Fond du Lac officials present preliminary 2025–26 budget; district cites enrollment drop, plans community survey on possible referendum

Fond du Lac School District finance officials presented the preliminary 2025–26 budget at a public budget hearing and regular meeting, outlining a projected operational shortfall tied to declining enrollment and describing next steps that include a community survey and further board decisions.

The budget presentation, led by Mike Gerlach, the district’s chief of finance and operations, said the district faces a projected $7.5 million operational deficit for the current fiscal year that began July 1, a shortfall the district attributes in part to a failed operational referendum in April and to lower enrollment. Gerlach said the district has taken expense reductions already but expects additional difficult staffing and programming choices may be required if revenues do not change.

Gerlach and administrators told the board the district’s September head count was 6,219 students and that enrollment is down roughly 220–227 students year over year. Superintendent Matt Steinbarth told the board the decline was a warning that will affect funding under the state revenue-limit formulas and said administrators are analyzing where students have left — citing a combination of out‑of‑state moves, some return to countries of origin and modest movement to private schools — and exploring ways to retain or attract students, including studying a virtual option.

Why it matters: public-school funding in Wisconsin is driven principally by state aid and a locally levied share; without voter approval through an operational referendum a district’s ability to raise recurring revenue is limited. Steinbarth and Gerlach said federal pandemic stimulus (ESSER) funds postponed the structural problem but have run out and that the district needs public input on whether to pursue additional local approval.

Survey, timing and possible referendum: district staff said they will distribute a community survey to test referendum amounts and priorities, aiming to send it within roughly a week and a half and to have results back by Nov. 26. Administrators described a draft survey that asks whether the community would support a combined package they described as $7.5 million over four years (the result of combining previously separate security and operations asks). The board will receive a proposed original budget at its Oct. 27 meeting and must set the levy by state statute on or before Nov. 1.

Financial position and reserves: Gerlach said the district is presenting a balanced operational fund budget for 2025–26 but cautioned that longer‑term stability is uncertain with continued enrollment declines. The district reported about $16.9 million in fund balance reserves (about 16 percent), inside the board’s 15–20 percent target policy. Gerlach noted the district’s Moody’s rating remains investment grade and described the reserves as a cushion, not a substitute for recurring revenue.

Debt defeasance and levy smoothing: board members and staff discussed a proposal to defease (prepay) long‑term debt to save future interest costs and smooth levy fluctuations. Gerlach said the district prepaid about $2.5 million in debt last year, producing roughly $1.3 million in interest avoidance; this fall the district’s consultant at R.W. Baird estimated another opportunity to defease roughly $1 million (final numbers to be set after state aid figures are released). Gerlach said the board could present a Fund 39 defeasance levy on Oct. 27 with the guideline that any defeasance not increase the district’s all‑funds levy above last year’s level; he emphasized the action would not affect the district’s operational budget but would reduce taxpayers’ future interest costs and smooth mill‑rate changes.

Classroom and operational impacts: administrators said prior expense reductions and current staffing practices have increased class sizes in some schools — Gerlach and Steinbarth described middle‑school classes above 30 in some settings and noted high‑school teaching loads changed — and they warned that future reductions would likely have to include staffing and programming choices if additional revenue is not secured. Steinbarth and other administrators emphasized the district’s investments in instructional programs in recent years and said they believe those investments contributed to improved student outcomes.

Board discussion and next steps: board members asked whether to move the formal budget hearing later in October to reduce changes between published documents and final levy numbers; staff said the board may hold additional public meetings but must set the levy before Nov. 1. The board and staff said they will return on Oct. 27 with updated state aid numbers and a recommended levy and asked members to submit follow‑up questions to staff in the coming days.

Votes at a glance (formal board actions taken during the meeting): - Consent agenda (minutes, personnel recommendations, retirements, new hires, and the bimonthly financial report) — motion by Mark Henschel, second by Pinnell; roll call vote: 6–0, motion carried. - Resolution to withdraw from the Wisconsin Public Employers Group Life Insurance program (pursuant to Wisconsin Statutes Section 40.704) — motion by Mark Henschel, second by Luke Frame; roll call vote: 6–0, motion carried. - Approval of National Insurance Services as the employee life insurance benefit provider, effective Jan. 1, 2026 — motion by Mark Henschel, second by Luke Frame; roll call vote: 6–0, motion carried. Finance staff said the change is expected to reduce district life‑insurance costs (district‑paid benefit) and estimated district savings in the personnel budget. - Approval of suggested revisions to NEOLA policy volume 34‑2 (second reading) — motion by Mark Henschel, second by Luke Frame; roll call vote: 6–0, motion carried.

What did not happen: no vote was taken on any operational referendum or on debt defeasance at this meeting; staff said they will bring specific defeasance numbers and a levy proposal to the Oct. 27 board meeting for action.

Ending: board members closed the public budget hearing and invited public comment; the meeting moved on to regular business and a workshop on employee health plan options following the board session.