Wisconsin State & School Finance Climate Update

I recently had an opportunity to visit with Todd Barry, President of the Wisconsin Taxpayers Alliance [29 minute mp3]. A summary of this timely conversation follows:

[2:25] Post Retirement Liabilities: Milwaukee Public Schools Post Retirement Health Care Liabilities: $2.2 to $2.5 billion

[3:01] Wisconsin's $2.44 Billion structural deficit. The State debt load ($4billion to $9billion from 2000 to 2007) is now among the top 10.

[7:48] On property values and assessment changes. Two years ago, property values grew 9%, last year 6%, 3% this year with most of the recent growth coming from commercial properties.

[8:57] Wisconsin Income Growth: Per Capita personal income "The canary in the mineshaft" and how we lag the national average by 6% or more.

Why?

The population is aging. Senior population will double by 2030. School age population is stagnant.

Employment growth peaked before the nation (04/05)

Wisconsin wages per worker is about 10% less than the national average. 1969; 4% below national average, 1980's; 10 or 11% below national average. Wisconsin wagers per worker are now 14% below national average. We've been on a 40 year slide.

We've hid this because the labor force participation of women has increased dramatically.

Wisconsin is losing corporate headquarters.

[18:18] What does this all mean for K-12 spending?

"If there is going to be growth in any state appropriation,it is going to be schools and Medicaid". The way the Legislature and Governor have set up these two programs, they are more or less on auto-pilot. They will grab whatever money is available and crowd out most everything else. So you get this strange situation where state aid to schools has tripled in the last 25 years while funding for the UW has barely doubled. That sounds like a lot, but when you look at it on a year by year basis, that means state funding for the University of Wisconsin System has grown less than the rate of inflation on an annual average basis while school aids has outpaced it (inflation) as has Medicaid."

Is there anything on the horizon in terms of changes in school finance sources? A discussion of shifting state school finance to the sales tax. "It's clear that in states where state government became even more dominant (in K-12 finance) than in Wisconsin, the net result, in the long run, was a slowing of state support for schools. The legislature behaves like a school board, micromanaging and mandating. California is the poster child.

[20:52] On why the Madison School District, despite flat enrollment and revenue caps, has been able to grow revenues at an average of 5.25% over the past 20 years. Barry discussed: suburban growth around Madison, academic competition amongst Dane County high schools. He discussed Madison's top end students (college bound kids, kids of professionals and faculty) versus the "other half that doesn't take those (college entrance) tests" and that the "other half" is in the bottom 10 to 20% while the others are sitting up at the top on college entrance exams.

[23:17]: This is a long way of saying that Madison has made its problem worse and has put itself on a course toward flat enrollment because of social service policies, school boundary policies and so forth that have pushed people out of the city.

[23:42] "If there is a way within state law to get around revenue caps, Madison has been the poster child". Mentions Fund 80 and frequent and successfully passing referendums along with Madison's high spending per pupil.

People think of the Milwaukee Public Schools as a high spending District. When you really look start to dig into it, it is above average, but Madison is way out there compared to even MPS. People argue that argue that MPS is top heavy in terms of administrative costs per student, Madison actually spends more in some of those categories than Milwaukee. (See SchoolFacts, more)

[26:45] On K-12 School finance outlook: The last time we blew up the school finance system in Wisconsin was in 1994. And, it happened very quickly within a span of 2 to 3 months and it had everything to do with partisan political gotcha and it had nothing to do with education.

[28:26] "Where are the two bastians of Democratic seats in the legislature? Madison and Milwaukee. Madison is property rich and Milwaukee is relatively property poor. Somehow you have to reconcile those two within a Democratic environment and on the Republican side you have property rich suburbs and some very property poor rural districts.

Posted by Jim Zellmer at October 15, 2008 8:11 AM
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