Don't fall for Walker spin, Wis public schools still losing in budget

We already knew GOP lawmakers were having problems with Governor Walker's Transportation budget for the 2017-19 biennium, and that in itself is a significant logjam that has to be cleared up in the next month (or later). But on Friday, the Wisconsin State Journal's Molly Beck told us that K-12 education is also a problem that the GOP-run Joint Finance Committee needs to work out.

While all sides seem to agree that there should be some increase to K-12 school aids for the 2017-19 budget, what form that takes and which districts will benefit is a big hangup. The Legislative Fiscal Bureau recently released their updated analysis of the Governor's K-12 education assistance plans, which will give almost all of his proposed $649 million total increase in public school aids in the form of per-pupil aid (the increase is actually $618 million, but Walker planned to use $31 million in alleged savings from a self-insurance scheme that has already been rejected by Joint Finance).

The flip side of this is that K-12 General Aids don't increase at all in 2017-18, and go up less than 1.6% for 2018-19. In addition, the LFB notes that under Walker's current bill, school districts will remain under strict revenue limits which have caused so many school referenda over the last few years in the state.

The bill would maintain current law as established in the 2013-15 biennial budget act under which there would be no per pupil adjustment under revenue limits in the 2017-18 and 2018-19 school years and each year thereafter…

Traditionally, additional financial resources have been provided to school districts under revenue limits, either through the per pupil adjustment or through other adjustments to the revenue limit calculation. School boards have the ability to levy for any additional revenue limit authority, with the state providing support either through general school aids or the school levy tax credit to fund school district operations and reduce the local levy. This method allows for some combination of state and local contribution to K-12 funding.

7. The basic concept of equalizing the fiscal capacities of school districts has been promoted through the equalization formula since 1949. The formula uses equalized property valuations per pupil to measure fiscal capacity. To equalize the tax bases of school districts, districts with lower per pupil property values receive a larger share of their costs through the formula than districts with higher per pupil property values. In the 2016-17 aid year, the district with the highest property value per pupil had 49 times the property value per pupil as that of the lowest district. The district at the 90th percentile had over three times the property value per pupil of the district at the 10th percentile. In the absence of a significant commitment to tax base equalization, it would be difficult, if not virtually impossible, for districts with the lowest property values per pupil to provide a reasonably equal educational opportunity for students as districts with the highest values could.

8. The school levy tax credit could be characterized as neutral with regard to equalization, given that the levy reduction under the credit generally is proportionate for all districts and produces a similar reduction in tax rates. Relative to general aid, school levy tax credit funding could be viewed as favoring taxpayers in districts with relatively higher spending levels and higher per pupil property values. Because these districts receive relatively less equalization aid, more of the cost of operating these districts is funded from property tax levies. Because the school levy tax credit is allocated based on each district's school levy in proportion to statewide levies, these districts receive relatively more school levy tax credit funding than districts that have more of their costs supported from general aid.

Which means that under Walker's budget, poorer districts with stagnant populations are likely not to do as well as the richer districts with growing student populations, which will likely expand disparities in educational outcomes even further.

Given that many GOP legislators represent poorer, rural districts, especially in the State Assembly, this is where the conflict is coming in. In Beck's Friday article in the State Journal, she describes how Assembly Republicans want to move some of the addtional money Walker earmarked to increase per-pupil aids by $200 a student in year 1 and another $204 in year 2, and put it into General K-12 aids. The Assembly GOP plans also wants to allow low-revenue districts to raise their taxes more without having to go to referendum.

Walker’s 2017-19 budget calls for an increase of $649 million for school districts on a per-student basis. The Assembly proposal would provide $90.8 million less for that funding source. (actually, the LFB says per-pupil aids are only $505 million of the $649 million, but that $505 million would go down by $90.8 million, if I read Beck right)

The Assembly also adds $92.2 million more in revenue limit authority for school districts that spend less than most others and adds $30 million more for the state’s general funding mechanism for schools than what Walker has proposed...

The Assembly’s proposal would increase the per-student amount by $150 in the 2017-18 school year and by $200 in the 2018-19 school year.

“The way the governor proposed it (the per-student increase) went to everybody, so I guess the differences comes down to if you believe there has been an inequity in the state over the last 24 years that the formula has been in place,” Nygren said. “At some point you have to fix it.”

There's also another K-12 education program that's been causing inequity in the Age of Fitzwalkerstan- the increasing amount of money being put into vouchers for students to attend private schools while funneling that money away from public K-12 schools. And the LFB released numbers late last week that say this funneling to vouchers is going to be much larger than Walker's bill claimed it would.

The reason why is that Walker's budget bill underplayed how many students are actually using vouchers statewide, which takes money away from those other school districts, and reduces the total amount of General Aid that goes out statewide. Walker's bill claimed only 4,400 students would be using vouchers outside of Racine and Milwaukee in 2018-19, but the LFB says that number will be 5,600 - more than 25% higher than Walker claimed it would be.

For the statewide program, preliminary application data indicates that participation in 2017-18 and 2018-19 will be higher than was estimated under the bill, as shown in Table 2. Based on the above estimates, total GPR required for the [voucher] program would increase by $6,170,200 GPR in 2017-18 and $9,523,200 GPR in 2018-19 relative to the amount provided in the bill. The aid reduction [for public K-12 General School Aids] would increase by $5,976,300 in 2017-18 and $11,473,100 in 2018-19.

In other words, K-12 General Aids will be $17.45 million less than Walker's budget claimed, due to vouchers. Yes, some of this reduction will be made up by the fact that Charter schools aren't getting as much enrollment as planed (which takes $6.81 million from that program and gives it back to K-12 General Aids), but that's still a $10.6 million drop for K-12 public school aids vs the already near-zero increases in the Walker budget.



And with some of that $10.6 million cut coming in 2017-18, that means the state is on track to cut General Fund aids for the next school year under Walker's budget. Sure, that is likely to be made up by the proposed increase in per-pupil aids, but if you're a stagnant or declining-enrollment district in a low-tax base area (aka, many mid-size rural districts in Wisconsin), you are not going to be better off next year.

Now you can see why Assembly GOPs are trying to modify some of this ahead of the next school year, because the already-underfunded public schools in Wisconsin aren't going to be made much better off under Walker's pre-election one-time boost to public education, and their constituents will see it firsthand over the next year. Add in the fact that vouchers are an even bigger drag on public school funding than we already knew, and once that reality hits home, there won't be enough dirty money from the DeVoses and Scott Jensen out there to bail them out of this - not after 8 years of neglect.

So an already-sketchy, house-of-cards Wisconsin budget just has hit another problem in the last month of Fiscal Year 2017. And with stagnant job and population growth in an aging state, there isn't any extra money lying around to bail out Scotty or WisGOP. Ruh roh.