While some school districts found solace in Act 10─ a state law that allowed them to collect more from staff toward health care benefits and pensions ─ they might want to hold their breath for the rollercoaster ride that lies ahead.
A recent column in the Milwaukee Journal Sentinel, by Alan Borsuk, talks about the average school district in the state. It’s called the Fairly Normal School District and was the subject of analysis and computer forecast by Bob Borch, a former school district business manager and now senior adviser with PMA Financial. The firm does consulting work with, among other clients, 140 school districts in Wisconsin. Borch is apolitical, knows school spending inside and out and believes that the numbers don’t lie.
According to the column, Fairly Normal faired OK in Year 1 following the passage of Act 10 and the 2011-13 budget that cut school resources by $1.6 billion. It gets worse, however, with fund balances disappearing, bills going unpaid, and huge financial problems on the horizon.
According to Borsuk, “By year five, which would be 2015-16, Fairly Normal is running a big deficit, has used up all its savings and can’t pay all its bills. I’m not exactly sure what we would call that when it happens to a unit of government in Wisconsin, but in other circumstances, I believe it’s called bankruptcy.”