Wisconsin School Finance Overview and 2013-15 State Biennial Budget (Acts 20 and

46)

Bob Soldner, School Financial Services TeamDepartment of Public Instruction

December 12, 2013

School Finance and “State Support”

Revenue Limits, School Aids, and Property Tax Levies

Revenue Limit Overview

• Revenue limits were implemented in 1993-94.

• Revenue limits were designed to restrict the amount of revenue a school district can raise through local property taxes and state general school aids annually on a per pupil basis.

• State categorical aids, federal aids, local receipts, and most debt service tax levies are not included within a district’s revenue limit.

• In most years, revenue limits are allowed to increase annually on a per pupil basis and are calculated based upon a school district’s three-year rolling membership average.

• Revenue limits are calculated by each district individually and are not dependent on changes in other districts.

• There are currently multiple adjustments to revenue limits.

• Revenue limits can be exceeded if approved through local referendum.

2012-13 Base Revenue Limit Per Pupil

• Highest Overall District-North Lakeland (K-8)--$18,840 per pupil

• Highest K-12 District-Pepin--$13,534 per pupil

• Lowest Overall District-Altoona--$7,916 per pupil

• 90th Percentile District-Menomonee Falls--$10,916 per pupil

• 10th Percentile District-31 Districts--$9,050 per pupil

• Statewide Average--$9,693 per pupil

2012-13 Revenue Limit Data

State School Aid Appropriation 2013-14 Funding1. General Equalization Aid* $ 4,381,594,6002. Special Education Aid $ 368,939,1003. Milwaukee Parental Choice Program (MPCP)** $ 161,050,0004. SAGE (Class Size Reduction in Grades K-3) Aid $ 109,184,5005. Independent Charter School Program (ICSP) *** $ 64,192,500

* Includes equalization aid ($4.295 billion), integration aid ($68.2 million), and special adjustment aid ($18.2 million). General aid funding is reduced by $56.7 million for the MPCP and $64.2 million for the ICSP.

** 64.8% of funding is from state and 35.2% from Milwaukee Public Schools (MPS) general equalization aid reduction.

*** All funding is from general aid reduction to all 424 districts.

2013-14 Largest GPR-FundedState School Aid Programs

General Equalization Aids• General equalization aids contain three different components:

– Equalization Aids

– Integration (Chapter 220) Aids

– Special Adjustment (85% Hold Harmless) Aids

• General equalization aids are received within school district revenue limits, thus increases or decreases in such state aids directly affect school district property tax levies.

• General equalization aids may be used by school districts for any purpose.

• Changes in any one school district’s “factors” (membership, costs, property value) affect the distribution of general equalization aid in most other school districts.

• In 2013-14, state cost sharing through equalization aid alone ranges from 0% (20 districts) to roughly 81% (Beloit) of eligible shared costs.

General Equalization Aid Formula-Factors

District Factors (all from the prior year):• Membership-September/January Full-Time Equivalent (FTE) average plus

Summer School. Pupils are counted by the district in which they live.

• Shared Cost-Eligible aided costs that have not been offset by other revenue sources such as state categorical aid, federal aid or local (non-property tax) receipts divided by the # of FTE pupils.

• Equalized Valuation-Total property valuation divided by # of FTE pupils.

State Factors:• State General Aid-The amount of state general aid appropriated.

• State Guaranteed Property Valuations and Cost Ceilings-State determined figures regarding property wealth and spending (shared cost) per pupil.

Categories of Districts ReceivingGeneral Equalization Aid in 2013-14

2013-14 Property Wealth Data

Most Property Wealthy District• North Lakeland--$8,054,600 per pupil

Equalization aid--$0 per pupil

Least Property Wealthy District• Beloit--$177,400 per pupil

Equalization aid--$8,279 per pupil

Statewide Average• $536,500 per pupil

Equalization aid--$4,882 per pupil

2013-14 Shared Cost Data

Highest Overall District• Phelps--$19,325 per pupil

Lowest Overall District• Richfield (K-8)--$8,541 per pupil

90th Percentile District• Dodgeville--$12,077 per pupil

10th Percentile District• Seymour--$9,312 per pupil

Statewide Average• $10,102 per pupil

2013-14 General Equalization Aid Data

Special Adjustment Aid

• Special adjustment aid is fully funded within general equalization aid and often referred to as “hold harmless” aid.

• Special adjustment aid works within the general equalization aid formula to assure that no school district’s overall general equalization aid eligibility is less than 85% of its prior year general aid eligibility.

• Special adjustment aid is received within a district’s revenue limit.

• In 2013-14, 69 districts are eligible for special adjustment aid totaling $18.2 million. This year, 18 districts (included in the 69 above) are estimated to only receive special adjustment aid as they are not eligible for any equalized aid.

High Poverty Aid

• High poverty aid is a separately funded general school aid and received within a school district’s revenue limit. Thus, it reduces eligible districts’ property tax levies.

• Districts are eligible for high poverty aid if at least 50% of their enrollment is eligible for free and reduced-price lunch in the national school lunch program. Eligibility is determined every two years.

• State aid per pupil is determined by dividing the total of amount of state high poverty aid by the total membership of all eligible districts.

• In 2013-14, 110 districts will receive high poverty aid totaling $16.8 million.

Categorical Aids

• There are currently 32 “categorical” aid programs that reimburse school districts for specific purposes and programs.

• Categorical aids are distributed without regard to a district’s property wealth or overall spending per pupil.

• Categorical aids are paid on either a formula basis or awarded as grants and may be prorated if appropriated funds are insufficient to fully fund a categorical aid program.

• Categorical aids are received outside of revenue limits.

• Not all districts are eligible for all categorical aids.

Independent Charter Schools Program (ICSP)

• Background

– Created in 1997.

– State funds pay for students in Milwaukee, Racine, Ozaukee, Washington or Waukesha counties to attend independent (non-school board) charter schools authorized by UW-Milwaukee, City of Milwaukee, or UW-Parkside in those counties.

– 23 independent charter schools in the ICSP in 2013-14.

• Student Eligibility

– Must be a resident of counties noted above.

– No income eligibility requirements.

• Funding

– All school districts in the state have their general equalization aid reduced to pay for students attending these charter schools. Districts can increase their property tax levy to offset any state aid reduction related to this program.

– State aid payment is $7,925 per full-time equivalent (FTE) student in 2013-14.

– Program is funded on current year basis.

– 2013-14 $64.2 million (8,100 FTE students-estimated)

– 2014-15 $70.3 million (8,700 FTE students-estimated)

• Increased general equalization and categorical school aids by $389 million, which is equal to a 3.3% increase over 2012-13 base funding in “state support” for school districts.

• Essentially froze existing categorical aid programs at 2012-13 levels and created four new state categorical aid programs.

• Increased school district revenue limits by $75 per pupil annually in each of the next two years.

• Created a new, sum-sufficient, categorical aid program to provide a $75 per pupil aid payment in 2013-14 and a $150 ($75 more than in 2013-14) per pupil aid payment in 2014-15 and each year thereafter.

2013-15 Biennial Budget Overview (includes Act 46)

• Per Pupil Adjustment-Provided for a $75 increase in the per pupil adjustment in both 2013-14 and 2014-15. The adjustment will revert back to no annual increase in 2015-16 and thereafter under current law.

• Low Revenue Ceiling-Maintained the ceiling at $9,100 per pupil in

2013-14 and thereafter without having to go to referenda. Less than 10 districts were eligible for this adjustment this year.

• Prior Year Base Revenue Hold Harmless-Restored this adjustment again in 2013-14 and thereafter (roughly 170 districts were eligible this year).

2013-15 Biennial Budget--Revenue Limits

• Increased general school aids by $270.2 million over the biennium, which is equal to a 3.1% increase over 2012-13 base funding.

• Increased categorical school aids by $118.8 million over the biennium, which is equal to a 9.1% increase over 2012-13 base funding.

Created four new categorical aid programs:

• Per Pupil Aid-Provided $63.5 million in 2013-14 and $127 million in 2014-15 to provide a $75 per pupil payment to each district annually.

• Educator Effectiveness (EE) Aid-Provided $5.7 million annually for grants to districts to implement EE evaluation systems.

• High Cost Transportation Aid-Provided $5 million annually for districts with transportation costs exceeding 150% of the state per pupil average.

• STEM Grants-Provided $250,000 over the biennium in grants to districts for the enhancement of STEM courses.

2013-15 Biennial Budget-General/Categorical Aids

For more information contact:DPI

School Financial Services Teamat

608/267-9114

Or visit our web site at:http://www.dpi.wi.gov/sfs/index.html

Department of Public Instruction (DPI)