Wisconsin

The state of Wisconsin education finance in 2013 might be characterized as the persistence of hard times for school districts. After the largest reductions in education aid in state history that resulted in unprecedented reductions in Wisconsin’s teaching workforce, school districts received a meager increase of 1% for FY 2013. Although the state realized a one-time revenue surplus through such dramatic cuts, the Wisconsin economy has struggled with one of the slowest rates of post-recession job growth in the nation, currently ranked at 38th out of the 50 states in private sector job creation. With the recent enactment of the 2013–2015 biennial budget, Wisconsin school districts face at least two more years of hardship.

The Structure of State Aid in Wisconsin

Wisconsin is the only state in the nation to still use the guaranteed tax base formula, referred to in Wisconsin as the “equalization formula,” as its sole distribution mechanism for basic aid. Basic aid is computed via a complex, three-tier guaranteed tax base formula in which the first tier resembles a flat grant, and the second operates like a foundation without a minimum local tax effort. The third tier most closely resembles a true guaranteed tax base approach; it also contains a “negative aid” feature, which, on paper, acts like a recapture provision.

For FY 2013, basic state aid was $4.31 billion. In FY 2014, it will increase 1.12% to $4.36 billion, an average increase of $100 per pupil. However, preliminary estimates indicate that over half of school districts will see a decline in basic aid. In FY 2015, basic aid will increase 1.71% to $4.43 billion, an average increase of $150 per pupil. No changes in the structure of the basic aid formula were made for the 2013–2015 biennium.

State funding also includes 29 categorical aid programs, which totaled $653.9 million in FY 2013. Special education was the largest categorical aid program at $372.4 million, over half of total categorical aid. In FY 2014, categorical aid will rise 3.5% to $680.8 million, and, in FY 2015, it will increase 9.7% to $749.9 million. In general, new funds will be distributed as across-the-board increases. Although these percentages are much higher than those for basic aid, it should be noted that categorical aid comprises only 12% of total state aid to school districts.

Private School Voucher Funding and Tuition Tax Reductions

Wisconsin’s current governor is a conservative Republican with a strong pro–private education agenda. Republican majorities in the legislature have been instrumental in his success in expanding the state-funded private school voucher program and its funding. In FY 2011, the voucher program was expanded from Milwaukee, where it originated, to include Racine, and family income eligibility requirements were eased. In FY 2014, the voucher program will become statewide. In FY 2015, state funding for vouchers will increase dramatically. In FY 2013, state funding for vouchers was $6,442 per pupil, regardless of grade level. In FY 2015, funding for K–8 students will rise 11.9% to $7,210; for grades 9–12, it will be $7,856, an increase of $1,414 per pupil, or 21.9%.

In addition, a state income tax deduction for private P–12 school tuition will take effect in FY 2015. All parents, regardless of income, will be eligible for a tax deduction of $4,000 per K–8 student and $10,000 per student in grades 9–12. An annual loss of $30 million in state income tax revenues is estimated.

Conclusion

State Issues Affecting P–12

• • Sluggish state economy, with public education funding disproportionately affected

• • Conservative Republican governor with a strong pro–private education agenda

• • Republican majorities in the state legislature

Funding Priorities/Trends for the 2013–2015 Biennium

• • Expansion of private school vouchers from Milwaukee and Racine to entire state

• • Substantial increase in per-pupil state funding of vouchers

• • Creation of private school tuition tax deduction for parents, regardless of income

Changes to Funding Formula for P–12 Public Education

• • No changes

Impact on School District Budgets

• • Historic state...