December Advocacy Tip: Why the Specifics Matter on School Funding Promises

AdvocacyAs we reported, Gov. Scott Walker recently reiterated his pledge to put additional money into public schools in the next state budget.  Senate Majority Leader Scott Fitzgerald and Assembly Speaker Robin Vos have also echoed those comments.

While that is very good news that school boards should be pleased to hear, it raises important questions school leaders should be raising with their state lawmakers, including newly elected ones, and with the governor as he works to develop his budget proposal: How much additional money and will it translate into actual resources school boards can use?

As school leaders we are in the education business, so we need to educate our elected policymakers about how school funding works and how their budgetary decisions impact our schools. Together we are partners with the state in educating our children.

1) How much additional money?

The question of how much additional money the governor might allocate to public schools will depend largely on how much revenue is available in the state’s general fund and whether the governor opts to commit that money to public schools or other competing programs.

Gov. Walker’s administration reported that expected state general fund revenues (derived mainly from state income and sales taxes) for the current fiscal year are expected to grow by 2.3 percent, which is less than the 3.6 percent they were previously estimated to grow.

The administration also recently reported that general fund revenues over the next two years will fall $693 million short of what state agencies, including the DPI, have requested to spend over that period. This shortfall is not an actual shortfall but a projection of the state’s fiscal picture if all agency requests were granted. History suggests state agency requests are seldom granted in full.

The governor uses these state agency requests to build his state budget proposal, which he will present to lawmakers in early February. Legislators may then make their own changes to the budget bill, approve it and send it to the governor for his approval. As part of that approval process, the governor can use his partial veto authority to modify what the Legislature sends him.

As we have written in the past (see also this story), a wild card in this discussion is how the governor and lawmakers solve the projected $940 million shortfall in the state’s transportation fund (derived mainly from gas taxes and vehicle registration fees).

2) Will that additional money allow school boards to increase their budgets?

The question of will the additional money allow school boards in increase their budgets is also complicated. It is possible to increase “state support” for public schools without actually providing more resources for school budgets. Through an archaic calculation, money added to the school levy credit, for example, is considered “state support” for public schools even though it doesn’t provide any budgetary increase for schools.

picture-revenue-limits-graphic

School district budgets are controlled by the state-imposed revenue limits. Revenue limits are the reason lawmakers can increase the amount of general aid for schools yet school budgets remain essentially frozen. If the per pupil revenue limit doesn’t increase, the additional state aid goes toward reducing property taxes, plain and simple. (See graphic above.)

There are good reasons why lawmakers are so fond of revenue limits.  As the Wisconsin Taxpayers Alliance notes, they “give lawmakers near total control over school revenues, other than those from Washington.”  Revenue limits also let lawmakers increase state aid while reducing property taxes at the same time, thus checking all the boxes voters want checked.

To get more money into school budgets without increasing property taxes, lawmakers must either increase revenue limits and general aid at the same time or increase the per pupil categorical aid payments to school districts.

Because lawmakers haven’t allowed increases in school district revenues to keep pace with inflation in recent years, we have seen record numbers of successful school operating referendums. As school leaders know, the only way school districts can exceed the revenue limits so the district can keep pace with inflation is by seeking voter approval of a referendum. We have to educate our lawmakers to make sure our lawmakers understand this, too.