A School District in Fiscal Free-Fall Scrambles to Avoid Crash Landing

Fans and teammates stand during the national anthem at a basketball game at Palmyra-Eagle High School in Palmyra, Wis., Jan. 16.
Fans and teammates stand during the national anthem at a basketball game at Palmyra-Eagle High School in Palmyra, Wis., Jan. 16.
—Photo © Andy Manis
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Palmyra, Wis.

It’s rare that local school board members agree to throw their hands up in defeat. So when the Palmyra-Eagle district’s board did just that last fall—asking the state of Wisconsin to dissolve the district and send its students elsewhere in the face of plummeting enrollment and a fiscal meltdown—the state’s rejection left the community bitterly divided.

Denied an escape hatch, the fractured Palmyra-Eagle school community has just six months to figure out how to retain teachers and students eager to flee the troubled 700-student district and, with barely any cash left in its bank accounts, keep employees’ paychecks from bouncing.

The state panel that turned down the request urged Palymra-Eagle’s leadership to “come together,” “explore their options,” and “get creative.”

That’s proven to be a tall task.

“The state just poked a stick in the hornet’s nest,” said board chair Scott Hoff who, along with two other people, abruptly resigned in protest from the seven-member board the week after the state’s Jan. 9 decision. “It’s going to get worse before it gets better.”

The aftermath of the state panel’s decision provides a window into the ripple effects from a school district’s fiscal crisis, affecting school life, long-standing friendships and, ultimately, even the community’s identity. It also illustrates the squeeze outdated K-12 funding systems and school choice programs can place on a district undergoing rapid demographic shifts.


See Also: Open Enrollment Has Drained One District. It's Looking to Dissolve


Palmyra-Eagle administrators—including Superintendent Steven Bloom—say they don’t plan to return to the district next school year, citing mounting resentment from some community members.

In the last month alone, two high school social studies teachers and the school’s librarian walked off the job. The remaining staff members, bracing for mass layoffs and millions of dollars of cuts this summer, say they’ve had trouble sleeping, and struggle not to let their anxieties rub off on students.

Though the state panel’s decision to keep the district intact drew applause at the meeting where it was announced, residents—many of whom are related and whose families have lived in the area for generations—also tell of name-calling, attacks on social media, vandalism, and accusations of racism and classism.

“Too many people think that this district has been saved,” said Tara Bollmann, another board member who resigned. “I’m tired of fighting like this.”

Culture Clash

The Palmyra-Eagle district serves two very distinct towns eight miles apart, made up of 4,000 people in all and situated in the southeast corner of Wisconsin.

Palmyra is a working class, historically white farming community that’s experienced an influx of Latino families in recent years drawn by manufacturing and dairy jobs. Eagle is a wealthier, mostly white and growing bedroom community of Milwaukee.

Local voters have long distrusted school administrators. Their refusal to raise the local property tax rate as hundreds of dissatisfied parents enrolled their children in neighboring districts under the state’s open-enrollment law has had a cascading effect on the district’s budget.

The community last summer, through its school board and then again through a local referendum, voted to pull the plug and dissolve the district. But a special state panel, after hearing 17 hours of testimony, voted to keep the district open, citing the disparate impact the dissolution would have on surrounding districts and saying that administrators hadn’t explored all cost-cutting options.

In order to open its doors this fall, the school district, which has an annual budget of around $12 million, needs to make an estimated $2 million in cuts, an amount many in the district feel will ultimately cripple its schools.

In the days after the state’s decision, a group of Palmyra mothers brainstormed ways to rebrand the district, consolidate schools, and lay off staff. Many filed to run for the school board in elections coming up this April. Tara LeRoy, a Palmyra parent who rallied to keep the district open, said a local philanthropist wants to donate more than $100,000 to help bail the district out.

“We’re going to fight like hell to figure this out,” LeRoy said.

But a large coalition of Eagle taxpayers who wanted the district to dissolve are livid. They describe the dissolution process as undemocratic and a sham. They promised to appeal the state panel’s decision, and launched an aggressive social media campaign to convince even more parents to send their children to neighboring districts.

“The state is telling us that we have to heal and come together,” said Cheri Geraci, an Eagle resident who, for the last eight years has been sending her children to Mukwonago neighboring district. “Well, that just won’t happen. I don’t want to spend one more dime on Palmyra-Eagle schools.”

Facing the Music

Many of those objections from Eagle residents seemed to be drowned out earlier this month by alumni and parents who wanted to keep the district intact.

After the state panel’s 6-1 vote rejecting a dissolution, hundreds of those crowding the high school’s gymnasium stood and cheered. Wiping away tears, they described to the local press the importance of keeping rural public schools alive, and presented LeRoy with a bouquet of purple roses—the high school’s team color.

But barely a week later, the mood was tense as Carol Gebhard Dyer, the district’s business manager, described the severity of the fiscal outlook, which had worsened in the prior months as bills piled up and students left.

Just to open up its doors this fall, the district would have to close one of its two elementary schools and lay off dozens of teachers and staff members, Dyer predicted. All after-school activities and sports programs, which have helped retain many of the district’s families, would be on the chopping block, she said.

The three board members who resigned that night described years of online harassment, emotional trauma, and severed friendships, and said they were unwilling to do any more damage to the community they grew up in.

“The numbers don’t work,” a tearful Carrie Ollis said before resigning. She’s said she’s been called a thief on Facebook and a member of a mob who should be jailed. “Nothing gives me confidence that we will be able to turn things around. There’s not enough money or time.”

What Lies Ahead

The coming months will be pivotal. Financially struggling districts with little cash flow often take out short-term loans to pay their bills. But the local First Citizens State bank stopped loaning Palmyra-Eagle money last summer when it asked to be dissolved, and a credit-rating agency downgraded its score, questioning whether the district could afford to make payments on more than $12 million the district owes.

“There’s a black cloud hanging over us,” said Bloom, the superintendent, who has been trying to persuade credit agencies to upgrade the district’s credit. “The state rejected our request to dissolve and then did nothing to improve our fiscal situation.”

The uncertainty affects planning for the coming school year—administrators have yet to publish a course catalogue or design its 2020-21 calendar because so many ideas have been thrown out on how to keep it in operation, save the district, including moving to a four-day school week.

Palmyra-Eagle High School Principal Kari Timm in Palmyra, Wis., has looked into virtual learning programs as a way to provide more academic programs for students in the struggling district.
Palmyra-Eagle High School Principal Kari Timm in Palmyra, Wis., has looked into virtual learning programs as a way to provide more academic programs for students in the struggling district.
—Photo © Andy Manis

Kari Timm, the district’s high school principal, said with all of the teacher turnover (a quarter of the staff at the high school has left in the last year), she’s struggled to fill students’ eight-period days with coursework. She’s started shopping for virtual learning programs for the district.

“It broke my heart seeing all of our kids up there on stage crying and asking the state not to close our schools,” Timm said of the state panel hearing. “But emotion is not a check you can cash.”

Several teachers at the school, many with young children at home, said the months-long dissolution debate only brought them closer to their colleagues and their students.

“I figured, this could be our last year, so let’s make it our best,” said Tammy Anderson, a middle school social studies teacher who’s worked in the district on one-year contracts for 32 years straight. In recent weeks, she and her students have started the day off with a writing exercises where they sum up their feelings in three words or less: “anxious,” “scared,” “nervous,” the students wrote.

Many teachers described frustrations with colleagues who, in the middle of the school year, left for surrounding, more financially stable districts, what they said amounted to abandoning the students when they needed them most.

But they also talked about late-night debates with their own spouses over whether they should stay for another year or start looking for another job.

“I want to be here,” Scott Hein, who leads the school’s marching band, jazz band, concert band, and volleyball team. His wife is expecting a baby in the coming months. “I want to be with these kids.”

Underlying Problems

The structural problems that led to Palmyra-Eagle’s predicament remain.

Over the last decade, enrollment fell from 1,200 to 700, much of that due to parents taking advantage of open enrollment. With the current uncertainty about the district’s fate, close to 100 students have left since the beginning of this school year; one 3rd-grade class at Eagle Elementary has just 12 students enrolled.

For every student the district loses, it eventually loses close to $7,500 in revenue from the state. To put that in perspective, a beginning teacher costs the district around $40,000 a year.

And for every teacher who quits or program the district cuts, it risks losing another student to open enrollment, which allows unsatisfied parents to transfer their child, tuition-free, to neighboring districts.

In the days after the state rejected the district’s appeal to dissolve, Eagle residents started a Facebook group encouraging parents to enroll their children in surrounding districts. There were offers for car pools, posts about the deteriorating services in the district, and tutorials on how to apply for the open enrollment process, which starts in February and goes through April.

The attractions may seem obvious. The Mukwonago school district’s high school, which Eagle residents drive by to get into Milwaukee, offers more than 16 AP courses, a bevy of electives, and a downhill ski team. It recently underwent a $50 million renovation to include a performing arts center and new gymnasium.

“All you have to do is look at the numbers,” said Eagle parent Cheri Geraci, a social worker who drives her kids more than 100 miles a day to the neighboring district. “We’d rather go to Mukwonago.”

Weighing Options

Those determined to stick it out are exploring extreme options: one elaborate pitch during the recent debate included moving to a four-day school week, closing and selling off one of the elementary schools, and having local residents volunteer to do maintenance work, such as painting hallways and cleaning the gym floor.

Chris Winkler, who runs a trucking company based in Oak Creek, Wis., sent a letter to the state panel considering the dissolution saying that he wants to move his wife and grandchildren onto his estate in Palmyra, which includes a barn and a horse-riding arena. He pledged to make a matching donation to support the school’s after-school programs and some of its capital needs.

“We chose Palmyra because of what it is and stands for—the values country life teaches, the sincerity and caring of neighbors and community schools where the kids know each other,” Winkler wrote. “Keeping Palmyra schools open is about ensuring my grandchildren and the children of Palmyra are happy and fulfilled in schools that are part of their community.”

Board members who quit and administrators say while those efforts are admirable, they still don’t add up to the $2 million the district needs to avoid cuts and are not sustainable.

But others say the district’s doubters lack hope.

“There are people who believe in us,” LeRoy said. “We have thick skin and broad shoulders. Failing is not an option.”

Last month, the Ace Hardware store that anchors Palmyra’s Main Street sold out of purple lightbulbs. As the district’s plight gained national attention, its varsity basketball team, the Panthers, set off on a winning streak; sports columnists predicted it might have a chance at this year’s state championship.

A wave of Panther pride swept over the town. Residents lit their porches up in a purple hue, plastered booster signs across their yards and, at the local fish frys, talked strategy with varsity players.

It was hard to tell at a recent game that the district just a week before had been on the brink of dissolution and was now looking down the barrel of $2 million in cuts.

During timeouts, the pep band, cheerleading team, and dance squad roused the packed audience. School board members, teachers, and former administrators served cheese nachos, Doritos, and hot dogs to a long line of fans.

Students in the pep squad from both Palmyra and Eagle said their home address mattered little once they came to school.

“The future is uncertain,” said Lane Scheel, a 17-year-old junior. “But we’re all Panthers here.”

Vol. 39, Issue 21, Pages 1, 14-15

Published in Print: February 12, 2020, as Unable to Dissolve Itself, Wis. District Struggles On
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