Wisconsin Taxpayer Magazine Getting to the Heart of School Finance

October 2016  •  Vol. 84 No. October
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  • Summary
  • Press Release
  • School districts in Wisconsin are funded largely with a combination of state aid and local property taxes. The mix of these two revenue sources depends on district property wealth and student characteristics. School property taxes are indirectly controlled by the state through the revenue limit law. In 2015, 70% of school spending was for employee salaries and benefits.

  • Dale Knapp or Todd A. Berry

    K-12 Education Largest State-Local Government “Program”

    WISTAX Examines School Revenues, Spending

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    MADISON—At more than $11 billion, K-12 education is Wisconsin’s largest state-local government “program.” Yet, because of the mind-numbing complexity of school finance, few residents fully understand how K-12 education is funded, or how schools spend tax dollars. “Getting to the Heart of School Finance,” a new report from the Wisconsin Taxpayers Alliance (WISTAX), explains the basics of Wisconsin school finance. WISTAX is a nonprofit, nonpartisan research organization dedicated to citizen education.
    Wisconsin schools are funded with a combination of federal, state, and local taxes. In 2015 (the most recent year for complete figures), general school aids (40% of the total) and school property taxes (43%) comprised 83% of $11.1 billion in school revenues. A second, smaller form of state support—categorical aids—comprised 7% of the total. Help from the federal government was another 7%, while student fees and other local revenues accounted for the remaining 3%.
    At the district level, these funding percentages can vary widely. Districts with relatively little property to tax are given more state aid to help keep property tax rates equitable. Thus, they rely more on state general aid and less on local property taxes. The reverse is true for property-rich districts.
    During 2012-16, state-local school revenues increased modestly. General aids rose 5.0%, or an average of 1.2% per year (to $4.48 billion), while school tax levies were up 4.5%, or 1.1% per year (to $4.85 billion). State categorical aids increased 23.5%, or 4.5% per year (to $844 million), though 90% of that jump was due a new type of per pupil aid. Most categorical aids were either unchanged or cut during those years.
    The spending side of the ledger shows that salaries and benefits accounted for 70% of school spending in 2015. Debt service was another 6%, leaving the remaining 24% of expenditures for books, equipment, utilities, and like items.
    Looked at another way, 57% of school spending was for instruction—teachers, aides, books, and other classroom equipment. Instructional support—primarily library costs, staff training, and curriculum development—accounted for another 5% of spending.
    Costs to maintain buildings and grounds comprised 10% of spending, while debt service and large capital expenditures combined for another 7%. Administrative costs claimed 7% of the $11-billion spending total, while pupil services accounted for 4%. These percentages varied by district.
    In 2015, Wisconsin school spending rose 2.5%, the largest increase since a 4.0% increase in 2011. During 2012-14, per student spending either declined (2012 and 2013) or rose little (1.1% in 2014). Much of the decline was due to benefit savings related to 2011 Act 10, which involved changes in collective bargaining.
    The new WISTAX study also examined some of the impacts of Wisconsin’s school revenue limit law, which caps growth in the combination of state general aid and local school property taxes. One of the more surprising findings was the impact these limits have had on “equity” in funding. In 1994, the first year of the limits, fewer than one-in-three of districts were within 5% of the state’s average per student limit. By 2016, nearly 43% were “near” the state average. Much of the shift has come by “pushing up” from below. In 1994, about one-in-five districts were more than 10% below average; by 2016, less than 1.5% were that far below the statewide norm.
    For more information, a free copy of The Wisconsin Taxpayer report, “Getting to the Heart of School Finance: Understanding Wisconsin’s Thorniest Issue” is available by calling 608.241.9789; emailing wistax@wistax.org; visiting www.wistax.org; or writing WISTAX at 401 North Lawn Ave., Madison, WI 53704-5033. o



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