Governor Walker has proposed significantly increasing resources for Wisconsin’s public schools, a move that has gotten a great deal of attention – and has attracted some controversy for the size of the increase. But his budget also includes a major increase in the amount of public money that goes to pay for private school tuition, a fact that has been mostly overlooked.
Through the state’s private school choice program, Wisconsin uses publicly-funded vouchers to pay tuition at private schools across the state. To participate in the program, students must have family incomes of up to 300% of the poverty level if they live in Milwaukee or Racine (about $73,000 for a family of four) or of up to 185% of the poverty level if they live in the rest of the state ($45,000 for a family of four). About 36,000 students are expected to receive publicly-funded vouchers to pay for private school tuition next year. Read more
Governor Walker has proposed a back-to-school sales tax holiday, a gimmick that would reduce the resources available to support Wisconsin’s schools, university system, and communities, without providing any real economic benefit.
Under the proposal, purchases of school supplies, computers, and clothing would be exempt from the sales tax for one weekend in August. This move would cost the state an estimated $11 million a year in lost tax revenue, and local governments an additional $750,000 a year in lost revenue. This reduction in revenue would make it harder for Wisconsin to make the kinds of investments in education, health, and workforce systems that can spur economic growth.
A sales tax holiday would do little to boost consumer spending or give a tax break to Wisconsin families with low incomes. There are a whole host of downsides to a sales tax holiday, including:
- Instead of encouraging consumers to spend more money, sales tax holidays simply shift the timing of the spending;
- A sales tax holiday on back-to-school items involves lawmakers picking winners and losers among types of goods that should be exempt from the sales tax;
- Sales tax holidays are not an effective tool for giving a tax cut to individuals with low incomes, since a large amount of savings is also given to people in higher income groups as well.
Governor Walker has proposed increasing the state’s Earned Income Tax Credit for some families, a move that would improve child well-being and expand economic opportunity for families with low and moderate incomes. He included the measure in his proposal for the budget period that runs from July 2017 to June 2019.
Expanding Wisconsin’s EITC would give a much-deserved break to working parents with low and moderate incomes. The EITC lets working families keep more of what they earn to help meet basic needs and pay for things that allow them to keep working, such as child care and transportation. This tax credit offers working parents a hand up by encouraging and supporting work. It’s a modest investment that can make a big difference in the lives of families.
The EITC also boosts local communities and economies across the state. It puts more money in the pockets of low-wage workers, who then spend it at local businesses to pay for things like groceries and child care. Read more
$190 Million Annual Savings + Threats to Federal Marketplace = Stronger Case for Expansion
There are many reasons why it makes sense for Wisconsin to modestly increase the eligibility ceiling for BadgerCare. A new memo by the Legislative Fiscal Bureau (LFB) sheds light on and strengthens one of those reasons – the large savings for Wisconsin from increasing the BadgerCare eligibility standard for adults.
Ironically, the ongoing efforts to repeal or undermine the Affordable Care Act (ACA) may also bolster the case for expanding BadgerCare, since the individual insurance Marketplace created by the ACA was Governor Walker’s rationale for sharply reducing BadgerCare eligibility. But let’s come back to that point after taking a closer look at the fiscal effect of expansion.
Under the Affordable Care Act, states that expand eligibility of adults to 138% of the federal poverty level are eligible for substantially higher federal cost sharing. Taking that step would qualify Wisconsin for reimbursement of at least 90% federal funding for the costs of covering childless adults, compared to the 58% reimbursement rate in effect now. Read more
Missed Opportunity: Proposed Performance Measures for UW System Won’t do Much to Open Doors for Underserved Students
Governor Walker has proposed a modest increase in state support to the UW System in the 2017-19 budget period, with the additional resources to be distributed among campuses based on how well they score on a certain set of criteria. Those measures could penalize institutions that have been most effective in enrolling underrepresented students and provide a disincentive for campuses to admit low-income students, first-generation students, or other students who may take longer to graduate.
Wisconsin is one of several states moving to outcomes-based funding as a way of distributing some higher education funding among institutions. In his budget proposal, Governor Walker proposed adding $43 million over two years in new funding for the UW System, to be distributed among the institutions using the following set of criteria:
- Affordability and attainability of degrees (used to distribute 30% of the performance-based funding);
- Student success in the workforce (30%);
- Student work readiness (15%);
- Operational efficiency (10%);
- Outreach (5%); and
- Two additional criteria to be set by the Board of Regents (10%).
Governor Walker has proposed significantly increasing state support for public schools, but the bulk of the increase would be distributed to school districts in a way that does not take into account the challenges faced by districts with high numbers of students coming from families with low incomes.
We don’t yet have the full details on what the Governor is proposing for the state’s education budget, but he released a brief summary earlier this week. His budget proposal includes additional funding at aimed addressing the challenges of rural schools, increasing student achievement in summer school programs in Milwaukee, and helping school districts connect students with disabilities to employment. (Read more about his education proposals in this AP article: Walker Proposes Big $649 Million Boost for K-12 Schools.)
By far the biggest component of the education proposal is an increase in the amount of financial support that the state provides to school districts. Read more
Mediocre Revenue Projections Beat the Low Expectations
A modest upturn in the state revenue projections and a significant reduction in state spending estimates have created a much better outlook for the state budget.
Before elaborating on the latest numbers, which were released by the Legislative Fiscal Bureau (LFB) last week, I have to admit that the new state tax collection numbers are considerably better than I expected when I wrote a very cautionary blog post about the next state budget a week or so ago. This is one of two recent occasions (along with my prediction that the Packers would lose to Dallas) when I am very happy to have been wrong.
Although the new revenue forecasts are also significantly better than the Department of Revenue projected two months ago, they are nothing to brag about. In fact, the latest tax collection estimate for the current fiscal year is $281 million less than the estimate that the biennial budget bill was based on. Read more
1. Compared to other states, Wisconsin has a lean public sector
Wisconsin had 2.1% fewer state and local government employees than the national average in 2015 given our population size, according to a new analysis from the Wisconsin Budget Project. Wisconsin had a leaner public sector than all but 15 states. Read more