School districts resolve to use exemption

With the Wisconsin Legislature working to finalize the 2017-19 biennium budget, public schools districts are scrambling to make use of a revenue cap exemption that may be on the way out.

The exemption, which allows schools to exceed their revenue cap for energy efficiency projects, has been in place since 2009.

Schools have ramped up their use of the exemption in recent years, however, and the Legislature has taken notice.

"The statute may go away," said Paul Staffrude, business manager for the Maple school district. "Schools have used hundreds of millions of dollars (through the exemption) because they don't have enough funding."

The use of energy efficiency exemptions has spiked in the past three years.

In 2015, the statewide total reached a new high of $347 million, and schools nearly matched that figure in 2016 with $316.3 million. The total for 2017 has already surpassed $300 million.

Unlike traditional referendums, energy efficiency resolutions require only the authorization of a local school board - not voter approval.

If a district approves a resolution exceeding $1 million, a public hearing must be held and voters may request a referendum vote if they can gather the necessary signatures during a 30-day petition period.

Gov. Scott Walker's biennial budget proposal calls for the elimination of energy efficiency exemptions. The Senate and Assembly budget bills both include language to discontinue the exemptions, but schools have until the effective date of the bill to file a resolution.

Locally, two school districts have already acted to beat the deadline.

The Maple School Board passed an energy efficiency resolution June 12. It marked the fourth time Maple has utilized the revenue cap exemption since 2009.

The latest resolution authorizes the school district to exceed its revenue cap by $339,536 in 2017-18 to purchase three propane buses.

The Maple school district already has three other propane buses in its fleet and a propane fueling station.

"I can't put money in next year's budget any other way for buses," Staffrude said.

Bus purchases were postponed the past two years due to lack of funding, he said, and the Maple school district frequently runs buses well over 200,000 miles before they are pulled from service.

"We thought we better move on this," Staffrude said. "We can't afford to get behind the curve on replacement."

Superior approved a similar resolution in June.

The school district had never passed an energy efficiency resolution before Superior School Board members gave unanimous approval to a proposal to exceed the revenue limit by up to $606,000 to purchase propane buses. The Board also approved a performance contract with APEX Efficiency Solutions for $31,851.85.

To qualify for an energy efficiency exemption, school districts must enter into a performance contract with an energy service company before passing a resolution.

After energy efficiency upgrades have been made, savings must be monitored and directed to retire the debt.

"We will not see a property tax increase because of this," said Alayna Burger, Superior school district business manager.

Calculations show Superior's bus purchase paying for itself in 10.7 years.

The school district intends to buy five propane special education buses, which will provide annual fuel savings of nearly $15,000 and operational savings of $20,000. A nearly $230,000 one-time capital cost avoidance figure is also factored into the savings, as the new buses will replace units that are beyond their useful lives.

"We can do this without any cost to our taxpayers, so we decided to move ahead," Burger said.

Staffrude said the Maple project will not raise tax rates either, but taxpayers did see a slight increase from a past resolution.

That measure, passed in October 2015, was the largest of Maple's four resolutions.

According to the Department of Public Instruction, the resolution authorized the Maple School Board to issue $4.5 million in bonds that will cost almost $6.1 million to pay off over the course of 20 years.

Staffrude said funds from the resolution went mainly toward Northwestern Elementary School, which needed significant upgrades to its heating and ventilation systems. No work was done at the school in 2006, when both Northwestern Middle School and Iron River Elementary School received money for improvements through a $33 million building referendum.

"We bonded for $4.5 million to completely redo the ventilation at the elementary school," Staffrude said. "But our $4.5 million pales in comparison to some of the schools in the south."

Northwestern's resolution in 2015 was only the 24th largest statewide. Wisconsin school districts passed a record 111 resolutions that year.

Around the state

Of those, 58 exceeded $1 million, and six exceeded $10 million.

According to DPI data, Oshkosh Area had the largest sum in 2015, passing a pair of resolutions for $14.5 and $21.5 million. The cost to pay off the bonds, stretching over 20 and 17 years, respectively, comes to a combined $45.4 million.

Kenosha also topped the $20-million mark in 2015 with an 18-year bond expected to cost $24.3 million over the life of the debt.

The school district has since passed three more resolutions - one in 2016 and more in 2017. Those resolutions total more than $100 million over the life of the debt.

Since 2013, Kenosha has passed a total of six resolutions totaling nearly $126 million.

"That's why it's contentious in the Legislature," Staffrude said. "Some schools have gone after $50 to $60 million."

When Wisconsin's energy efficiency rule debuted in 2009, only two resolutions exceeded $500,000 and none reached $1 million. The average amount of the 35 resolutions passed that year was $144,235.49.

For 2016, the average amount was more than $4.4 million. Of the 74 resolutions on file with the DPI, 45 exceeded $1 million, and 12 exceeded $10 million.

This year, school districts are passing resolutions with ever greater urgency as the legislative deadline looms.

As of Monday, the DPI reported 40 resolutions passed and another pending. More than half passed within the last month.

In 2016, only nine resolutions had been passed by July 5.

The amount schools are seeking for energy efficiency projects is also up. The average so far in 2017 is more than $7.3 million. The increase is due largely to a pair of Milwaukee resolutions for $83.5 million and the two Kenosha resolutions totaling $65.7 million.

CESA 12 resolutions

· Among Cooperative Educational Service Agency (CESA) 12 schools, Northwood has taken advantage of the energy efficiency exemption most frequently. The school district passed one resolution in five consecutive years, beginning in 2011. The five resolutions total $1.1 million.

Together, Maple and Northwood account for half of the 18 resolutions passed in CESA 12.

Maple's 2015 resolution was the largest passed, followed by Phillips' $1.9 million resolution passed the same year.

In all, Maple has passed roughly $6.6 million in energy efficiency resolutions since 2009.

· Solon Springs has taken a unique route with its energy efficiency projects.

The school district passed one resolution the first year they were permitted, 2009, but has not passed another since.

The school district used its lone $32,821 resolution to update existing freezer and cooler units with a new walk-in freezer and walk-in cooler unit. The estimated payback time for the updates was about 12 years.

In 2016, Solon Springs voted to begin another energy-saving project - without utilizing the revenue cap exemption.

The Solon Springs School Board approved plan to upgrade various systems at the school, including boilers and air handling units, with funds from a $500,000 recurring referendum passed in 2016. The project was expected to cost $389,700 over two years.

Michael Cox, then superintendent of Solon Springs, said the school district would save money by avoiding an energy efficiency resolution.

· CESA 12 schools that have never issued an energy efficiency resolution are Butternut, Bayfield, Drummond, Hayward, Hurley, South Shore and Washburn.

The only school districts to issue more than one referendum are Maple, Northwood, Phillips and Winter.