Several themes heard at Blue Ribbon Commission hearing in Tomahawk

The Blue Ribbon Commission on School Funding held its seventh public hearing yesterday in Tomahawk and a number of themes emerged.

One common theme is that many northern Wisconsin school districts are challenged by declining enrollment.  This has two main effects: first, it reduces districts’ revenue limit authority because revenue limits are tied to enrollment; and second, as the number of pupils decreases, at any given level of property values, a district will appear more property wealthy on a per pupil basis, which results in that district losing state aid under the general aid formula. 

Declining district revenues under revenue limits in turn causes districts to ask voters to approve operating referendum in order to maintain programs and staff for students or address maintenance that has been deferred in order to maintain programs and staff.  Once a district receives voter approval, it often finds itself in a continuing cycle of having to ask voters for additional revenue limit authority, particularly if enrollment continues to decline.

Compounding the challenges for districts caught in this cycle are the twin problems of: (1) declining state aid, which forces a greater share of district expenses onto the property tax; and (2) the relatively modest incomes of the full-year residents of many northern districts, which may make those residents hesitant to vote to raise their taxes.

Due to new limitations that require districts to schedule referendums in conjunction with regularly scheduled primary and general elections and restrict school districts to only two referendum questions per calendar year, several northern districts indicted they plan to switch from a three-year to a four-year referendum cycle in order to be able to put referendum questions to district voters in even-numbered years.  That will give them a second chance should voters not approve a ballot question the first time around.  Several districts  asked the Commission to recommend allowing school referendums to be held in the fall of odd-numbered years (in effect restoring language vetoed from the 2017-19 state budget).  This would allow a second chance for a vote in an odd-numbered year and eliminate the need to schedule operating referendums only in even-numbered years.

Another issue for northern Wisconsin districts is their sheer size and geography, which causes school busses to travel relatively longer distances to get around lakes, rivers and forest lands as they transport students to and from school.  It is not uncommon for these districts to spend $1,000 per pupil or more on transportation.  While the state provides both basic pupil transportation aid and high-cost transportation aid to help defray a portion of these costs, this state portion is small.  Recent figures from the nonpartisan Legislative Fiscal Bureau show that while the state currently allocates $36.7 million in its two pupil transportation aid programs, statewide costs just to get kids to and from school totaled $350 million.  Thus, on average, the state is directly covering about 10.5 percent of those costs.  The rest comes from local school district budgets.  Not surprisingly, several districts urged that high-cost transportation aid be increased.

Since the 2008-09 school year, the state has provided additional funding for small, rural districts outside of their revenue limits through sparsity aid, as a way to lessen certain challenges experienced by rural districts with both a small pupil membership and a sparsely populated area.  Currently, small, rural districts with fewer than 745 pupils and fewer than 10 pupils per square mile are eligible to receive sparsity aid equal to $300 multiplied by the school district’s membership in the previous school year.  (Recent legislation will increase those payments to $400 per pupil next year.)

Many larger enrollment districts also serve sparsely populated areas and at the Tomahawk hearing, they asked the Blue Ribbon Commission to raise (or lift entirely) the enrollment cap on Sparsity Aid. They argue that a sparse pupil population increases expenses for districts, regardless of the district’s total pupil population.

This idea of expanding sparsity aid eligibility is not new.  Back in 2014, the Speaker’s Rural Schools Task Force issued a report recommending that: (a) the appropriation for the sparsity aid program be changed from a sum certain to a sum sufficient appropriation; (b) sparsity aid eligibility be expanded to allow districts with pupil membership of up to 1,000 pupils to receive aid; and (c) districts with pupil membership of up to 2,700 pupils and a population density of less than seven (7) pupils per square mile to qualify for a reduced amount of aid.  In his 2017-19 state budget proposal Gov. Walker proposed expanding eligibility for a reduced dollar amount ($100 per pupil) of sparsity aid for school districts with membership between 745 and 1,000 pupils and fewer than 10 pupils per square mile.

Three Lakes Board member Terry McCloskey thanked lawmakers for the funding increases they provided in the recently completed legislative session and urged the Commission to distinguish between “programmatic” sparsity and “geographic” sparsity.  “Programmatic” sparsity results from a lack of economies of scale.  In districts with low enrollment, fixed costs are spread across fewer pupils, and class sizes in required courses may be so small as to further increase per pupil costs.  In addition, declining enrollment in many small, rural districts further decreases the resources available under revenue limits, adding financial challenges to districts where enrollments are already low.  An example of “geographic” sparsity is that districts with low pupil density typically experience higher per pupil transportation costs as they are transporting a small number of pupils over a greater distance.

Because many of these districts have property wealth per pupil far above the state average and thus receive little or no general equalization aid, they urged the Commission to continue providing per pupil categorical aid, which districts receive outside the revenue limits.  Support was expressed by northern districts for continued annual increases in per pupil aid as well as for annual per pupil adjustments (increases) to revenue limits that together would provide all districts with a predictable, annual funding increase at least equal to the increase in the consumer price index (CPI).

Two other common themes expressed by representatives of northern school districts were that: the rate at which the state reimburses special education costs is too low; and that mental health is a huge issue needing more attention.

A number of districts testified that they were adding social workers to address unmet student mental health issues and/or were partnering with community organizations as well as law enforcement agencies and other first responders to look for ways to address these issues.

Special education categorical aids, the primary source of state funding to assist districts with special education costs, have been frozen at $368.9 million since the 2008-09 school year.  A January 2018 LFB memo found Wisconsin school districts picked up over $1.02 billion (63 percent) of special education costs in 2015-16. (Districts incurred $1.63 billion in special education costs in 2015-16, and received just over $600 million in state and federal special education aids and other offsets (e.g., Medicaid).

For northern districts that receive little or no general aid, these unreimbursed special education costs are paid for almost exclusively out of local property taxes.  Under revenue limits, these districts cannot raise property taxes without referendum approval so they must transfer funds from their regular education budget to special education to cover the shortfall.  One district submitted testimony that it has to transfer 13 percent of its general fund (Fund 10) each year to cover its unreimbursed special education (Fund 27) costs.

A number of northern districts noted difficulty in attracting and retaining teachers, especially young teachers.  Several made a plea for the state to relax statutory changes made in the 2013-15 budget that aimed to prevent so-called “double-dipping” but also effectively restrict or inhibit the rehiring of retired teachers and administrators.  Those provisions   limit  the number of hours a rehired retiree can work before their receipt of retirement  payments is automatically suspended.  Noting that the Northwoods is home to many retirees, several northern districts said relaxing those restrictions would help them fill positions with qualified personnel.