Friday, July 13, 2007

The GOP's School Funding Shell Game

***UPDATED BELOW***

When the GOP budget was being debated on the Assembly floor earlier this week, Rep. Sondy Pope-Roberts (D-Madison) commented on the cuts to K-12 education in the budget, and Rep. Brett Davis (R-Oregon) responded that the GOP proposal includes $464 million in new money for schools while Governor Doyle's budget only includes $448 million.

Really? Well, it depends on how you define "money for schools."

According to a LFB memo released yesterday, it's true that the GOP budget spends $16.3 million more in what's typically defined as "support of K-12 education." But, at the same time, the GOP budget would actually send $83.7 million less to schools than the governor's budget.

The issue is that state support of K-12 education comes in four ways:
  1. General school aids
  2. Categorical aids
  3. School levy tax credits
  4. State residential schools
The GOP budget and Doyle's budget spend the same on state residential schools and virtually the same on categorical aids (the GOP budget spends $1.6 million more). On general school aids, however, Doyle's budget spends $85.4 million more than the GOP budget, while on school levy tax credits, the GOP budget spends $100 million more than Doyle's budget.

That all washes out into a $16.3 million lead for the GOP budget; but, the thing is, school levy tax credits aren't actually spent on the schools. These are payments made to municipalities based upon a formula that considers (see page 33) a municipality's three-year school levy average in relation to the average statewide municipal three-year school levy average.

The municipalities then pass this credit on directly to their property taxpayers; none of it goes to the school districts. So the $100 million more that the GOP budget spends on the school levy tax credit than Doyle's budget is really a property tax cut, not an increase for the schools.

And that's fine; in fact, I'm sure most property taxpayers would cheer it on the surface. Except it's not funding for schools, as Rep. Davis and other conservatives have made out, and the fact is the bulk of that $100 million is coming on the back of $83.7 million less in overall state aid to schools.

It seems the GOP wants to have its cake and eat it, too, on this one. But, as with trying to eat a cake twice, you just can't take credit for cutting costs and improving on the services that those costs would've funded.

UPDATE (7/16): I was wrong. The shifting of funds from general aids to the school levy credit in the GOP budget wasn't an attempt to short K-12 education as a whole. Based upon my understanding now, the effect actually will be to short property-poor districts and benefit property-rich districts based upon the way the levy credit is dolled out in relation to the distribution formula for equalization aid.

Check out the comments for more.

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11 Comments:

Blogger Dad29 said...

Won't make any difference.

There will be no cops, no firefighters, and no statewide child-abduction alarm system remaining in the whole State.

Who cares about schools?

July 13, 2007  
Blogger James Wigderson said...

Thanks for the clarification.

Sondy Pope-Roberts still has yet to release her "secret plan" to fix the school funding formula.

July 13, 2007  
Anonymous Anonymous said...

Actually, this is all a shell game. Revenue caps determine how much school districts have to spend. Whether or not democrats or republicans increase general school aids has no effect on the dollars districts have to spend. Increasing categoricals does allow districts to spend more, but those aids are small relative to general (equalization) aids. Increasing equalization aids only reduces the school property tax. It has the same effect as increasing the school levy credit. So while both parties can argue about how much they are spending on education, the fact is that what they are arguing about has no effect on school spending.

July 13, 2007  
Blogger Dad29 said...

Anony, that's the POINT of the ridiculously complex school-aid formulations in Wisconsin.

Both parties can score points, using identical numbers.

For them, it's not about the kids, any more than it's "about the children" for WEAC.

July 14, 2007  
Blogger Seth Zlotocha said...

It's true, Anon, that revenue limits impact the value of general state aids; but to say that general aids are the same as the school levy credit is wrong, at least in the context of the GOP budget.

The levy credit is passed on directly to property taxpayers, while the general aid actually goes to the schools. The difference there is important because under the GOP budget local governments would be placed under strict property tax levy limits that wouldn't allow them to make up the loss to general aids under the GOP budget. In addition, the GOP budget includes a stricter revenue limit per pupil, which further restrains funds for K-12 schools.

I should've included this discussion in my post, and I'm glad you pointed it out. But the bottom line is the same -- the GOP budget provides less for K-12 schooling than the Dem budget, and the GOP choice to put money in the levy credit as opposed to general aids plays a roll in that.

July 14, 2007  
Anonymous Anonymous said...

Seth,
You said "The levy credit is passed on directly to property taxpayers, while the general aid actually goes to the schools. The difference there is important because under the GOP budget local governments would be placed under strict property tax levy limits that wouldn't allow them to make up the loss to general aids under the GOP budget."

You are right that local governments (municipalities and counties) would be placed under tax limits. However, those limits don't apply to schools, which remain under revenue caps. And, under revenue caps, increases in general state aid ultimately act the same as the school levy credit, they are passed on to property taxpayers in the form of lower taxes. For example, consider a district with a $1 million budget (revenue cap limit) that gets $600K in state general aids. That means it levies $400K in property taxes. If aids are increased $100K, the $1 million total remains the same, but property taxes fall by $100K. That is the same as leaving aids at $600 (no increase) and raising the state levy credit by $100K.

You do make a good point about the reduced revenue limits in the republican budget. This will affect school districts and the amounts of money they have to spend. The proposed limits are based on the health insurance benefits provided. Thus, if a district offers something similar to what the state offers, their limit is the same under the republican and democratic budgets - i.e. there is no effect. For those with benefits greater than what the state offers, they get a smaller increase. I guess it's an incentive to try to force disctricts to reign in benefit packages.

July 16, 2007  
Blogger Seth Zlotocha said...

I see your point, Anon. I was working under the incorrect assumption that the municipal levy included the school district levy. Thanks for pointing that out.

But there must be some difference between putting money into general aids vs. the school levy credit. Why else would the GOP bother shifting the funds around?

Based on the way the levy credit and general aid are dolled out, it seems the levy credit would benefit property-rich districts more because distribution is based solely upon levy amount rather than also taking into consideration district membership as equalization aid distribution does.

So it seems I was wrong. The shifting of funds into the levy credit in the GOP budget wasn't an attempt to short K-12 education as a whole; rather, it was an attempt to short property-poor districts and benefit property-rich districts.

July 16, 2007  
Blogger Xoff said...

Or, a cynical person could say, to shift the money from Democratic school districts to Republican districts.

July 16, 2007  
Blogger Seth Zlotocha said...

Yeah, in the urban/suburban areas, at least. But a lot of conservative property-poor rural communities would be hit by this, too. Seems to me it's a backhanded way of further moving away from two-thirds funding and, more generally, equalization; communities, in the conservative mindset, just need to pull themselves up by their bootstraps just like individuals.

July 16, 2007  
Anonymous Anonymous said...

Seth,
I'm not sure if "short" is the correct term here. If money is put into the credit, everybody sees the same percentage decrease in property taxes. For example, it the levy credit was increased $100 million above its current $593 million, each school district's net levy (levy minus the total credit coming to that district) would drop about 3.7%. In fact, the decline would be the same for everyone. However, if that same $100 million were put into general aids, levy changes would vary depending on property values and on how much the district spends. That's where the difference in philosophy comes in. Should everyone get the same property tax cut, or should it depend on a formula as convoluted as the state aid formula.

July 16, 2007  
Blogger Seth Zlotocha said...

Relative to what property-poor districts would've been getting if the money was put into general aids, putting the funds into the levy credit is shorting them.

The money that each municipality gets through the levy credit is based upon the municipality's average school levy over the past three years divided by the total school levy statewide, and that figure is then multiplied by the total school levy credit available for that year. That means districts with a higher levy amount will get more of the credit than districts with a smaller levy. That makes sense, except for the fact that higher levy amounts doesn't always mean more students -- for instance, a district like Whitefish Bay is going to have a higher levy per pupil ratio than a district like MPS, therefore its levy credit per pupil also will be higher. Conversely, if the money went into equalization aids, district membership would be taken into consideration alongside the levy amount when determining who gets the money from the state, and a district like MPS would get more per pupil than Whitefish Bay.

And, yes, it does come down to philosophy -- do we want our state dollars for K-12 education going to equalize school funding as much as possible, or do we want those dollars to function in the same uneven way as local funding where property-rich districts get more and property-poor districts get less?

July 16, 2007  

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