Creating a New School District

(Wis. Stats. 117.105)

This law establishes the process for the creation of a new school district from the territory of one or more existing school districts. The process for creating a school district takes two years.

INITIATION OF PROCESS

The process for creating a new school district may be initiated by either of two ways. Before July 1 of any year:

A written petition may be signed and filed by electors who total: 1.) at least 20% of the total number of electors residing in the affected school districts; and 2.) at least 5% of the electors residing in each affected district.

Each affected school board adopts a resolution to consider the creation of a school district.

In either case, the petition or resolution shall include the approximate boundaries of the proposed district.

HEARING, BOUNDARIES, ASSETS AND LIABILITIES

HEARING. Before agreeing on the precise boundaries of the new school district and the allocation of assets and liabilities, each affected school board must hold a public hearing on the reorganization. Joint school board hearings may be held.

BOUNDARIES; ASSETS AND LIABILITIES. Before October 15, the school boards of a majority of the affected school districts may, by adoption of a resolution, agree on the precise boundaries and the allocation of assets and liabilities between the affected school districts and the proposed school district. The method for asset and liability apportionment is set forth in s.66.0235 (2c) (a) (1), Wis. Stats., which provides for apportionment based on the ratio of all taxable property in the territory to be transferred to the equalized valuation of all taxable property of the detaching school district.

The affected school districts may, by identical resolutions adopted by a three-fourths vote of the members of each affected school board, decide on an alternative method of asset and liability apportionment, as provided in s.66.0235(2c)(b). In determining the precise boundaries, the school boards may not detach territory from any additional school districts.

If the school boards of a majority of the affected school districts fail to agree on the precise boundaries or on the apportionment of assets and liabilities by October 15, the SDBAB shall issue an order doing so by the following February 15. SDBAB costs are charged to the affected school districts. In determining the precise boundaries, the SDBAB may not detach territory from any additional school districts.

SCHOOL BOARDS’ ACTIONS

If, by October 15, the affected districts agreed on precise boundaries and the apportionment of assets and liabilities, each affected school board has until January 15 to adopt a resolution ordering or denying the creation of the school district.

If, by October 15, the affected districts did not agree on precise boundaries and the apportionment of assets and liabilities and the SDBAB made the determination, each affected school board has until April 15 to adopt a resolution ordering or denying the creation of the school district.

In both cases, the resolution shall state the school board’s rationale for ordering or denying the reorganization and include an evaluation of each of the factors specified in s.117.15, Wis. Stats.

If a school board fails to adopt a resolution either ordering or denying the creation of the school district before the applicable date, it is considered a denial of the creation of the school district by that school board.

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Process decision point:

If any of the affected school boards denies the reorganization and no petition for SDBAB review is filed, then the process ends and there is no reorganization.
If all of the affected school boards grant the reorganization and no petition for SDBAB review is filed, then a referendum is held.

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SDBAB BOARD REVIEW

The SDBAB shall review a proposed reorganization:

If all of the affected school districts grant the reorganization and a petition for SDBAB review, signed by at least 10% of the number of electors residing in the territory of the affected school districts that is not within the proposed school district, is filed.
If any of the affected school districts deny the reorganization and a petition for SDBAB review, signed by at least 10% of the number of electors residing in each affected school district, is filed.

The petition for SDBAB review must be filed by February 15, if the districts originally agreed on the precise boundaries and assets and liabilities, or by May 15, if the SDBAB determined the precise boundaries and assets and liabilities.

Upon receipt of a petition for review, the SDBAB shall hold a public hearing on the proposed reorganization. After the hearing and after consulting with the school boards of the affected school districts, but before May 15, the SDBAB may modify the boundaries and the apportionment of assets and liabilities. (If the SDBAB originally drew the boundaries and made the allocation of assets and liabilities, the SDBAB may not modify their original plan.) The SDBAB may not detach territory from any additional school districts if it modifies the boundaries.

If the SDBAB modifies the boundaries or the apportionment of assets and liabilities at this point, each affected school board, before June 15, may issue an order to grant or deny the proposed reorganization, as modified by the board.

If another petition for SDBAB review is not filed at this point, the SDBAB can proceed to issue an order granting or denying the proposed reorganization, but not before June 21. By August 1, the SDBAB shall issue its order either granting or denying the proposed reorganization. The order shall state the Board’s rationale and include an evaluation of the criteria in s.117.15. The SDBAB may overturn the decision of the local school boards only if it finds that the local school boards’ conclusions regarding the factors (s.117.15) are not supported by the facts or that the local school boards did not properly apply these factors.

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Process decision point:

If the SDBAB does not grant the reorganization, there is no reorganization.
If the SDBAB grants the reorganization, a referendum(s) is held.

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REFERENDUM

If the reorganization is granted by the affected school boards and/or the SDBAB, before the reorganization may take effect, it must also be approved at a referendum by electors residing in the territory of the proposed new school district. Thus, a referendum will be held in the territory of the school district proposed to be created by the reorganization in any of the following circumstances:

The school boards of all of the affected districts grant the proposed reorganization, and there is no petition for SDBAB review.
The school boards of all of the affected districts grant the proposed reorganization, a petition for SDBAB review is filed, and the SDBAB grants the proposed reorganization.
The school board of one or more of the affected school districts denies the proposed reorganization, a petition for SDBAB review is filed, and the SDBAB grants the reorganization.

A second referendum on the proposed reorganization may be held in the territory of the affected school districts (the entire territory of all of the school districts from which territory will be detached to create the new district) at the same time as the first referendum (i.e., on the Tuesday after the first Monday in the 2nd November following receipt of the petition or adoption of the resolution under s.117.105) if:

The school board of one or more of the affected school districts denies the proposed reorganization, a petition for SDBAB review is filed, and the SDBAB grants the reorganization; and
A petition conforming to the requirements of s.8.40 requesting a referendum, signed by at least 20% of the number of electors residing in the territory of the affected school districts, is filed before the 2nd Tuesday of September.

FEES TO COVER THE COSTS OF SCHOOL DISTRICT BOUNDARY APPEAL BOARD (SDBAB)

This new law provides that DPI may charge fees to cover the costs of the SDBAB relating to its responsibilities under the law. Fees shall be paid by the affected school districts if the SDBAB must determine the precise boundaries and the apportionment of assets and liabilities. Fees also must be paid by the person filing a petition for SDBAB review of local board decisions regarding a proposed reorganization.

ORDER OF REORGANIZATION IF APPROVED AT REFERENDUM

If a majority of votes cast in the referendum from nos. 1, 2, or 3 above is in favor of the reorganization and a majority of the votes cast in the second referendum is in favor of the reorganization, the reorganization takes effect and the school boards of the affected districts shall make and file an order of school district reorganization with the Secretary of the SDBAB. The reorganization shall take effect on the following July 1 unless the school board of the newly created school district adopts and files a resolution stating that the reorganization shall take effect on the 2nd July 1 following the order of reorganization.

Contents of the Order to Create a School District

Every order that creates a new school district shall:

Describe the territory of the school districts from which territory is detached to create the new school district, state the school district created by the order and describe the territory of the school district created by the order.
Name the new school district.
State the type of school district and the grades to be taught by the new school district.
Designate the number of school board members, the terms of initial members of the school board, and the method of election of school board members.
Direct the election of school board members and designate the date of the first election of school board members.
Fix the time and place for the first annual meeting of the new school district, if one is to be held.

LIMITATION ON FURTHER REORGANIZATION
4 Year Limit on Consideration

No petition may be filed or resolution adopted for the creation of a new school district under s.117.105 before the 5th July 1 following the filing of a petition or resolution under s.117.105 that includes any of the same territory. This limitation does not apply if the school board of each affected school district adopts a resolution waiving the limitation.

Limit on Reorganization

No school district created by a reorganization under this section may consolidate with another school district under s.117.08 or 117.09, or have all of its territory attached to another school district under s.117.10, 117.11 or 117.132, within 10 years after the effective date of the reorganization under 117.105, unless the school district was created by detaching territory from a single school district, and the consolidation under 117.08 or 117.09 or the attachment under 117.10, 117.11 or 117.132 will consolidate the school district with, or reattach its territory to, the school district from which its territory was detached by the reorganization which created the school district. In other words, the 10-year limitation does not apply in if the effect of the new action is to “undo” the creation of the school district.

APPEAL PROCESS

Within 30 days after copies of the order are filed with the Secretary of the SDBAB, any appeal may be filed with circuit court of any county in which any of the territory proposed to be detached from, or included in, another school district is located or with the circuit court of any county in which any territory proposed to be attached, or the school district that is proposed to be created, is located.

PROVISIONS APPLICABLE AFTER THE REORGANIZATION
School Boards In New School Districts

The first election of school board members in a newly-created school district shall be held at the spring election following the referendum (s).

A school board candidate who resides in the territory of the school district created pursuant to a reorganization under 117.105 and is otherwise a qualified elector shall be considered a qualified elector for a school board election in the newly-created district.

School board members elected to a school board in an election in a newly-created district shall reside in the territory of the new school district.

Any person elected to a school board in an election in the newly-created school district who is also a member of the school board of an affected school district is not eligible to serve as a member newly-created school district board unless the person resigns as a member of the school board of the affected school district prior to receiving the official oath of office.

Management Issues
Students and Tuition Payments by School Districts

The school boards of the new district and a school district from which territory was detached to create the new district must permit a pupil who resides in that territory to continue to attend school in that school district until the new school district begins offering instruction at the pupil’s grade level. The new school district must pay tuition for the pupil.

The school boards of the new school district and a school district from which territory was detached to create the new district must allow a pupil who resides in such territory and has gained 12th grade status to continue to attend school in his or her old district even though the pupil is no longer a resident of that district. The school board of the new school district must pay tuition for the pupil. (In 12 grade status situations not involving a newly-created district, students may complete 12th grade at the high school without the payment of tuition, even though the student is no longer a resident of the school district.)

Employees

Any employee of a school district from which territory is detached by the reorganization who is laid off as a result of the reorganization has priority over other persons for 3 years after the effective date of the reorganization for new positions and vacant positions for which he or she is qualified in the school district that is created by the reorganization.

Any person who wishes to exercise his or her priority shall notify the school district that is created by the reorganization, in writing, that he or she wishes to be considered for any new position or vacant position and shall include in the notice the address to be used by the school district to notify the person of such positions.

Attachment Upon Failure to Operate a School

If a school district for 2 or more successive years has failed to operate sufficient classes at each grade level to provide all pupils who reside in the school district an opportunity to attend class at the appropriate grade level, the board (SDBAB) shall attach the territory of the school district to one or more school districts that do so.

For newly-created districts, before the end of the first school year beginning after the effective date of a reorganization under 117.105, the school board of the school district created by the reorganization to request the Department to extend the 2-year time period by one year. The Department may grant one-year extensions is the Department determines that the school board has adequate plans and is making adequate progress toward that goal.

If the school district fails to operate sufficiently after the end of the first year, plus any extension period(s) granted by the Department, the SDBAB shall re-attach the territory of the school district to each of the school districts from which the territory was detached, unless that school district was no longer an operating school district.

Revenue Limits and Equalization Aid
Existing School Districts:

Each school district from which territory was detached to create a school district, shall have its revenue limit in the year that the reorganization takes effect increased by 5% of the school district’s state aid.

For a school district from which territory was detached to create a school district under 117.105, in each of the 3 years beginning on the July 1 following the effective date of the reorganization under 117.105,:

the primary and secondary cost ceilings are multiplied by 1.05 and rounded to the next lower dollar.
the primary, secondary, and tertiary guarantees are multiplied by 1.05 and rounded to the next lower dollar.

The additional aid generated by these adjustments will be excluded from the calculation of revenue limits.

New District:

The revenue limit for the new school district for its first year of operation shall be the weighted average, prior year revenues per pupil of the school districts from which territory was detached to create the new district, plus the allowable revenue increase for the current year. The computation is as follows:

For each of the existing school districts, multiply its prior year per-pupil revenue by the number of pupils enrolled in that district during the prior year who resided in territory that was detached from that district to create the new district.
Sum the amounts determined in number 1.) above, and divide that sum by the total number of pupils residing in the detached territory who were enrolled in the prior year in a school district from which the territory was detached.
Add the allowable per-pupil revenue increase.
Multiply the amount in number 3.) above by the greater of: (a) the total number of pupils residing in the detached territory who were enrolled in the prior year in the school district from which the territory was detached: or (b) the number of pupils enrolled in the new school district as determined by its third Friday in September pupil count for the current school year.

Thereafter, the revenue limit for the new school district shall be computed as for other school districts, with the exception of the membership used in the computation:

In the first year after the reorganization, the base year per-pupil amount is calculated using the prior year number of pupils; the amount of revenue available to the school district is calculated using the average number of pupils in the current and prior year.
In the second year after the reorganization, the base year per-pupil amount is calculated using the average of number of pupils in the two prior years; the amount of revenue available to the school district is calculated using the average number of pupils in the current and prior two years.
In the third year after the reorganization, the new school district would have three years of actual 3rd Friday in September data available, and the current three-year rolling average calculation would be used without modification.

Existing and New Districts:

This law specifies that funds needed for the payment of any general obligation debt service authorized by resolution of any school board and secured by the full faith and credit of the school district if the issuance of the debt was not subject to a referendum under these provisions is not subject to revenue limits. This includes debt service on the debt issued or reissued to fund or refund outstanding municipal obligations, interest on outstanding municipal obligations or the payment of issuance costs or redemption premiums.

Referenda for Borrowing to Finance the Allocation of Assets and Liabilities

Under current law, a referendum on school district borrowing using promissory notes in excess of $5,000 or using any amount of bonds may be required if the borrowing amount would cause the school district’s outstanding indebtedness incurred without a referendum since August 9, 1989, to exceed the lessor of: (a) $1 million; or (b) 1.5% of the statewide average equalized value per member multiplied by the school district’s membership.

The new law created exceptions to these referenda provisions. The exception allows both the new school district and the school district from which territory was detached to issue bonds or promissory notes for the purpose of financing any assets or liabilities apportioned to them under the reorganization. The school district’s revenue limit shall be increased by the amount of the funds needed for the payment of the general obligation debt service on the amounts borrowed for this purpose.

Referenda for Borrowing to Finance New Construction
Existing School District:

Under this new law, these amounts are increased for a school district from which territory is detached to form a new school district for the purposes of the construction of, or addition to, a building. The amount of borrowing increase is calculated as follows:

Determine the number of pupils in each grade level who attended school in the previous year in a building that was allocated to another school district and who resided, in the previous year, in territory that was not transferred to the other school district. The number shall be the average of such pupils enrolled on the third Friday of September and the second Friday of January.
The Department of Commerce shall determine for each grade level in which pupils formerly attended school in the transferred building, the average cost per square foot for, and the average number of square feet per pupil included in, two recently constructed school buildings that were designed to serve pupils of the grade level, as selected by Commerce.
For each grade level, multiply the number of pupils determined under (1) by the appropriate square footage and cost per square foot determined under (2) and total the results.

The school district’s revenue limit shall be increased by the amount of the funds needed for the payment of the general obligation debt service on the amounts borrowed to finance new construction up to this limit.

New School District:

Except for financing the allocation of assets and liabilities as outlined above, the new school district may be required to hold a referendum on any borrowing that would exceed the current $1 million/1.5% limit on outstanding indebtedness, as under current law. Thus, for example, a referendum may be required on bonds issued by the new district for new construction or purchasing property if the borrowing will cause the district to exceed its $1 million/1.5% limit.

Example: 2006-2008 process to create a new school district.

For questions about this information, contact Janice S. Zmrazek (608) 266-2803

Last updated on 2/26/2008 2:55:05 PM

Public School District Reorganization-Creating a new school district