years of lower state increases. “We wanted to be conservative in that number for our taxpayers,” Fry said of the referendum.

A major near‑term concern Fry emphasized is one‑time federal ESSER funds (Elementary and Secondary School Emergency Relief). He said districts used ESSER money to cover recurring needs — nurses, IT staff and equipment — and that Sun Prairie has been using about $3 million a year of ESSER to pay ongoing costs. “That federal money … ends this next year,” Fry said. “On September 30 we will need to have all our ESSER money spent. That creates that fiscal cliff.”

Citing a December 2023 survey from the Wisconsin Association of School Business Officials (WASBO), Fry summarized common district responses to the shortfall: staff attrition and unfilled positions, delaying capital projects, increasing class sizes, cutting instructional staff and using fund balance to cover operating expenses.

Fry closed by outlining the district’s schedule for addressing the issue: budget forecasts and modeling presented earlier in the year, this March discussion of the state budget’s local impact, an April presentation on district cost‑saving measures and a June plan to address the shortfall, followed by implementation steps over the summer and next fall. He invited board members and the public to contact him with questions.

The presentation cited sources including the Wisconsin Department of Public Instruction, the Legislature Fiscal Bureau, WASBO and the Wisconsin Policy Forum. Fry provided no formal recommendation in the screencast beyond describing the shortfall, the end of ESSER funding and the possible budget actions districts are taking to cope.