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School Funding: Seeing the Big Picture 2007 WASDA Annual Education Conference

School Funding: Seeing the Big Picture 2007 WASDA Annual Education Conference. Brian Pahnke, Assistant State Superintendent Department of Public Instruction May 3, 2007. State School Aids/Credits and Property Tax Levy History 1993-94 through 2006-07.

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School Funding: Seeing the Big Picture 2007 WASDA Annual Education Conference

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  1. School Funding: Seeing the Big Picture2007 WASDA Annual Education Conference Brian Pahnke, Assistant State Superintendent Department of Public Instruction May 3, 2007

  2. State School Aids/Credits and Property Tax Levy History 1993-94 through 2006-07

  3. 2006-07 Top Ten GPR-Funded State School Aid Programs State School Aid Appropriation2006-07 Funding Level 1. General Equalization Aid* $ 4,620,413,400 • Special Education Aid $ 332,771,600 • Milwaukee Parental Choice Program (MPCP)** $ 110,517,000 4. SAGE (Class Size Reduction in Grades K-3) Aid $ 98,588,000 5. Integration Aid (Chapter 220) $ 89,048,400 6. Milwaukee/Racine Charter School Program *** $ 39,862,200 • Transportation Aid $ 27,292,500 • Special Adjustment Aid $ 13,281,100 • Bilingual-Bicultural Aid $ 9,890,400 10. Tuition Payments Aid $ 9,491,000 * Includes MPCP (45%) and MRCSP (100%) funds ** 55% of funding is from state and 45% from Milwaukee Public Schools (MPS) general equalization aid reduction *** 100% of funding is from general equalization aid reduction to all 425 school districts

  4. General Equalization Aids • General equalization aids contain three different components: General Equalized School Aids (2006-07 figures) • $4.62 billion (98% of total general aids) Integration (i.e. Chapter 220) Aids • $89.0 million (2% of total general aids) Special Adjustment (i.e. 85% Hold Harmless) Aids • $13.3 million (<1% of total general aids) • General equalization aids are received within district revenue limits, thus increases or decreases in such aids directly affect school district property tax levies. • General school aids may be used by districts for any purpose. • Changes in any one district’s “factors” affect distribution of aid in most other districts.

  5. General Equalization Aid Formula-Background • The current “school aid” formula’s goal is to distribute funding so that school districts that spend the same amount per pupil will have a similar tax rate, regardless of their property wealth per pupil. However, Wisconsin’s “school aid” formula does not seek to guarantee all districts will have the same tax rate; rather, it attempts to achieve the equalization of each district’s tax base. • State equalization aid is provided to make up the difference between a district’s actual tax base and the state guaranteed tax base at all three tiers of the formula. • There is an inverse relationship between equalization aids and property wealth as districts with the lowest valuations per pupil receive the highest percentage of state aid and vice versa. • The formula funds those school costs that would otherwise be supported by property taxes in the absence of state equalized aid.

  6. Three-Tier General Equalization Aid Formula General equalization aid is based on the following factors: District Factors (all from the prior year): • Membership • Pupils are counted in the district in which they reside • September/January average FTE count plus Summer School • Shared cost-Eligible aided costs that have not been offset by other revenue sources such as state categorical aid, federal aid or local (non-property tax) receipts divided by the # of FTE pupils. • Equalized valuation-Total district property valuation divided by # of FTE pupils. State Factors: • Amount of state aid distributed-The state has a single appropriation to fund its equalization aid formula with revenues coming from the state general fund. • State guaranteed property valuations and cost ceilings-State determined figures regarding property wealth and spending (shared cost) per pupil.

  7. 2006-07 Property Wealth Data Most Property Wealthy District North Lakeland--$6,117,800 per pupil Equalization aid--$0 per pupil Least Property Wealthy District Wauzeka-Steuben--$182,100 per pupil Equalization aid--$8,511 per pupil Statewide Average $483,000 per pupil Equalization aid--$5,323 per pupil 2006-07 Shared Cost Data Highest Overall District Geneva J4 (K-8)--$16,000 per pupil Lowest Overall District North Cape (K-8)--$6,912 per pupil 90th Percentile District Frederic--$10,643 per pupil 10th Percentile District Marion--$8,559 per pupil Statewide Average $9,169 per pupil 2006-07 General Equalization Aid Data

  8. Categories of Districts ReceivingGeneral Equalization Aid in 2006-07 CategoryNumber of Districts% of Total Positive Primary & Secondary Aid 11 2.6% Positive Primary, Secondary & Tertiary Aid 248 58.2% Negative Tertiary Aid 125 29.3% Primary Aid Only 31 7.3% Special Adjustment Aid Only 11 2.6% Total 426 100.0%

  9. 2006-07 General Equalization Aid Formula-% Aided CategoryNumber of Districts% of Total 0% of shared costs aided 11 2.6% 0-25% of shared costs aided 45 10.6% 25-50% of shared costs aided 66 15.5% 50-75% of shared costs aided 263 61.7% Above 75% of shared costs aided 41 9.6% Total 426 100% State average is 57% of shared costs aided by General Equalization Aid Formula

  10. 2006-07 General Equalization Aid-Facts and Figures • Overall, general school aids increased by $109 million over last year with 62% of the state’s school districts receiving more aid than last year. • Changes in state general school aid range from a 51% increase in general state school aid in one district (Brighton #1) to 47 districts receiving 15% less state equalization aid than they did a year ago. • On a statewide basis, membership declined by 0.1% with membership changes ranging from a 14% increase in one district (Brighton #1) to an 11% decrease in pupils in another (Belmont). • The district with the largest percentage increase in membership and largest reduction in property wealth per pupil had the largest percentage increase in state equalization aid (Brighton #1).

  11. Revenue Limits-General Information • In 1993-94, revenue limits were implemented to control increases in school property tax levies. • The purpose of revenue limits is to restrict the amount of revenue a school district can raise through local property taxes and state general school aids annually on a per pupil basis. State categorical aids, federal aids, local receipts and most debt service tax levies are not included in the revenue limit definition. • Each year revenue limits are allowed to be increased on a per pupil basis that is loosely tied to inflation and are based upon a district’s three-year full-time equivalent (FTE) rolling enrollment average. • Revenue limits are determined by each district individually and are not dependent on changes in other districts. • There are exemptions/adjustments for declining enrollment, unused revenue authority, transfers of service, reorganizations, community services, and for districts below the state-defined “low revenue ceiling”. • Revenue limits can be exceeded if approved through local referendum.

  12. Revenue Limits-Exemptions/Adjustments • Declining Enrollment-districts receive a non-recurring adjustment to their revenue limit in a dollar amount equal to 75% of what the decline in the three-year rolling average enrollment would have generated. • Unused Revenue Limit Authority-districts may carry-over 100% of any unused revenue limit authority from the prior year to the following year. • Transfers of Service-districts may receive increases and decreases to their revenue limit for transfer of service responsibilities between themselves and other districts or other local units of government upon approval from DPI. • Reorganizations-consolidating districts receive additional state general aid that is outside of their revenue caps for five years after consolidation. • Community Services-districts may adopt a separate tax levy for community service activities that have the primary function of serving the community, including swimming and community education programs, elderly food service programs, and adult education. Since 2001-02, these levies have been excluded from the revenue cap. • Low Revenue Ceiling-districts below a certain state-set figure may raise their per pupil revenues to that figure without having to go to referenda ($8,400 per pupil in 2006-07).

  13. 2005-06 Base Revenue Limit Per Pupil Highest Overall District Nicolet UHS (9-12)--$14,484 Lowest Overall District Rice Lake--$7,551 Highest K-12 District Green Lake--$11,712 2005-06 Base Revenue Limit Per Pupil 90th Percentile District Port Edwards--$9,691 10th Percentile District 20 Districts--$8,100 Statewide Average $8,710 2005-06 Revenue Limit Data

  14. Revenue Limits-Facts and Figures • Approximately 99.8% of overall school district revenue limit authority is used annually on a statewide basis, as usually less than $15 million (out of $7.9 billion in total revenue limit authority in 2006-07) is left unused. • Districts exceeding their revenue cap in any year are penalized under current law, resulting in the return of state general equalization aid to the state’s general fund in that same year. • In 2006-07, the $256.93 per pupil increase for all districts amounts to a roughly 3% increase in the base revenue for most districts. • In 2006-07, most districts eligible to use the “low revenue ceiling” chose to use all or part of this exemption to increase their revenues per pupil to $8,400. • In 2005-06, there were roughly 45 districts (all of which had declining enrollment) that had a final revenue limit less than what it was in 2004-05. • In 2006-07, 246 (58%) of the state’s 425 districts are eligible to receive the 75% declining enrollment exemption.

  15. Declining Enrollment School Districts

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