A bipartisan compromise to spend about $1.8 billion of Wisconsin’s projected $2.5 billion budget surplus on tax rebates, property tax relief, and increased school funding died in the state Senate on a 15-18 vote Wednesday night, May 13, leaving districts such as Iola-Scandinavia facing tighter budgets without expected state aid.
The plan, negotiated between Democratic Gov. Tony Evers and Republican legislative leaders, would have directed roughly $600 million toward K-12 education, including a record boost in special education reimbursement and $302.5 million in general school aid to help reduce property tax levies. It also included $850 million in direct rebate payments to taxpayers and other tax relief measures, such as eliminating state income taxes on tips and overtime.
Had the measure passed, Iola-Scandinavia School District stood to receive an estimated $244,361 in additional general school aid for the 2025-26 school year on top of the $4,520,867 it already was slated to get, according to estimates from the Legislative Fiscal Bureau cited by Rep. Brent Jacobson (R-Mosinee). It would also have seen special education aid increases of about $31,058 in 2025-26 and $84,039 in 2026-27, helping move the statewide reimbursement rate from current levels to 42.7% in 2025-26 and 50% in 2026-27, described as the largest such increase in state history.
I-S District Administrator Chris Nelson had urged support for the package in a letter to Jacobson, noting that it would provide critical relief after voters rejected an operational referendum in April seeking $1.6 million. The district now must cut about that amount from its expenses amid rising costs and budget pressures.
“Wisconsin’s kids and schools aren’t going to get the investments they desperately need this year” because some lawmakers “chose to blow up a bipartisan plan,” Evers said in a statement after the vote, accusing them of prioritizing elections over people.
The bill passed the Assembly 61-32 earlier Wednesday but faced opposition in the Senate from all 15 Democrats, who criticized their exclusion from negotiations and called the plan fiscally irresponsible, and three Republicans. Rank-and-file GOP lawmakers also resisted elements of the deal.
Jacobson, responding to concerns from Iola-Scandinavia residents and Nelson, had emphasized that the district would benefit despite not receiving direct property tax relief checks. The general aid flows through the state’s funding formula, reducing the amount districts must levy locally. Special education aid is provided directly from the state.
The failure leaves districts like Iola-Scandinavia, already contending with a failed referendum and the need for significant cuts, without the additional general and special education funding that supporters said would ease property tax burdens and cover mandated services. Statewide, schools will forgo the temporary funding boost and the path to 50 percent special education reimbursement in the coming biennium.
The state’s surplus remains largely intact for now, with no immediate alternative spending plan in place. Lawmakers head into the rest of the legislative session and fall elections amid ongoing debates over taxes, education funding, and fiscal priorities.
Iola-Scandinavia budget cuts
The Iola-Scandinavia School District has begun implementing budget cuts totaling about $1.6 million after voters rejected an operational referendum in April, forcing administrators to reduce spending in a small rural district already strained by rising costs and limited state aid.
Nelson and the school board have approved roughly $500,000 in initial reductions and are working to close the remaining $1.1 million gap for the 2026-27 school year. The district, which serves approximately 580 students across pre-kindergarten through 12th grade, must align its roughly $11 million to $12 million budget with available revenue after the referendum failed by 176 votes on April 7.
Cuts so far include leaving two full-time positions unfilled through attrition, trimming the information technology department, reducing the number of field trips, and scaling back athletic coaching positions. Officials also plan to delay or cancel some maintenance projects. Further reductions could bring larger class sizes, fewer extracurricular opportunities, and additional staff adjustments, according to earlier district warnings.
The referendum sought authority to exceed the state revenue limit by $1.6 million in the coming year and roughly $2 million annually in subsequent years. It marked another attempt by the district to bridge gaps created by Wisconsin’s school funding formula, inflation, salary increases, and growing special education mandates. Similar referendums have passed in the district since 2016, but voters this spring opted against the increase amid concerns over property taxes.
The failed measure compounds challenges for Iola-Scandinavia, one of about two dozen Wisconsin districts where spring 2026 referendums did not pass. Without the additional local revenue, the district faces structural pressures common in small rural systems where fixed costs are spread across fewer students.
District leaders are now seeking input from the community. They plan to conduct a survey to better understand voter concerns and are considering a revised referendum for the November 2026 ballot.
The situation grew more difficult this week when the state Senate rejected a bipartisan compromise that would have sent additional aid to schools. Had that plan passed, Iola-Scandinavia stood to receive an estimated $244,000 in new general school aid and tens of thousands more in special education reimbursement, money that would have helped offset local levy pressures.
For now, the district is focusing on measured reductions to minimize disruption while preparing for what could be a lean 2026-27 school year. Officials say the initial round of savings emphasizes efficiencies, but deeper programmatic choices may become necessary if no new revenue materializes.
