Sun Prairie budget forecast shows short-term balance, warns of post-referendum gap

Phil Fry, director of business and finance for the Sun Prairie Area School District, told the school board the district’s five-year budget forecast projects a roughly $511,000 surplus for fiscal 2025-26 but shows a potential large deficit after the referendum dollars end in fiscal 2028-29.

The forecast is built on a set of stated assumptions, Fry said, including University of Wisconsin Applied Population Laboratory enrollment projections, a $325 per-pupil state funding increase carried forward from recent years, and salary and health-insurance cost assumptions. "Nothing's—it's not an exact science at all," Fry said, describing long-range budgeting as necessarily assumption-driven.

The baseline enrollment model from the University of Wisconsin APL projects the district will decline by 208 students over five years and by eight students in the first year; Fry noted the district had gained 22 students since the third-Friday count but called overall enrollment "very volatile." Senior leaders recommended using the UW APL baseline model as their planning assumption because it has been the most accurate and is conservative.

Fry listed the main financial assumptions driving the forecast: a 3.75% salary increase in 2025-26 (including professional development), 3% salary increases in subsequent years, a 10% increase in health insurance for 2025-26 and 8% in following years, overall inflation of 2.95% for 2025-26 and 3% thereafter. He also said the district may use Fund 46 (long-term capital maintenance) to smooth budgets by transferring money into it over the next one or two years and drawing funds later.

Fry outlined planned initial uses of the November 5, 2024, referendum proceeds. He said $2,000,000 in referendum-related spending will be rolled into the budget and described allocations from a $4,000,000 programming bucket and a $7,000,000 compensation-and-benefits bucket. For 2025-26, Fry said the district would use $672,800 from the programming bucket. Specific planned uses for next year include:

- $100,000 to provide transportation for Dual Language Immersion (DLI) students to Meadowview and Northside; the plan would allow students from the district’s other elementary schools to be bused to those DLI sites if they choose. Fry cautioned actual costs depend on how many students sign up and shuttle costs, and said the $100,000 is an estimate.

- $400,000 to double enrollment in the Madison College STEM Academy dual-credit program; Fry noted some offset in staffing because students attending STEM Academy would not attend the district high schools.

- $12,800 estimated cost to add shuttles so East and West high school students have equal access to classes.

- $160,000 to staff two additional positions (one at each high school) to offer smaller classes that could not be offered the prior year due to low enrollment.

On the compensation side, Fry said $3,000,000 from the referendum was used last year to increase teacher pay and that the district is holding $1,000,000 in reserve for unanticipated compensation or benefits adjustments in 2025-26 (pending health-insurance renewals and a support-staff and administrator wage study). In total he said the referendum included $7,000,000 for strengthened compensation and benefits.

Fry summarized tax impacts and levy projections. For fiscal 2024-25 the district’s tax levy was $86,600,000 and the mill rate $10.16. The forecast shows a projected levy of $92,500,000 for the next fiscal year (a 6.8% increase) and a projected mill rate of $10.24 — a smaller mill-rate change (about 0.8%) than the prior year. He noted this projected mill rate is below the $10.74 projection presented in referendum materials; Fry said the lower figure is "on paper" and that further budget work remains.

Fry emphasized the referendum was designed to avoid significant operating deficits from 2025-26 through 2028-29 and said, "the campaign that we had for a referendum to reduce or eliminate deficits for the next 4 years at this point is playing out." He warned that once referendum funds end after fiscal 2028-29, the district could face a large deficit and that the board and administration will need to plan accordingly.

Fry closed by noting more detail will be provided at an upcoming meeting and invited board members to ask questions at the next session. "We'll be at the meeting Monday night. Can explain more about this, explain more about the TLE and compensation buckets," he said.