'How do we pay people?:' School district vows to 'dissolve' if voters refuse $11.5M tax increase

EAGLE — It's an ultimatum for voters -- approve millions of dollars in new taxes, or your schools are going to close. In a pair of small Wisconsin villages, spring will decide the future.

The Palmyra-Eagle Area School District is asking voters for $11.5 million over the next four years, in a district with a budget just over $12 million.

"It's not an insignificant amount of money," said Lisa Schulist, an Eagle taxpayer and mother of four.

It's also part of a soaring statewide trend. Since 2014, voters have approved more than $5.8 billion in new taxes through school referendums -- $5.8 billion -- with a B. That's more than President Donald Trump sought from Congress for a border wall.

"I mean, those are staggering numbers," said Sen. Duey Stroebel, (R-Cedarburg), who called the surge in referendums a ticking "debt bomb."

Palmyra-Eagle Area School District is asking voters to approve a 4-year, non-recurring referendum, that would authorize an increase in property taxes totally $11.5-million.

Sen. Chris Larson, (D-Milwaukee) said it's the logical result of deep cuts in state aid under a Republican administration.

"Schools are hard up for cash because it's been slashed at the state level," Larson said.

This spring, 60 Wisconsin school districts will seek another $1.2 billion in referendums placed on local ballots, but nowhere are the stakes higher than in Palmyra and Eagle, where the school district is giving voters an ultimatum.

"Pass this referendum, or we file to dissolve," said Bryan Polcyn, FOX6 Investigator.

"Correct," said Scott Hoff, a member of the Palmyra-Eagle Area School District School Board.

Unless voters approve the referendum, the district is vowing to close its doors for good.

"They're kind of putting a gun to the head of the taxpayers," Schulist said.

"Who wants to see their community schools close? Nobody does," said Melissa Sanchez, an Eagle resident.

"I just think closing an entire district would be detrimental to the entire community," said Robyn Ratajczyk, a parent who likes the personal attention that comes with a small town school.

Palmyra is in Jefferson County and Eagle in Waukesha County. Combined, they have fewer than 4,000 residents, a shared high school and middle school, two elementary schools, and not a single stoplight.

Scott Hoff is a PEASD school board member and father of four.

"All the kids know each other. The families know each other," Ratajczyk said.

They are small towns with small schools that keep getting smaller every year.

"We're about half full right now, yep," Hoff said of Eagle Elementary School, which was built to hold more than 300 students, but is currently educating 152. Hoff said even when enrollment is down, there is only so much staffing you can cut.

"We can't stop teaching second grade because there are only 14 kids there," said Hoff.

Hoff is not only a board member, but a father of four of the district's 769 remaining students.

"My wife and I grew up here. This is home, so it means a lot," he said.

While public school enrollment is declining statewide, in Palmyra-Eagle, it's in a virtual free-fall -- down more than 35 percent since 2007. Hoff said that is mostly due to the families who take advantage of the state's open enrollment system.

"People intentionally move here with no intention of going to school here," he said.

Lisa Schulist lives in Eagle, but sends her children to a neighboring district with a five-star state rating, bigger athletic programs, and better test scores.

"We built our house here 19 years ago," Schulist said. "The opportunities available at Mukwonago were just much more what we were looking for."

Lisa Schulist lives in Eagle, but sends her children to a neighboring district through open enrollment. The district says open enrollment state aid transfers cost them more than $2-million per year.

She's not alone, as 340 students who live within the Palmyra-Eagle district boundaries transfer out to other school districts, while just 25 transfer in. That's a net loss of 315 students for a district with barely more than 1,000 school age residents, and it's a loss of more than $2.2 million in state aid that has the district on the brink of insolvency.

"We've reduced staffing. Changed insurances. We've increased deductibles. We've done all the big things that we can," Hoff said.

"We are down to a skeleton staff," said Sharon Lana, the district's business manager.

"There are no more cuts to be made," said Steve Bloom, superintendent.

Eighteen other school districts have referendums on the ballot in April with a bigger total price tag, but Palmyra-Eagle's would have the second highest impact per taxpayer. By year four of the operating referendum, the owner of a $100,000 home would pay an extra $305 per year.  That is 19 times more than neighboring Kettle Moraine, where a $30 million referendum on the April 2 ballot would cost a similar homeowner an extra $16 a year.

"I haven't seen another district of this size asking for this amount of money," Schulist said.

Even if the referendum fails, there is no guarantee the schools will close.

"There's a whole array of what could happen," Bloom said.

The district has already promised to operate next school year (2019-2020) and the Wisconsin Department of Public Instruction (DPI) could order them to remain open even after that.

"If we are told we have to operate, how do we pay people? From what? From where?" Bloom said.

Or the state could break up the district and divide it among the surrounding schools.

"I don't want to take the risk that this isn't here," Ratajczyk said.

The only thing certain right now is the rising tension in the two communities.

"It's very hard to voice your opinion one way or another without feeling you may be judged for it," Sanchez said.

"The accusations, the name-calling," Hoff said.

"So it's gotten personal?" Polcyn said.

"Oh, very much so," Schulist said.

It's a fight for the district's very survival.

"It's my kids' future," Ratajczyk said.

"It's hard to say, 'Yes I want to pay more taxes,'" Sanchez said.

"It's the ultimate spot of democracy," Hoff said.

And it all comes down to this:

"What is the value of having schools in your communities?" Bloom said.

And how much are you willing to pay for it?

If the vote fails and the district does dissolve, the tax impact for homeowners is not entirely clear. Some neighboring districts have lower tax rates, others higher, and there is still a long-term debt owed by Palmyra-Eagle for additions done to the middle and high schools.

The state would have to decide who takes on that debt.

Election Day is April 2.