How Should We Fund Education?

Chris Lufter:

We are sure that this statement will shock this community: The Waukesha Taxpayers League agrees that we have an educational funding problem in Wisconsin.

While there may be widespread agreement with that statement, how we got into this predicament and, more importantly, how we resolve the funding issue is where disagreement exists. As the saying goes, “one must know history well or history is bound to repeat itself.” A brief review of school funding history is in order.

During the late ’80s and early ’90s, education spending was out of control. Double-digit property tax increases were common. The only way to control school taxes and spending was to oust local school board members – always a difficult feat. Fiscally responsible school boards were rendered helpless by state mediation/arbitration law which sent contract disputes to an arbitrator for resolution. The problem was, the arbitrator’s decision was heavily influenced by settlements in surrounding districts. If one district settled at a high level of salary and benefit increases, soon all districts were mandated to provide such settlements. Large settlements combined with increased hiring led to escalating school spending and taxes. Property taxes in particular rose at unbearable rates, angering taxpayers across Wisconsin.

In the early ’90s, responding to an angry electorate, the Legislature passed a “revenue cap” law limiting the amount of revenue a district could collect from property and state taxes, effectively limiting spending. This cap was formulated to allow for inflation and student enrollment changes. Some contend that districts are only allowed to increase spending by 2 percent annually, but Wisconsin Taxpayers Alliance figures show that school spending increases have averaged 4 percent yearly since 2001.

To make revenue caps workable, salary and benefits (80 percent of school budgets) also needed to be reined in. The Legislature passed what is commonly called the QEO: qualified economic offer. This law prohibits mediation/arbitration if a district offers the teachers union at least a 3.8 percent salary and benefit increase. However, huge loopholes developed in QEO law, resulting in average salary increases of more than 5 percent annually, not including the increasing cost of health and retirement benefits.

This legislation intentionally created a shortfall between the money generated by revenue caps and the QEO to force districts to prioritize spending within their budgets that had become padded with new programs and staff for years. To provide for some local control of spending, the Legislature included the referendum process for any spending over the revenue caps.

Also passed was “two-thirds funding.” This means that the state provides two-thirds of the cost of education in Wisconsin. This was a huge shift in taxes from the local to the state level. This two-thirds funding is actually a very complex formula that distributes this money unevenly. Property rich districts and big spending districts get less state money than property poor districts and lesser spending districts. Waukesha is considered a property rich district, so we receive less than twothirds funding.

The state of Wisconsin currently spends $5.89 billion on kindergarten through 12thgrade education. This represents 39.3 percent of the state’s general fund. Local property taxes (after all credits) increased 5.4 percent to $3.79 billion. These figures demonstrate how generous Wisconsin taxpayers are to our schools.

Christ Lufter is President of the Waukesha Taxpayers League.

Posted by Jim Zellmer at February 2, 2007 12:49 PM
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