Sparta Area School District faces roughly $2.3M gap; board discusses 2026 referendum and spreads facility borrowing to reduce interest costs

District administrators told the board committee they expect an operating deficit of about $2,300,000 for fiscal 2026‑27 and opened a high‑level discussion about pursuing a possible operating referendum in 2026.

Mister Russ presented the district's budget picture and timeline: the current $750,000 operating referendum lapses at the end of its second year, creating pressure for 2026‑27 planning. "We're looking at a $2,300,000 deficit," he said. He described available fund balance stabilization of roughly $1,100,000 and noted that if that balance were used the remaining shortfall would be about $1,200,000. Russ emphasized statutory deadlines for referendum timing and teacher contract offers (May 15) and said the district can pursue an April, August (primary) or November election but must follow the 70‑day resolution deadline for the chosen date.

Board members urged the administration to present multiple options showing mill‑rate impacts and program consequences. One board member suggested presenting more conservative, passable options (for example roughly a $1.0 million referendum) and asked the administration to show a graphic or table of cuts made over the last four years and potential personnel impacts if voters do not approve a referendum. Another member urged messaging that explains how legislative changes to funding affect local budgets.

Russ also presented an updated facility financing strategy connected to the district's earlier borrowing. He said the district originally borrowed $66,000,000 at a low interest rate and realized roughly $9,000,000 in interest savings; the administration now plans to spread an additional roughly $15,000,000 of borrowing over two calendar years so each borrowing stays at or under $10,000,000 and qualifies as "bank‑qualified," which reduces interest costs by about a half point. Russ said the administration will bring two resolutions at the end of the month for board consideration and will work with Baird and counsel to time the borrowing for best interest outcomes.

Board members asked whether spreading the borrowing would impact contractor commitments and Russ said he would confirm the schedule but did not foresee impediments given the earmarked uses and the district's sequencing of high school (SHS) work first. He also explained arbitrage issues that can arise when larger bond pools force federal reporting and potential payments to the U.S. Treasury; bank‑qualified borrowing avoids that complexity.

No formal action to place a referendum on a ballot was taken; the discussion was informational and staff will prepare follow‑up materials (mill‑rate scenarios, a cuts table and options for referendum amounts and durations) for future board consideration.