93rd WI State Education Convention – Milwaukee, WI January 23, 2014 A Tour of Wisconsin’s House of School Finance Tour Guide: David Carlson Building Inspectors:

93rd WI State Education Convention – Milwaukee, WI January 23, 2014 A Tour of Wisconsin’s House of School Finance Tour Guide: David Carlson Building Inspectors: Bambi Statz & Pete Ross Homeowners: 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 Direct Aid to Schools 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 Funding STEEP 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 2 nd highest cuts of all. Source: http://www.cbpp.org/cms/index.cfm?fa=view&id=4011

Change from FY08 to FY 14 -$1,038 Adjusted for Inflation

State Support for K-12 Education $ in Millions State Funding 2008-092009-102010-112011-122012-132013-142014-15 Budget General Aids $4,811.5$4,671.2 $4,285.0$4,310.5$4,398.4$4,492.8 Categorical Aids 650.9644.1653.8608.5653.9680.8745.9 School Levy/1 st Dollar Credits 822.4892.4897.4 State Residential Schools 11.511.8 11.2 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 Run Based on 2013-14 October Aid Run Between Two Different WI SDs both spending $10,005 but with different valued taxbases: Between Two Different WI SDs both spending $10,005 but with different valued taxbases: - District A has $350,000 in property value/Pupil - District B has $700,000 in property value/Pupil Comparisons in State Equalization Aid Eligibility due to state versus local factors

2013-14 PRIMARY AID Primary Cost LOCAL STATE $350,00018%$180$1,580,00082%$820 $1,930,000 PRIMARY GUARANTEE $1,000 Primary Cost Ceiling $350,000 $1,930,000 District A: Spends $10,092 Prop Val = $350,000/P

2013-14 SECONDARY AID Secondary Cost LOCAL STATE $350,00032% $2,597 $2,597 $ 740,654 68%$5,495 $ 1,090,654 SECONDARY GUARANTEE $9,092 - 1,000 = $8,092 Secondary Cost $350,000 $1,090,654

TERTIARY AID Tertiary Cost LOCAL STATE $350,00065% $650 $650 $ 186,519 35%$350 $ 536,519 TERTIARY GUARANTEE Any Amt. Over $9,092 Tertiary Cost e.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 AID Primary Cost LOCAL STATE $700,00036%$360$1,235,20064%$640 $1,930,000 PRIMARY GUARANTEE $1,000 Primary Cost Ceiling $700,000 $1,930,000 Negative Aid: How it works District B: Like 116 WI SDs that receive (-) Tertiary state aid District B: Spends $10,092 Prop Val = $700,000/P

SECONDARY AID Secondary Cost LOCAL STATE $700,00064% $5,178 $5,178 $ 390,654 36%$2,914 $ 1,090,654 SECONDARY GUARANTEE $9,092 - 1,000 = $8,092 Secondary Cost $700,000 $1,090,654

TERTIARY AID Tertiary Cost LOCAL STATE $700,000130% $1,300 $1,300 ($ 163,481) -30%-$300 $ 536,519 TERTIARY GUARANTEE Any Amt. Over $9,092 Tertiary Cost e.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, $10,092 both spending $10,092 different Property Values but with different Property Values Equalization AidDistrict A Prop. Val = $350,000/P Positive P, S, and T Aid (231 SDs) District B Prop. 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-TIER EQUALIZATION 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? Year Primary Guarantee Secondary Guarantee Tertiary Guarantee Secondary Cost Ceiling 2013-141,930,0001,090,654536,5199,092 2012-131,930,0001,105,090555,3569,005 2011-121,930,000968,209564,0239,498 2010-111,930,0001,243,710581,1159,299 2009-101,930,0001,255,691582,5889,206 2008-091,930,0001,375,991563,3738,868

Formula 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?

2012-13 Equalization Aid TERTIARY: Over $9,005 per pupil. Positive Aid Negative Aid SECONDARY: Above $1,000 up to $9,005 per pupil. Positive Aid Positive Aid Positive Aid Negative Aid PRIMARY: Up to $1,000 per pupil. Positive Aid Positive Aid Positive Aid ZERO AID Up to $555,356 per pupil. Above $555,356 up to $1,105,090 per pupil. Above $1,105,090 up to $1,930,000 per pupil. Above $1,930,000 per pupil. DISTRICT EQUALIZED VALUE PER PUPIL DISTRICT SHARED COST PER PUPIL Source: (Oct 15. 2012 DPI Aid Cert.) 20 or 5%23 or 6%31 or 7%124 or 29%226 or 53% +10-6 Change in # SDs from 2011-12 -11+8

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 reductions At 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 00-0101-0202-0303-0404-0505-0606-0707-0808-0909-1010-1111-12 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% Hospital100% 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: 08-0909-1010-1111-12 45.0%23.0%94.0%80.29% Alma $ 19,190$ 18,629$ 76,595$ 60,216 Athens 36,63536,983146,713127,900 Blair-Taylor 47,23646,781186,700160,657 Cashton 37,10439,467159,948146,205 Gilman 64,94932,705131,507113,689 Port Edwards 31,33432,636130,943110,078 Princeton 26,77125,805109,54295,864 Randolph 33,34734,085142,489123,323 Washburn 39,38537,949152,908126,454 Wauzeka-Steuben 21,87322,63196,02581,653 Wonewoc-Union Center 27,37528,496111,79599,477 Source: DPI Website http://dpi.wi.gov/sfs/sparsity.htmlhttp://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+B udget+Project%29 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+B udget+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

Statewide Special Needs Vouchers Private Schools Students are not guaranteed services, and Families surrender their legal recourses under IDEA. Public Schools 119,262 (13.7% ) of all Wisconsin students receive special education services State reimbursement has dropped from 44% to 26% in the past two decades. Special Ed vouchers are funded by a deduction in general aid. Public schools will have to meet maintenance of effort for SwD voucher students. 2013-15 State Budget Proposal *Note: this budget provides no new special education categorical aid for public schools. Source: DPI http://news.dpi.wi.gov/news_2013-15-state-budget-information

School Finance School 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 4 th 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-Year Average School Levies Statewide 3-Year Average School Levies DISTRIBUTION Distributed 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 Garage School 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 & 1 st Dollar TAX CREDITS Prior to 1990, Credits = $169 M and were equalized 1995-96$ 319m 1996-97+ 150m Nearly a Decade = $ 469m 2005-06+ 124m $ 593m 2007-08 + 79.4m $ 672.4m 2008-09 + 150m $ 822.4m 2009-10 + 70m 2009-10 + 70m $ 892.4m 2010-11 and after+ 5.0 m 2010-11 and after+ 5.0 m $ 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 Appropriations 2005-06 to 2013-14 2005-062006-072007-082008-092009-102010-112011-122012-132013-14$ Chge% Chge General School Aids $4,613.9$4,722.7$4,731.7$4,811.5$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$135.624.87% School Levy Credits $469.3$593.1$672.4$822.4$892.4$897.4 $428.191.22% State Residential Schools $10.4 $11.5 $11.8$11.2 $10.8$0.43.85% 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$348.66.18% $63M Per Pupil Aid not based on Pupil Need

Differing Effects of the 2 Largest Forms of State Support (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 DistrictLoss School DistrictGain Appleton +.35-$2,460,110Crivitz (1.34)$1,199,074 Baraboo +.50-$812,613Drummond (.76)$1,020,634 Waunakee +.17 -$352,788Elcho (.99)$806,260 Delavan-Darien +.47 -$919,700Elmbrook (1.56)$12,132,922 East Troy +.46-$698,069Gibraltar (.44)$1,605,973 Fond du Lac +.37-$1,313,439Green Lake (.98)$1,034,812 Hudson +.51-$1,823,001Hayward (1.02)$3,194,244 Kenosha +.30-$2,842,143Mequon-Thiensvl (1.62)$7,487,810 Marshfield +.54-$1,053,006Northland Pines (1.01)$3,657,577 Mosinee +.41-$418,468Phelps (1.30)$550,762 Mukwonago +.41-$1,355,671Sevastopol (.90)$1,291,729 Oak Crk-Frank +.46-$1,711,559Spooner (1.21)$2,117,850 Owen-Withee +.44-$89,065Three Lakes (.96)$1,495,773 Racine +.65-$6,299,947Webster (.97)$1,432,684 Waukesha +.31-$3,031,465Weyerhaeuser (1.50)$296,963 Wauwatosa +.46-$2,475,613Williams Bay (1.23)$1,429,572 West Bend +.59-$2,784,119Wisconsin Dells (.89)$2,070,942 Total No. of SDs295 = 70%Total No. of SDs130 = 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$2,938 Nekoosa$ 840,458$ 12,100 $ 9.15$ 3,105$ 7,693$1,153 Three Lakes$ 2,830,586$ 15,636$ 4.99$ 202$14,125$2,579 Stevens Point$ 530,206$ 12,310$ 9.48$ 5,574$ 5,027$ 763 Mequon-Thiensville$ 1,298,892$ 12,614$ 8.73$ 597$11,340$2,038 Wisconsin Rapids$ 383,030$ 11,899$ 8.93$ 6,679$ 3,422$ 563 Wisconsin Dells$ 1,374,392$ 11,970$ 6.77$ 461$ 9,309$1,600 State 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? 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 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  Each option has its own requirements and funding formula  Open Enrollment (chapter 118.51 of statutes)  Open enrollment regular and special needs students; regular student tuition is a set amount ($6,445 est. for 2012-13); special needs is the set amount plus actual additional student associated costs (Doe v. Burmaster, U.S. District Court Eastern District 03- CV-892) Note: districts can mutually agree to an OE amount for special education students –

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  District Virtual Charter for district and OE students  District counts resident students for equalization aid and revenue limit and receives OE tuition for other districts’ students  No limit on district resident and non resident students attending district’s virtual charter schools in 2012-2013

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 limi t

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 -$150,000 That could be backfilled on the local property tax. This is a local tax increase. Lost Aid and increased taxes! Not all districts/taxpayers treated the same! 2013-14 State Aid Reductions due to Independent Charters *Note: the general aid reduction percentage changes annually, depending on the number of students enrolled in independent charters, although DPI projects that this number will increase under te state budget. Source: DPI http://news.dpi.wi.gov/news_2013-15-state-budget-information District2012-13 Aid CutDistrict2012-13 Aid Cut Chippewa Falls$ 410,234Gibraltar$ 100 Green Bay 1,976,652Green Lake321 Madison776,235Three Lakes910 Seymour261,801Elmbrook76,983 Sheboygan1,019,950Kohler5,708 Stoughton224,712Wisconsin Dells10,185

2013-15 Funding Comparison Public Schools Independent Charters Voucher Schools Enrollment864,00010,500 + 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, 2013http://news.dpi.wi.gov/news_2013-15-state-budget-inform

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 Caps

Change in Revenue Limit Over Time 2013-15 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 Type 2013-15 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 Way 2013-15 State Budget Proposal * High school students $3,781$1,975 Source: DPI http://news.dpi.wi.gov/news_2013-15-state-budget-information

Inspection Summary Some 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?

Resources Fundamentals of Wisconsin’s School Funding System Resources WASB; The Budget Cycle Association for Equity in Funding Website; www.waef.netwww.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’s House 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

93rd WI State Education Convention – Milwaukee, WI January 23, 2014 A Tour of Wisconsin’s House of School Finance Tour Guide: David Carlson Building Inspectors:

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93rd WI State Education Convention – Milwaukee, WI January 23, 2014 A Tour of Wisconsin’s House of School Finance Tour Guide: David Carlson Building Inspectors:

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Presentation on theme: "93rd WI State Education Convention – Milwaukee, WI January 23, 2014 A Tour of Wisconsin’s House of School Finance Tour Guide: David Carlson Building Inspectors:"— Presentation transcript:

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