EM schools to lose $22,000 to federal sequestration

By LeAnn R. Ralph

ELK MOUND —  The Elk Mound School District expects to spend about $22,000 more this year on interest as a direct result of an automatic $85 billion reduction in federal spending that went into effect March 1 known as “sequestration.”

The Elk Mound Board of Education learned at the March 18 meeting that the school district will receive $22,000 less in federal subsidies on interest for loans that the school district used for a $9.325 million building project in 2010.

The federal subsidies on interest were part of the economic stimulus package known as the American Recovery and Reinvestment Act of 2009 to help stimulate the economy following the collapse of financial markets and the burst of the housing bubble in the Great Recession.

Some of the money borrowed by the Elk Mound School District was in the form of Build America Bonds, and some of the money was borrowed under the Qualified School Construction Bond program. Both programs were part of the American Recovery and Reinvestment Act.

Of the three loans taken out by the school district, 100 percent of the interest was covered by federal funds for one loan, and 35 percent of the interest was covered for each of the other two loans, said Dr. Ron Walsh, district administrator.

Electors in the Elk Mound school district approved spending $9.325 million for improvements to Mound View Elementary, Elk Mound Middle School and Elk Mound High School in a referendum election held in April of 2009.

The Elk Mound school district is experiencing an increase in an enrollment, and the improvements included more classrooms and a new cafeteria for Mound View Elementary and a new office area and new cafeteria for Elk Mound High School.

Elk Mound will be able to make up the $22,000 in other parts of the budget, and the funds that will be received are still excellent subsidies, Dr. Walsh said.

On the other hand, $22,000 could cover the cost of a new computer lab or other equipment for the school district, he noted.

The loan receiving the 100 percent interest subsidy will lose a half a percent, and the other two loans covered at 35 percent will lose about three percent in subsidies, Dr. Walsh said.

Elk Mound is among only a handful of school districts in the state with an increasing enrollment.

Most school districts in Wisconsin are experiencing a decline in enrollment or are holding steady.

As part of the Budget Control Act of 2011, the U.S. House of Representatives and the U.S. Senate voted to approve sequestration as a way to convince members of Congress to work together to reduce the federal deficit.

The looming threat of sequestration did not work.

Automatic spending cuts went into effect March 1.

The automatic reductions include 7.8 percent in defense discretionary funding and 5 percent in non-defense discretionary spending.

The reductions also include 2 percent cuts to Medicare, 5.1 percent in reductions to other non-defense mandatory programs and 7.9 percent in reductions for defense mandatory programs.

Out of the more than 400 school districts in the state, 42 applied for zero percent Qualified School Construction Bonds, which were administered by the state Department of Public Instruction.

All together, the DPI awarded $98.6 million under the QSCB program.