One Year Later: Big Changes to School Financing

Tuesday, July 3, 2012 at 10:00 PM by

Big Change #1: Schools Are Laying off Teachers and Disparities between Districts Are Widening

Wisconsin has long relied on a well-educated workforce as one of the foundations of the state’s economy and has made very substantial investments in our public education systems. In recent years, state support for K-12 education has accounted for about two-fifths of Wisconsin’s General Fund spending.

The magnitude of the state’s investment in public schools helps explain why, after deciding to balance the budget solely with spending cuts, Governor Walker chose to make deep cuts in school aid a key part of his budget plans. The Governor used a three-pronged strategy to cut both state and local support for public schools:

  • Changes to public sector labor laws and pension system financing that sharply reduce the benefits and overall compensation of public employees, including teachers (and also sharply reduce the power of public sector unions).
  • Cuts in school aid of about $792 million over two years, with $749 million of that coming from equalization aid. (According to an analysis by the Center on Budget and Policy Priorities, the cut in 2011-12 was the second-largest in the country when measured on a dollars-per-student basis.) 
  • A reduction of 5.5% in the revenue cap for each district, which limits the total of a district’s local property taxes and state equalization aid.

For the majority of districts, the cuts in their revenue cap meant that they had to cut local property taxes, even as they were getting significantly less state aid. And the reduced revenue caps made it almost impossible for districts to use local property tax revenue to shield their teachers from substantial cuts in compensation (unless the district could pass a referendum for a property tax increase).

The aid cuts referenced above are measured relative to the 2010-11 funding level, not to the increased level of funding that DPI said was needed (and which was factored into the calculation of the state’s $3.6 billion budget shortfall going into the 2011-13 biennium). A more comprehensive perspective on the cuts to schools is that the changes to the revenue caps reduce school financing (from property taxes and equalization aid combined) by a total of $1.6 billion over the two years.

The net effect of the changes in school financing and employee compensation is a hotly contested topic, partially because the effects vary greatly from one district to another. It will take another year or two to get a clearer picture of how schools are being affected because some districts had longer term contracts that delayed the imposition of cuts in staff compensation, and some districts were able to draw on reserve funds to temporarily cushion the effects of the aid cuts.

Although the heated debate about the net effects on our education system won’t be settled anytime soon, here’s what the aggregate data from the Department of Public Instruction (DPI) tells us:

  • Wisconsin’s 424 school districts lost a total of 2,312 full-time positions during the 2011-12 school year, a net loss of 2.3% of school staff statewide, compared to the previous year.
  • Although some schools added teachers in 2011-12, 73% of districts cut teachers, resulting in a net loss of 1,446 teaching positions statewide (a drop of 2.4% compared to 2010-11).
  • The preliminary aid estimates for 2012-13 (released by DPI last week) indicate that about two-thirds of school districts will receive less state aid in the coming school year than in 2011-12. 
  • About 5,000 teachers retired before the 2011-12 school year, which was twice the normal rate.

As we explained in a May blog post, the deep cuts to school equalization aid are widening the rift between rich and poor school districts. The findings from a UW analysis by James Shaw and Carolyn Kelleymake us worry that there will be a wider achievement gap for students as well. For example, they found that:

  • High-poverty districts had their state aid reduced by $703 per student in the 2011-12 school year, while low poverty districts lost just $319 per student.
  • Public school staffing was reduced by 5.7% in high-poverty districts in 2011-12, compared to 1.1% in low-poverty districts.

Turning from the hard numbers to a more subjective issue, I worry about what the recent changes will mean for the teaching profession. Will idealistic and intelligent young adults still be attracted to the profession?  In the years ahead, as baby boomers retire from teaching, will Wisconsin schools be able to attract enough high quality teachers of the sort that we want to be educating our children and grandchildren?  Will the quality of our educators enable future graduates of our public schools be competitive in the U.S. economy and the world economy?

Those are some of the issues we think Wisconsinites need to keep in mind as we ponder the next state budget and as we ask candidates for public office what they will do to ensure that future graduates can succeed in the workforce and in life.

Please let us know what changes you are seeing in the schools in your area, what questions you think voters should pose to candidates, and how you think the state should change or improve the financing of our K-12 education system.

Jon Peacock


As a new fiscal year gets underway, we are publishing this series of blog posts examining the impact and future implications of the sweeping changes ushered in by Wisconsin’s 2011-13 state budget. We urge you to sign up for the Wisconsin Budget Project’s email list to receive ongoing, up-to-date information about state budget issues.

One Response to “One Year Later: Big Changes to School Financing”

  1. Anonymous says:

    See the latest Opportunity to Learn newsletter for a compilation of recent news about the budget struggles in a number of districts: