Tech. College Funding Shift Masks 25 Percent Cut in Higher Ed Support Since 2008
Wisconsin cut state support for higher education by 8.3 percent this year, or $603 per student. As the following graph illustrates, only Arizona cut state funding for higher education by a larger percentage.
In contrast to Wisconsin, most states have been taking advantage of the national economic recovery to increase support for higher education and restore some of the funding cut during the recession. The bar graph from a new report by the Center on Budget and Policy Priorities (CBPP) shows that Wisconsin was one of just 11 states that cut its support for higher education in the current fiscal year, relative to fiscal year 2015, and almost all of the other cuts were far smaller. Read more
A change in federal Medicaid policy announced in February creates an exciting opportunity to improve health care for Native Americans. It’s an opportunity that Wisconsin tribes and state officials should seize in order to help alleviate the extreme disparities in health between Native Americans and whites in Wisconsin.
The revised interpretation of Medicaid reimbursement policy expands the scope of health care services for Native Americans that are fully paid for by the federal government, without the usual requirement for state matching funds. In the past, the federal government paid 100% of the cost of Medicaid services provided directly by Indian Health Services (IHS), but not for health care provided outside of IHS facilities. Under the new policy, federal funding will also cover the full cost of Medicaid services delivered to American Indians by providers under contract with IHS, if IHS or a tribal practitioner refers the Medicaid patient and continues to oversee their care. Read more
Wisconsin’s middle class, while still one of the largest in the country, is shrinking. Most of the loss has occurred as people fell out of the middle class to the lower income tier, rather than climbing into the upper tier.
In Wisconsin, 62.5% of residents were in the middle class in 2000, the second largest share of any state, according to a new report from Pew Research Center. By 2014, Wisconsin’s middle class had shrunk to 57.2% of residents and Wisconsin’s rank for the size of our middle class had dropped to 4th.
Wisconsin needs a strong middle class in order to thrive economically. Businesses need a large middle class, bolstered by broad-based income growth, to generate customers. The middle class is at the heart of Wisconsin’s workforce, and decisions made by the middle class drive public investments in Wisconsin’s schools and communities. Pew defines the middle class this way: “Middle-income Americans are adults whose size-adjusted household income is two-thirds to double the national median size-adjusted household income.”
The fact that Wisconsin’s middle class is shrinking is a problem, one that we share with nearly all the other states. Read more
Governor Walker has delayed a payment on the state’s debt, pushing costs off into the future and increasing the amount of interest the state will have to pay. Postponing debt payments can be a helpful tool to manage budget shortfalls, but Governor Walker hasn’t released information indicating why the delay was necessary.
Instead of making a $101 debt payment that was due in May, the state skipped the payment and restructured the debt to be repaid over the next eight years. (State law allows the governor to restructure certain types of debt without getting the approval of legislators.) This move reduces spending in this fiscal year, but raises future costs in two ways:
- By increasing the amount of principal that must be repaid in future years. Spreading out the $101 million cost over the next eight years will raise payments on the debt principal by $12.6 million for each year between 2017 and 2024.
Three years ago, Minnesota implemented a new, higher income tax bracket aimed at requiring wealthy Minnesotans to pay their fair share. Now, new figures show that the number of very rich taxpayers in the state increased in the period after the tax increase – not decreased, as detractors predicted would happen.
This article in the Minnesota StarTribune sums up the results:
“Critics predicted that the ultra-affluent would flee after Gov. Mark Dayton secured 2013 passage of a new income tax tier of 9.85 percent on individuals who make more than $156,000 a year. But the latest data show that the number of people who filed tax returns with over $1 million in income grew by 15.3 percent in the year after the tax passed, while the new top tier of taxpayers grew by 6 percent.”
The tax increase on top earners helped Minnesota make investments in the state’s schools, communities, and infrastructure. Read more
Wisconsin is committing a shrinking share of its resources for education to making sure that students have access to an excellent education regardless of whether they live in a poor community or a wealthy one.
The state funds about 62 cents out of every dollar spent on public education in Wisconsin, with the remaining amount raised from the property tax in each district. The variation in property tax values means that school districts with low property values would need to use higher tax rates to raise the same amount of money for education as wealthier districts with high property values.
To help address that imbalance, the bulk of the money the state provides for K-12 education is distributed through a formula aimed at insuring that school districts with low property values are able to provide students with the same high-quality education as property-rich districts. Outside of the equalization formula, the state provides additional support for school districts that is allocated on a flat per-student basis, and also provides money to school districts to pass through to residents in the form of lowered property taxes. Read more
Data from Sean F. Reardon, Demetra Kalogrides, Andrew Ho, Ben Shear, Kenneth Shores, Erin Fahle. (2016). Stanford Education Data Archive. http://purl.stanford.edu/db586ns4974. Read more
Regularly putting money into the state’s Rainy Day Fund during periods of sustained economic growth helps build up a budget cushion on which the state can rely to cushion the impact of recessions and avoid harmful budget cuts. But before 2011, Wisconsin’s Rainy Day Fund sat mostly empty.
In 2011, 2012, and 2013, the state deposited money into the Rainy Day Fund when tax revenues came in higher than anticipated, building the balance to $280 million. But lawmakers made no deposits to the fund in 2014, 2015, or in 2016 so far. They pushed aside a requirement that part of higher-than-anticipated tax revenues be deposited in the Rainy Day Fund, and instead passed new tax cuts and allowed existing tax cuts to grow. Some of those tax breaks benefitted large corporations and taxpayers with high incomes.
There’s no hard-and-fast rule about how big a state’s Rainy Day Fund should be, but the Government Finance Officers Association recommends that states have at a minimum of 5% to 15% of annual general revenues set aside. Read more
Wisconsin residents strongly favor raising taxes on the wealthy and large corporations to reduce income inequality, a new poll shows. But instead of raising taxes on these groups, Wisconsin lawmakers have taken steps to give significant tax breaks to taxpayers with high incomes and corporations.
Two-thirds (66%) of survey respondents support raising taxes on the rich and big businesses, according to the spring 2016 Wisconsin Survey conducted by the Strategic Research Institute at St. Norbert College. Another 28% of respondents did not support raising taxes, and seven percent weren’t sure.
The poll results show that Wisconsin residents are alarmed about growing levels of income inequality and the widening chasm between the highest earners and everyone else. Wisconsin residents are right to be concerned. The share of income in Wisconsin going to the top 1% has reached its highest level ever, exceeding even levels reached prior to the Great Depression, and has more than doubled over the last 40 years. Read more
New tax collection figures released yesterday by the Wisconsin Department of Revenue (DOR) show a nice upturn in revenue in March, and that comes as a relief after a worrisome drop in February. After the rebound last month, the state is only modestly (0.4%) below the growth rate for the current fiscal year that the Legislative Fiscal Bureau projected in January.
According to the new DOR data, General Fund tax collections grew by $55 million last month, compared to March 2015, an increase of 6.2%. That follows a drop of $91 million (14%) in February. Read more