93rd WI State Education Convention – Milwaukee, WI

January 23, 2014

A Tour of Wisconsin’sHouse of School Finance

Tour Guide: David CarlsonBuilding Inspectors: Bambi Statz & Pete RossHomeowners: School Board Members

School Finance Some think the house is too large; others say it is

too small . The quality of construction varies from room to

room. Some think the house is ugly, others say it is

functional and beautiful in its own unique way. Some believe we should burn the place down;

others believe we need some major remodeling; and some think all it needs is a fresh coat of paint.

• The purpose of this session is to provide a basic overview of Wisconsin’s System of School Funding (The House). Additionally, this presentation will identify some of the concerns and issues that have been raised about the key components (Rooms) of the system.

• Our goal is to empower you with an understanding of the finance house, how it was built, perceived flaws and what if any, modifications you would make if you were to able to make changes.

Home Inspection: School Finance House

The Location and Lot Size: Overview The Appraisal: Level of Funding The Great Room: General Aid (Equalization) Utility Room: Categorical Aid Semi-Attached Garage: School Levy Credit Bedrooms: Student Learning Options The Kitchen: Revenue Limit

School Finance Overview (The Location and Lot Size)

Public education is a function of the state School boards are authorized by the

legislature to administer public education within their geographical boundaries (chapters 115-121 Wisconsin Statutes)

Boards levy a local property tax but the state provides additional revenue

School Finance Overview

State aid is intended to reduce the reliance on the local property tax

State aid is also intended to guarantee a basic education opportunity that is available to all students as required by the state Constitution

How does the state assist districts financially? Directly and Indirectly

Humke Elementary School Nekoosa, WI

Dir

ect A

id to

Sch

ools

Property Tax Credits

Property Tax Relief

State Support for K-12

=

General Aids

Categorical Aids

General Aid• 2008 - 09 = $4,811,500,000• 2009 - 10 = $4,671,200,000• 2010 - 11 = $4,671,200,000• 2011 - 12 = $4,285,000,000• 2012 - 13 = $4,310,488,000• 2013 - 14 = $4,398,424,600*

Sources: LFB Paper #26, WI ACTS 20, 32,46 and 2013-15 State School Aids Budget Summary

Categorical Aid• 2008 - 09 = $650,900,000• 2009 - 10 = $644,200,000• 2010 - 11 = $653,800,000• 2011 - 12 = $608,500,000• 2012 - 13 = $653,902,300• 2013 - 14 = $680,760,000*

3 Largest

School Levy Credit• 2008 - 09 = $822,400,000 • 2009 - 10 = $892,400,000• 2010 - 11 = $897,400,000• 2011 - 12 = $897,400,000• 2012 - 13 = $897,400,000• 2013 - 15 = $897,400,000*

* = 2013 - 15 Budget including Acts 20 & 46

The Appraisal: Level of FundingSTEEP CUTS IN STATE FUNDING FOR SCHOOLS

Center on Budget and Policy Priorities Findings:•At least 34 states are providing less funding per student for the 2013-14 school year than they did before the recession hit.  •Thirteen of these states have cut per-student funding by more than 10 percent.  (These figures are in inflation-adjusted dollars and focus on the primary form of state aid to local schools.)•At least 15 states are providing less funding per student to local school districts in the new school year than they provided a year ago.  This is despite the fact that most states are experiencing modest increases in tax revenues. 

•WI is among states where school funding is below 2008 levels. •WI is among the states with the highest cuts in spending•In per pupil dollar terms, WI has had the 2nd highest cuts of all.

Source: http://www.cbpp.org/cms/index.cfm?fa=view&id=4011

Change from FY08 to FY 14

-$1,038Adjusted for Inflation

State Support for K-12 Education$ in Millions

State Funding

2008-09 2009-10 2010-11 2011-12 2012-13 2013-14 2014-15Budget

General Aids $4,811.5 $4,671.2 $4,671.2 $4,285.0 $4,310.5 $4,398.4 $4,492.8

Categorical Aids 650.9 644.1 653.8 608.5 653.9 680.8 745.9

School Levy/1st Dollar Credits

822.4 892.4 897.4 897.4 897.4 897.4 897.4

State Residential Schools

11.5 11.8 11.8 11.2 11.2 10.8 10.8

Total $6,296.3 $6,219.5 $6,234.2 $5,802.1 $5,873.0 $5,987.4 $6,146.9

Partial School Revenues

$9,574.1 $9,731.9 $9,899.7 $9,398.7 $9,340.1

State Share 65.76% 63.91% 62.97% 61.73% 59.3% 61.6% 61.8%

Sources: LFB Estimated State Support for School Districts published Oct 11, 2012 and Sept 28, 2011 and March 2013 and LFB Estimated State Support for School Districts published Nov 21, 2013 and

2013-15 School Aid Summary

General Aid• 2008 - 09 = $4,811,500,000• 2009 - 10 = $4,671,200,000• 2010 - 11 = $4,671,200,000• 2011 - 12 = $4,285,000,000• 2012 - 13 = $4,310,488,000• 2013 - 14 = $4,398,424,600*

Sources: LFB Paper #26, WI ACTS 20, 32,46 and 2013-15 State School Aids Budget Summary

Categorical Aid• 2008 - 09 = $650,900,000• 2009 - 10 = $644,200,000• 2010 - 11 = $653,800,000• 2011 - 12 = $608,500,000• 2012 - 13 = $653,902,300• 2013 - 14 = $680,760,000*

3 Largest

School Levy Credit• 2008 - 09 = $822,400,000 • 2009 - 10 = $892,400,000• 2010 - 11 = $897,400,000• 2011 - 12 = $897,400,000• 2012 - 13 = $897,400,000• 2013 - 15 = $897,400,000*

* = 2013 - 15 Budget including Acts 20 & 46

School Finance

General Aid (The Great Room) General aid is defined as equalization,

integration, special adjustment Equalization aid is by far the largest state

education annual appropriation of $4.41 billion dollars (2013-2014 school year)

Equalization aid formula has been used to distribute state support since 1949

•General Aid is made up of Equalization, Integration (Chapter 220), Poverty Aid, and Special Adjustment Aids

•Eligibility for Integration (Chapter 220), and Special Adjustment (85% Hold Harmless)Aids are fully paid as first draws from the appropriation and the remainder is distributed as Equalization Aid

School Finance Equalization Aid

Tax base equalizing formula Districts that spend at the same level will

tax at the same rate• Example: All districts that spend $11,000

per student will tax 9.8 mills regardless of the differences in property values between districts

• Click on Icon for More Info

School Finance Equalization Aid

Based upon a reimbursement of costs from the prior school year

Factors include: student membership and district property values per student

Does not mandate how much the district spends per student

• Based on 2013-14 October Aid RunBased on 2013-14 October Aid Run

• Between Two Different WI SDs both spending Between Two Different WI SDs both spending $10,005 but with different valued taxbases:$10,005 but with different valued taxbases:- District A has $350,000 in property value/PupilDistrict A has $350,000 in property value/Pupil- District B has $700,000 in property value/PupilDistrict B has $700,000 in property value/Pupil

Comparisons in State Equalization Aid Eligibility due to state versus Comparisons in State Equalization Aid Eligibility due to state versus local factorslocal factors

2013-14 PRIMARY AID2013-14 PRIMARY AIDPrimary CostPrimary Cost

LOCALLOCAL STATESTATE$350,000$350,000

18%18%

$180$180

$1,580,000$1,580,000

82%82%

$820$820

$1,930,000 PRIMARY GUARANTEE$1,930,000 PRIMARY GUARANTEE$1,000 Primary Cost Ceiling$1,000 Primary Cost Ceiling

$350,000

$1,930,000

District A: District A: Spends $10,092Spends $10,092

Prop Val = $350,000/PProp Val = $350,000/P

2013-14 SECONDARY AID2013-14 SECONDARY AIDSecondary CostSecondary Cost

LOCALLOCAL STATESTATE$350,000$350,000

32%32%

$2,597$2,597

$ 740,654$ 740,654

68%68%

$5,495$5,495

$ 1,090,654 SECONDARY GUARANTEE$ 1,090,654 SECONDARY GUARANTEE$9,092 - 1,000 = $8,092 Secondary Cost$9,092 - 1,000 = $8,092 Secondary Cost

$350,000

$1,090,654

TERTIARY AIDTERTIARY AIDTertiary CostTertiary Cost

LOCALLOCAL STATESTATE$350,000$350,000

65%65%

$650$650

$ 186,519$ 186,519

35%35%

$350$350

$ 536,519 TERTIARY GUARANTEE$ 536,519 TERTIARY GUARANTEEAny Amt. Over $9,092 Tertiary CostAny Amt. Over $9,092 Tertiary Cost

e.g. $1,000e.g. $1,000

$350,000

$536,519

Primary Aid = 820 or 82%; Secondary Aid = 5,495 or 68%; Tertiary Aid = 350 or 35% For Overall Sharing = $6,665 or 66%

PRIMARY AIDPRIMARY AIDPrimary CostPrimary Cost

LOCALLOCAL STATESTATE$700,000$700,000

36%36%

$360$360

$1,235,200$1,235,200

64%64%

$640$640

$1,930,000 PRIMARY GUARANTEE$1,930,000 PRIMARY GUARANTEE$1,000 Primary Cost Ceiling$1,000 Primary Cost Ceiling

$700,000

$1,930,000

Negative Aid: How it worksNegative Aid: How it works

District B: Like 116 WI SDsDistrict B: Like 116 WI SDsthat receive (-) Tertiary state aidthat receive (-) Tertiary state aid

District B: District B: Spends $10,092Spends $10,092

Prop Val = $700,000/PProp Val = $700,000/P

SECONDARY AIDSECONDARY AIDSecondary CostSecondary Cost

LOCALLOCAL STATESTATE$700,000$700,000

64%64%

$5,178$5,178

$ 390,654$ 390,654

36%36%

$2,914$2,914

$ 1,090,654 SECONDARY GUARANTEE$ 1,090,654 SECONDARY GUARANTEE$9,092 - 1,000 = $8,092 Secondary Cost$9,092 - 1,000 = $8,092 Secondary Cost

$700,000

$1,090,654

TERTIARY AIDTERTIARY AIDTertiary CostTertiary Cost

LOCALLOCAL STATESTATE$700,000$700,000

130%130%

$1,300$1,300

($ 163,481)($ 163,481)

-30%-30%

-$300-$300

$ 536,519 TERTIARY GUARANTEE$ 536,519 TERTIARY GUARANTEEAny Amt. Over $9,092 Tertiary CostAny Amt. Over $9,092 Tertiary Cost

e.g. $1,000e.g. $1,000

$700,000

$536,519

Primary Aid = 640 or 64%; Secondary Aid = 2,914 or 36%; Tertiary Aid = -300 or -30% For Overall Sharing = $3,254 or 32%

Comparison in State Equalization Aid Eligibility Comparison in State Equalization Aid Eligibility between Two Different WI SDs,

both spending $10,092 $10,092 but with different Property Valuesdifferent Property Values

Equalization Aid District AProp. Val = $350,000/PPositive P, S, and T Aid

(231 SDs)

District BProp. Val = $700,000/P

(-) Tertiary Aid(142 WI SDs)

Primary Aid $820 or 82% $640 or 64%

Secondary Aid $5,495 or 68% $2,914 or 36%

Tertiary Aid $350 or 35% ($300) or -30%

Total State Equal. Aid $6,665 or 66% $3,254 or 32%

Note: 20 SDs are ineligible for Equalization Aid - Why? and 31 receive only Primary & Secondary Aid – Why?

The Great Room: General Aids

Reduced by $413M or 8.6% from 2008-09 to 2013-14

• 2008 - 09 = $4,811,500,000• 2009 - 10 = $4,671,200,000• 2010 - 11 = $4,671,200,000• 2011 - 12 = $4,284,984,000• 2012 - 13 = $4,310,488,000• 2013 – 14 = $4,398,424,600 per Act 46

Distribution within the Equalization Aid Formula is impacted by less money and by modifications to the formula.

2013-14 General Aids actually distributed to schools include:

Equalization Aid = $4.295B Integration Aid = $68.2M Special Adjustment Aid = $18.2M High Poverty Aid = $16.8M

26

Note: 210 or 50% of WI pubic SDs are receiving less school aid for 2013-14 than

they did last year.Source: DPI Oct 2013-14 State Aid Certification and Press Release

$ 200,000 $ 600,000 $1,000,000 $1,400,000 $1,800,000

$400,000 $800,000 $1,200,000 $1,600,000 $ 2,000,000

PROPERTY TAX BASE

SECONDARY COST CEILING = $ 9,092

$14,000 $13,000 $12,000 $11,000 $10,000 $9,000 $8,000 $7,000 $6,000 $5,000 $4,000 $3,000 $2,000

$1,000

COSTS

Tertiary Guarantee (TGVM) = $536,519

Secondary Guarantee (SGVM) = $ 1,090,654

2013 – 14 THREE-TIEREQUALIZATION AID FORMULA

State Aid Graph Oct 2013

PRIMARY COST CEILING = $ 1,000

PRIMARY GUARANTEE(PGVM) = $1,930,000

Recent history of state aid factors

Note: Since 2008-09 the Secondary Guarantee has DECREASED by $285,337 or 21%! Why has that happened?

Note: The Tertiary Guarantee has declined as well. Why is that?

Note: The Secondary Cost Ceiling has fluctuated as well. Why?

YearPrimary

GuaranteeSecondary Guarantee

Tertiary Guarantee

Secondary Cost

Ceiling2013-14 1,930,000 1,090,654 536,519 9,0922012-13 1,930,000 1,105,090 555,356 9,0052011-12 1,930,000 968,209 564,023 9,4982010-11 1,930,000 1,243,710 581,115 9,2992009-10 1,930,000 1,255,691 582,588 9,2062008-09 1,930,000 1,375,991 563,373 8,868

Formula Factor ChangesFormula Factor Changes

• 1970s (2-Tier) = 105 – 110% of state average• 1990s (94–95) (2-Tier) = 100% of state average (cpi adj)

• 1996-97 (3-Tier) = 90% of state average

• 1990s (94-95) (2-Tier) = 106% of state average• 1996-97 (3-Tier) = 100% of state average

Cost Ceiling

Guarantee

Was meant to be a disincentive for

excessive spending –

AT 90% of AVERAGE?

School Finance

Categorical Aid (The Utility Room) State Supreme Court Decision of Vincent v.

Voight concluded that the state’s system of funding was constitutional; however, it provided a warning that districts were not “fungible”

Fungible means interchangeable

School Finance Categorical Aid

Vincent v. Voight

• “An equal opportunity for a sound basic education acknowledges that students and districts are not fungible and takes into account districts with disproportionate numbers of disabled students, economically disadvantaged students, and students with limited English language skills.”

School Finance Categorical Aid

Many categorical aids are intended to recognize the need for additional resources for these populations (2013-14) school year)

Special Education $ 368.9 million SAGE $ 109.1 million High Cost SE $ 3.5 million Sparsity $ 13.4 million High Poverty $ 16.8 million Bi-lingual/Bi-cultural $ 8.5 million

School Finance Categorical Aid

Also provides additional resources for required programs to offset local tax burden

Transportation $ 23.7million Library $ 37 million

Provide resources as incentives School Breakfast $2.5 million 4K Start Up Grants $1.35 million

Categorical aid calculations can be based upon such prior year factors as the number of students, teacher costs, miles transported, district size, % students in poverty

School Finance Categorical Aids

Susceptible to change Elimination such as Driver’s Education

aid/Children at Risk “Sum certain” rather than “sum sufficient”;

result is often % reimbursement drop; example is special education aid; once 67% now estimated at 26.5% in 2013-14

Utility Room: Categorical Aids

Fluctuates with periodic reductionsAt slightly above 2008-09 level

• 2008 - 09 = $650,900,000• 2009 - 10 = $644,200,000• 2010 - 11 = $653,800,000• 2011 - 12 = $608,500,000 • 2012 - 13 = $653,875,400• 2013 – 14 = $680,760,000* per Acts 20 & 46

* Includes $63,487,500 in Per Pupil Aid

:

In 2000, the WI State Supreme Court established

an educational standard which provides that:

1. “Wisconsin students have a fundamental right to an equal opportunity to a sound basic education . . . that will equip students for their roles as citizens and enable them to succeed economically and personally.”

2. The Court also required that “. . . districts with disproportionate numbers of disabled students, economically disadvantaged students, and students with limited English language skills . . .” be taken into consideration.

The effect of this decision is to demand that the legislature revise our school finance system to assure that every child has an equal educational opportunity. Is that the case in today’s climate?

State Reimbursement Rates

 Categorical Aid

00-01 01-02 02-03 03-04 04-05 05-06 06-07 07-08 08-09 09-10 10-11 11-12

Actual Actual Actual Actual Actual Actual Actual Actual Actual Actual Actual Estimate

Special Education,

SpEd Transp, Psych/SW,

Room & Board

35.79%

33.66% 31.87% 30.45% 29.95% 28.84% 28.70% 28.82% 28.67% 27.85% 28.08% 26.00%

Hospital 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100.00% 100.00%

Bilingual/Bicultural

17.95%

16.50% 12.80% 12.74% 11.41% 11.49% 11.59% 11.26% 10.79% 9.68%    

Sparsity Aid 45.0% 23.0% 94.0% 80.29%

Source: http://dpi.wi.gov/sfs/speced.html

Eligibility Criteria: SD membership less than 725 Less than 10 members per square mile At least 20% of members qualify for free or reduced

Sparsity Aid

Sample Districts

Proration Factor:

08-09 09-10 10-11 11-12

45.0% 23.0% 94.0% 80.29%

Alma $ 19,190 $ 18,629 $ 76,595 $ 60,216

Athens 36,635 36,983 146,713 127,900

Blair-Taylor 47,236 46,781 186,700 160,657

Cashton 37,104 39,467 159,948 146,205

Gilman 64,949 32,705 131,507 113,689

Port Edwards 31,334 32,636 130,943 110,078

Princeton 26,771 25,805 109,542 95,864

Randolph 33,347 34,085 142,489 123,323

Washburn 39,385 37,949 152,908 126,454

Wauzeka-Steuben 21,873 22,631 96,025 81,653

Wonewoc-Union Center 27,375 28,496 111,795 99,477

Source: DPI Website http://dpi.wi.gov/sfs/sparsity.html

Per Pupil Aid – Flat Aid• 2013-14 = $63,487,500 Sum Sufficient

appropriation with no proration = $75/Pupil based on 3-yr rolling average including summer school 40%

• 2014-15 = $126,975,000 Sum Sufficient appropriation with no proration = $150/Pupil based on 3-yr rolling average including summer school 40%

Wisconsin Budget Project Findings: Low-Income Students Face a Wide Opportunity Gap

Source: Wisconsin Budget Project – Low-income Students Face a Wise Opportunity Gap by Tamarine Cornelius http://www.wisconsinbudgetproject.org/low-income-students-face-a-wide-opportunity-gap-new-school-report-cards-show?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+WisconsinBudgetProject+%28Wisconsin+Budget+Project%29

• Low-income students have a much greater chance of attending a failing school than do other students.

• The student bodies of the highest-performing schools and the lowest-performing schools look drastically different. In the lowest-performing schools, 84% of students are economically disadvantaged, compared to only 16% of the students in the highest-performing schools, as show in the chart below. Students in the lowest-performing schools are far more likely to have disabilities or difficulty speaking English, compared to students in the highest-performing schools. 

• In 2014, WI will spend $1,038 less per student in state aid for K-12 education than it did in 2008. Most of those cuts have come from equalization aid to schools, which equalizes the fiscal capacity of school districts. Cuts to equalization aid undermine Wisconsin’s commitment to establishing equality of opportunity for all students.

Source: Wisconsin Budget Project – Low-income Students Face a Wise Opportunity Gap by Tamarine Cornelius

School FinanceSchool Levy Credit (Semi Attached Garage)Property tax relief program Direct offset to individual property tax bills Appropriation was $469.3 million in 2005-06 and $897.4 million in 2013-14 Calculated by Department of Revenue and paid to municipalities/counties 4th Monday in July The school levy tax credit is distributed based on each municipality's share of statewide levies for school purposes during the three preceding years

School Finance

School Levy Tax Credit Statewide, the credit reduced the school portion

of 2012(13) property tax bills by an average of 16.1% (LFB January 2013)

Given the same tax rate, the taxpayer with a higher valued home would receive a proportionally larger school levy credit as compared to a taxpayer with a lower valued home

School Finance School Levy Tax Credit

On a home with a full market value of $150,000 subject to the 2012(13) average statewide levy rate for school purposes, school taxes of $1,529 would have been reduced by a credit estimated at $238.

Higher-valued homes would receive a proportionately higher credit. For example, a $250,000 home taxed at the same rate would have a school tax bill of $2,548 and would receive a credit estimated at $397.

Levy Credits

Municipality’s 3-YearAverage School Levies

Statewide 3-YearAverage School Levies

DISTRIBUTIONDistributed based on each municipality’s share

of statewide levies for school purposes during the preceding three years.

Source: LFB Papers #21 & #27, January 2009

Levy Credits

Source: LFB Papers #21 & #27, January 2009

Local Factors:•Local Spending (Higher spending means more credit)•Local Levy (Higher taxes means more credit)•Direct State Aid (Lower state aid means higher local levy, means more credit)

Semi-Attached GarageSchool Levy Credits

Lack of Transparency Complicates Tax Bills Funding for Levy Credits (School Levy

Credits and First Dollar Credits) has proliferated while direct aid to school districts has diminished.

Distribution – opposite of equalization

SCHOOL LEVY & 1SCHOOL LEVY & 1stst Dollar TAX CREDITS Dollar TAX CREDITS

Prior to 1990, Credits = $169 M and were equalized Prior to 1990, Credits = $169 M and were equalized

1995-961995-96 $ 319m$ 319m1996-971996-97 + 150m+ 150m Nearly a Decade = Nearly a Decade = $ 469m$ 469m 2005-06 2005-06 + 124m+ 124m

$ 593m$ 593m 2007-08 2007-08 + 79.4m+ 79.4m

$ 672.4m$ 672.4m 2008-09 2008-09 + 150m+ 150m

$ 822.4m$ 822.4m 2009-10 2009-10 + 70m+ 70m

$ 892.4m$ 892.4m 2010-11 and after2010-11 and after + 5.0 m+ 5.0 m

$ 897.4m$ 897.4m

8.3% 15% of Total

81.8% 73.4% of Total

State Funding for K-12 Education 2005-06 to 2013-14

($ in Millions)

Annual Appropriations2005-06 to

2013-14

2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13 2013-14 $ Chge % Chge

General School Aids

$4,613.9 $4,722.7 $4,731.7 $4,811.5 $4,671.2 $4,671.2 $4,285.0 $4,310.5 $4,398.4 -$215.5 -4.67%

Categorical Aids $545.2 $571.1 $608.5 $650.9 $644.2 $653.8 $608.5 $653.9 $680.8 $135.6 24.87%

School Levy Credits

$469.3 $593.1 $672.4 $822.4 $892.4 $897.4 $897.4 $897.4 $897.4 $428.1 91.22%

State Residential Schools

$10.4 $10.4 $11.5 $11.5 $11.8 $11.2 $11.2 $11.2 $10.8 $0.4 3.85%

Total State Funding

$5,638.8 $5,897.3 $6,024.1 $6,296.3 $6,219.6 $6,233.6 $5,802.1 $5,873.0 $5,987.4 $348.6 6.18%

$63M Per Pupil Aid not based on Pupil Need

Differing Effects of the 2 Largest Forms of State Support Differing Effects of the 2 Largest Forms of State Support (Aids v. Credits) on Local Taxes(Aids v. Credits) on Local Taxes

● Property poor/low spending districts will receive more state support when funds are channeled as Equalization Aid

● Property wealthy/high spending districts will receive more state support when funds are channeled as School Levy Tax Credit

● Taxpayers in every district gain from First Dollar Credits (Disequalizing)

Why is this important?There has been a shift from Equalization

Aids to Levy Credits – Per LFB analysis, Disadvantages 70% of WI SDs

 School District Loss  School District GainAppleton +.35 -$2,460,110 Crivitz (1.34) $1,199,074Baraboo +.50 -$812,613 Drummond (.76) $1,020,634Waunakee +.17 -$352,788 Elcho (.99) $806,260Delavan-Darien +.47 -$919,700 Elmbrook

(1.56)$12,132,922

East Troy +.46 -$698,069 Gibraltar (.44) $1,605,973Fond du Lac +.37 -$1,313,439 Green Lake (.98) $1,034,812Hudson +.51 -$1,823,001 Hayward (1.02) $3,194,244Kenosha +.30 -$2,842,143 Mequon-Thiensvl (1.62) $7,487,810Marshfield +.54 -$1,053,006 Northland Pines (1.01) $3,657,577Mosinee +.41 -$418,468 Phelps

(1.30)$550,762

Mukwonago +.41 -$1,355,671 Sevastopol (.90) $1,291,729Oak Crk-Frank +.46 -$1,711,559 Spooner (1.21) $2,117,850Owen-Withee +.44 -$89,065 Three Lakes

(.96)$1,495,773

Racine +.65 -$6,299,947 Webster (.97)

$1,432,684

Waukesha +.31 -$3,031,465 Weyerhaeuser (1.50)

$296,963

Wauwatosa +.46 -$2,475,613 Williams Bay (1.23) $1,429,572West Bend +.59 -$2,784,119 Wisconsin Dells (.89) $2,070,942Total No. of SDs 295 = 70% Total No. of SDs 130 = 30%

LFB Analysis: Shift of $747.4M School Levy Credits vs. Equalization Aid to in 2009-10 

Source: LFB Paper dated February 2, 2010

 School District

09-10 Equal. Value per

Pupil

09-10 Total

Exps per Pupil

09-10 Tax Rate

09-10 Equal

Aid per Pupil

09-10 Property Tax per

Pupil

09-10 Levy

Credit per Pupil

Sheboygan $ 372,028 $ 13,013 $ 10.58 $ 5,897 $ 4,497 $ 659

Green Lake $ 3,503,363 $ 20,375 $ 4.85 $ 131 $16,977 $2,938Nekoosa $ 840,458 $ 12,100 $ 9.15 $ 3,105 $ 7,693 $1,153Three Lakes $ 2,830,586 $ 15,636 $ 4.99 $ 202 $14,125 $2,579Stevens Point $ 530,206 $ 12,310 $ 9.48 $ 5,574 $ 5,027 $ 763Mequon-Thiensville $ 1,298,892 $ 12,614 $ 8.73 $ 597 $11,340 $2,038Wisconsin Rapids $ 383,030 $ 11,899 $ 8.93 $ 6,679 $ 3,422 $ 563Wisconsin Dells $ 1,374,392 $ 11,970 $ 6.77 $ 461 $ 9,309 $1,600State Average (K-12) $ 560,976 $ 12,366 $9.18 $ 5,373 $ 5,144 $847

School District Comparisons 

Sources: School Facts ‘10 by WTA and Feb 2010 LFB analysis

Above Average CreditBelow Average Credit

Who Pays & Who Benefits from Levy Credits?Who Pays & Who Benefits from Levy Credits?• All WI residents contribute to GPR through income and sale taxes.

• Only 51% of the total school levy credit reduces property taxes of WI homeowners on their primary residences.

• 9% of the levy credits go to WI residents who own vacation property

• 26% go to owners of nonresidential property and non-Wisconsinites who own vacation homes in the state

• “Property owners in the poorest school districts (in terms of property wealth) received an average credit equal to $375 per student. The size of the average credit going to taxpayers in school districts with higher levels of property wealth per student increases with district wealth. Property owners in the state’s 21 property-richest districts received average per student credits of $2,596, nearly seven times the average credit going to taxpayers in the poorest school districts.”  

Source: Andrew Reschovsky's study of levy credits: http://www.lafollette.wisc.edu/publications/workingpapers/#2010-003

School Finance

Student Learning Options (The Bedrooms) Have provided many unique and individual learning

opportunities for students

Examples: Open Enrollment, Milwaukee Parental Choice Program, Charter Schools including Virtual Charter Schools, Youth Challenge Academy, Youth Options, Youth Apprenticeship, Integration (Chapter 220)

School Finance Student Learning Options

Charter Schools – Chapter 118.40 of State Statutes

District Charter for district students District counts students for equalization aid and

revenue limit

District Charter for district and OE students District counts students for equalization aid and

revenue limit and receives OE tuition for other districts’ students

School Finance Student Learning Options

Charter Schools – Milwaukee/Racine Schools chartered under chapter 118.40 (2r) Authorizing entities

The common council of the city of Milwaukee The chancellor of the University of Wisconsin –

Milwaukee The chancellor of the University of Wisconsin –

Parkside The Milwaukee area technical college district

board

School Finance Student Learning Options

Charter Schools (2r) Milwaukee/Racine (2r) charters receive a

payment from the state based upon a prescribed funding formula (est. for 2013-14 of $ 7,925 per student for 8,100 students)

Sum sufficient appropriation of $ 64.2 million for 2013-14 taken from every school district’s general aid eligibility (equalization, special adjustment, integration)

School Finance

Student Learning Options Charter Schools (2r)

1.465% general aid reduction for each district Districts have the authority to levy for the aid

loss due to the charter reduction Complex array of funding formulas/district

costs complicates the accurate counting of students for aid and revenue limit

Bedrooms:Student Learning Options

Choice and Independent Charter Programs impact funding for public

schools

ALL WI School Districts Fund these Programs • Under the Milwaukee and Racine charter school program, the City

of Milwaukee, UW-Milwaukee, and UW-Parkside operate (or contract to operate) charter schools.

• The operators of these charter schools are paid a statutorily-determined per pupil yearly ($7,925 in 2013-14).

• By law, DPI is required to proportionally reduce the general aid for which each school district is eligible by an amount totaling the estimated payments under the program. Based on the October 2013 (Act 46) general school aids estimate, in 2013-14, general aid statewide will be reduced by a total of $64.2 million for the charter program. Each district's general aid will be reduced proportionately by 1.465%. Milwaukee’s aid is reduced by $56.7M to pay its share of the Milwaukee Voucher Program.

Source: DPI 10/23/13 General School Aids Certification Press Release

State Independent Charter School Funding

The 2013-14 general aid reduction for independent charters was -1.465%* = Average district cut approximately -$150,000

That could be backfilled on the local property tax. This is a local tax increase. Lost Aid and increased taxes! Not all districts/taxpayers treated the same!

2013-14 State Aid Reductions due to Independent Charters

*Note: the general aid reduction percentage changes annually, depending on the number of students enrolled in independent charters, although DPI projects that this number will increase under te state budget.

Source: DPI http://news.dpi.wi.gov/news_2013-15-state-budget-information

District 2012-13 Aid Cut District 2012-13 Aid Cut

Chippewa Falls $ 410,234 Gibraltar $ 100

Green Bay 1,976,652 Green Lake 321

Madison 776,235 Three Lakes 910

Seymour 261,801 Elmbrook 76,983

Sheboygan 1,019,950 Kohler 5,708

Stoughton 224,712 Wisconsin Dells 10,185

2013-15 Funding ComparisonPublic Schools

Independent Charters

Voucher Schools

Enrollment 864,000 10,500+ 2,500 students over 2012-13 school year

30,000+ 5,000 students over 2012-13 school year

Revenue (How much schools can spend)

Per-Pupil Increase $50**/75student + $156/student + $608/ K-8 student+ $1,414/ 9-12 student

State School Aid (How much the state pays)

Net Increase $39 M*/$60M $23 M in 2013-14 $73 M in 2013-14

Per-Pupil Aid Increase $45/student $2,190/student $2,433/student

Per-Pupil Flat Cat Aid $64 M/$127M

Per-Pupil Flat Aid $75/150/student

Because the revenue limit was initially frozen, the increase in general school aids reduced local property taxes and did not increase student spending. There are no revenue limit

restrictions for independent charter and voucher schools; they can spend all they receive. *Note: All $39 million will go to property tax relief. See DPI’s net state school aid increase calculation. Additionally, only some school districts will be eligible for the $64 million performance funding, which is included in the “net increase” state school aid number.** If SD levied to the max.

2013-15 State Funding

Source: DPI http://news.dpi.wi.gov/news_2013-15-state-budget-inform and DPI Press Release Oct. 23, 2013

Other Publicly Funded Private School Programs

• Statewide Voucher Program: $3.2 million in public subsidies is provided beginning this year for 500 pupils to attend private schools (including religious schools) throughout the state while 79% of these pupils did not previously attend public schools.

• Tuition Tax Credits: Parents of private school children are eligible for a $2,500 annual tax credit on their income tax returns.

Sources: DPI 10/23/13 General School Aids Certification Press Release and October 29, 2013 JS Article

School Finance

Revenue Limits (The Kitchen) Arose out of the early 1990’s when many tax

levies were increasing at over 10% a year Effective 1993-94 as Chapter 121.90 of state

statutes Revenue limit law controls the levy

authority of school boards both for operations and long term debt

School Finance

Revenue Limits Since equalization aid is considered in

calculation, over 85% of a district’s revenue is controlled

Not a set levy amount per district; rather a conversion was made from 1992-93 actual individual district expenditures to a revenue control for 1993-94

School Finance Revenue Limits

Through the years there has been numerous proposed and enacted changes to this calculation

Examples: declining enrollment, summer school, exempt computer aid, allowable per pupil increase, energy efficiency

It is now the state’s most complex calculation for districts and for the state to administer

School Finance

Revenue Limits Over levies reduce district equalization aid

eligibility and over taxed residents do not get a refund so accuracy is critical

Provides state with significant control over the spending and taxing authority of school districts

School Finance

Revenue Limits Causes districts to do revenue based

budgeting Referendum option for operations and

capital expenditures

The Kitchen:State-Imposed Revenue

Limits

The Revenue Caps were unfairly implemented resulting in many school

districts and their students being disadvantaged ever since.

Source: DPI http://www.dpi.wi.gov/sfs/workexe.html and DPI/WASDA Fall 2013 Workshop based on 2013-15 Biennial Budget

Equal Access to Resources stymied by: State-Imposed Revenue CapsEqual Access to Resources stymied by: State-Imposed Revenue Caps

Change in Revenue Limit Over Time2013-15 State Budget Proposal

A historic decline in revenue limit over the last four years

Source: DPI http://news.dpi.wi.gov/news_2013-15-state-budget-information

Per-Pupil Revenue by School Type2013-15 State Budget Proposal

* For high school students

An issue of fairness: No growth in public school spending

Source: DPI http://news.dpi.wi.gov/news_2013-15-state-budget-information

Closing Gaps the Wrong Way2013-15 State Budget Proposal

* High school students

$3,781 $1,975

Source: DPI http://news.dpi.wi.gov/news_2013-15-state-budget-information

Inspection SummarySome of the ways WI’s school finance system has been revised over the past two decades that interfere with equal access to resources and equal educational opportunities include:

• Inconsistent and Declining Level of State Funding • Modifications to General Aid Formula Factors• Addition of Per Pupil Aid• Lack of Commitment to Funding for disabled students,

economically disadvantaged students, and students with limited English language skills

• Changes in State Funding between Direct State Aids and Levy Credits

• Other Public Policy & Funding Decisions including the introduction and expansion of Private School Choice, Public School Open Enrollment, and Charters

• Imposition of State-Imposed Revenue Limits

• The purpose of this session was to provide a basic overview of Wisconsin’s System of School Funding (The House). Additionally, this presentation identified some of the concerns and issues that have been raised about the key components (Rooms) of the system.

• Our goal was to empower you with an understanding of the finance house, how it was built, perceived flaws and what if any, modifications you would make if you were to able to make changes. In addition, we have identified resources (Building Materials) that will help you to apply these concepts to your own district (House).

•

Your Home Inspection should ask:

Is the foundation sound?Is the house too big or too small?Should some rooms be demolished?Any new rooms needed?Is the house functional? Appealing? Attractive?

Fundamentals of Wisconsin’s School Funding System

Resources Resources • WASB; The Budget Cycle• Association for Equity in Funding Website; www.waef.net• DPI Finance Team's Learning Center• DPI Finance Team's Basic Facts• Legislative Fiscal Bureau• DPI School Data Warehouse

A Tour of Wisconsin’sHouse of School Finance

Pete Ross, District Administrator, Seymour Community School District

Bambi Statz, PhD, Emeritus Professor, UW-Whitewater and Association for Equity in Funding Executive Director

David Carlson, WASB Organization Services Program Consultant