School debt repayment should be a priority, not deferred | Opinion

Debt is not inherently irresponsible. Schools need safe, functional facilities. But when debt becomes permanent, it stops being a tool and starts being a constraint.

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Each year, Wisconsin property taxpayers contribute more than $6.5 billion in local school levies. Those dollars are commonly understood to support classrooms, teachers and student services. In reality, a large — and growing — portion is diverted to debt service, a non-negotiable financial obligation before a single classroom dollar is spent.

In fact, the debt-service share of the local levy continues to grow, not because students are receiving more, but because past borrowing decisions increasingly dictate today’s budgets. Fortunately, at least one school district is showing that a debt free future is possible.

Statewide, nearly 18% of all local school levies — about $1.18 billion each year — are used to service debt. In practical terms, almost one out of every five local school tax dollars is unavailable for instruction or student support because it has already been committed elsewhere. Unfortunately, long-term debt has become a routine feature of school finance rather than an exception.

Looking at debt on a per-student basis makes the impact clearer. Across Wisconsin, districts levy an average of $1,483 per student each year simply to service existing debt. In districts that carry any debt at all — roughly 85% of districts statewide —that figure rises to $1,550 per student, before any money is spent in a classroom.

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At the same time, Wisconsin is experiencing sustained enrollment decline, and while per-pupil revenue limits may decline with enrollment, existing district debt does not shrink when enrollment falls. The obligation stays fixed, and the burden shifts. Even if no new debt is added, fewer students are left to carry the same costs.

Over a ten-year period, a 1.5% statewide enrollment decline — far slower than the actual current rate of decline — would result in a 16% increase in per-student burden without a single new referendum, project, or improvement.

Debt-free school districts are rare

Against that backdrop, debt-free districts have become rare — especially among larger systems. Among the 100 largest school districts in Wisconsin, only four operate without any debt service levies. When the Waukesha School District retires its final obligations on April 1, 2026, it will be the largest debt-free school district in the state — by a lot.

Serving 10,600 students, Waukesha will be more than 6,000 students larger than the next-largest debt-free district. The next few —Tomah (67th), followed by Merrill Area (92nd) and Arrowhead (98th) — sit near the bottom of the top-100 by enrollment or just beyond it. No other district operating at Waukesha’s scale is debt-free.

That matters. It shows that operating without long-term debt is not a function of being small or rural. It is a function of choices: how projects are scoped, how debt is structured and whether repayment is treated as a priority rather than deferred indefinitely.

Homeowners shocked by schools’ part of tax bills

While many homeowners have been shocked to see the school portions of their property tax bills increase exponentially in recent years, Waukesha’s has declined, on average, with fluctuations that reflect the year-to-year complexity of the funding formula.

The school tax levy increased by 2.25% this past year because of shifts in state aid allocation beyond the district’s control, including millions more going to Milwaukee for passing it’s own massive referendum. While the board could have taken steps to keep the levy flat, instead, they followed through to retire debt and recognized a 26% savings on total borrowing costs ($1.5M less than the anticipated $6 million 10-year repayment).

Meanwhile, referenda themselves have become routine. Last year, dozens of operating and capital referenda passed across Wisconsin. This spring’s ballot again includes districts seeking additional authority — often not for discrete, time-limited projects, but to cover ongoing maintenance, capital costs, or basic operations. Increasingly, districts are asking voters for more money simply to operate. Over the past three election cycles (spring 2024-spring 2025), Wisconsin districts have placed $3.8 billion in operating and capital borrowing referendum requests on local ballots.

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There are consequences to this approach. When districts rely on recurring referenda and long-term debt to sustain basic functions, strategic consolidation and shared-service models become far more difficult. Few communities are willing to absorb another district’s long-term debt, particularly when those obligations were incurred under different assumptions and governance.

Debt is not inherently irresponsible. Schools need safe, functional facilities. But when debt becomes permanent, it stops being a tool and starts being a constraint. And when nearly one-fifth of all local school taxes are treated as a non-negotiable obligation before student and classroom needs are even considered, flexibility disappears.

Fiscal discipline is not measured by how easily costs are added. It is measured by whether leaders are willing — and able — to start paying them off.

Will Flanders is the Research Director for the Wisconsin Institute for Law & Liberty.