The Prescott School Board will vote on Jan. 17 on a referendum question asking district taxpayers for an additional $1.2 million in operating funds annually.

The consensus of the board at its Dec. 20 meeting was that the referendum question will be on the ballot April 2, 2024. With declining enrollment and state funding that came in lower than the district had hoped in the current two-year budget cycle, the district also plans to cut expenses. This year, it had to dip into $900,000 of its fund balance to fill holes in this school year’s budget, and those reserves will quickly be depleted in coming years without more funding.

Superintendent Dr. Rick Spicuzza said that Prescott schools are annually at or near the top academically among Middle Border Conference schools, and without additional funding, the district would have no choice but to make cuts that could eventually target educational programs and class sizes.

“The Prescott community has stepped up historically and will step up again when they know why we exist and how we have produced,” said Spicuzza. “Prescott Public Schools are number one in performance compared to the conference in both reading and mathematics.”

Prescott’s not alone in its need for more funding. The state put controls limiting how much schools can levy in their annual budget process, forcing districts to go to referendum when that isn’t enough to meet expenses. Statewide in 2023, referendum approved spending for school districts totaled $650 million, according to a report from Forward Analytics.

Compounding the problem for Prescott is declining enrollment. The district enrollment is expected to be down 25 students in the 2024-25 school year.

“That equates to $280,000 less money coming in on revenue,” said Spicuzza. “So, we already know that we’re just shy of $300,000 fewer dollars coming in.”

Spicuzza said the board direction has been to set a budget for 2024-25 with a 2.5% salary increase for all employees and to not adjust benefits.

“Based on that information, we ran through a number of scenarios for you, and there’s really only two variables that we can control. One is you make reductions. The difficulty is that I do not believe there’s any viable way for us to make reductions that are at the level for us to stay fiscally solvent. What that means is we cannot cut our way to a balanced budget,” Spicuzza said.

In addition to seeking the referendum dollars, the district is in “good faith” working to cut $650,000 from next year’s budget.

“Yes, some of it will be personnel. Yes, some of it will be classroom teachers, but every department in every group will be considered. We will ensure that all of our grade levels, classroom targets, classroom sizes or sections are in line. At this time, we believe about four or five sections can be reduced based on that information,” Spicuzza said.

He said if staff leaves the district, their position will be scrutinized and may not be refilled. Spicuzza said the district will have a better idea on the effect on staffing in February, when staff members need to tell the district if they intend to retire. The cuts won’t affect just teachers, as it could be all levels of staffing.

While those cuts will help, the $1.2 million recurring annually will keep the district at a point where it has a fund balance over $5 million. Board policy is that the district needs to have three months of expenses in reserve, and Spicuzza said salary and benefit costs are $1.3 million monthly.

With the additional $1.2 million, the district projects that it would keep that fund balance in the range of $5 million through at least three two-year state budget cycles.

“Our goal is to get the district out to 2029 and still have a viable fund balance,” said Spicuzza.

At $1.2 million, based on this year’s tax numbers, the tax rate would increase to $8.50 per $1,000 of property valuation, from $7.70 which it is on this year’s property tax bills. At a home valued at $400,000, that equates to an annual increase of $320, or $27 monthly.

Last year, the district tax rate was $8.50 per $1,000 of property valuation, and it dipped 80 cents this year with higher property values.

“What we’re basically asking the community for is enough money where it would raise the mil rate to last year’s rates. I think that’s kind of an important story to tell,” said President Mike Matzek.

If the voters don’t approve, Spicuzza said the district will have to have a plan in place very quickly.

“I believe and have faith in the Prescott community, because every time we came with a need, it was explained, and they saw that we were in good faith. They’ve stepped up,” said Spicuzza. “If not, we do have to have contingency plans if the unthinkable did occur.”