Budget Delay Favors Wealthier School Districts

Delay favors wealthier schools

Tardiness leads to credit rather than aid, which gives Milwaukee $1.6
million less

By AMY HETZNER
ahetzner@journalsentinel.com

Posted: Oct. 24, 2007

The delay in approving a budget in Wisconsin could end up benefiting
residents in the state's wealthiest communities.

Legislators were unable to meet a Sept. 28 deadline set by the state
Department of Public Instruction that would have allowed them to
increase general aid to school districts by $79.3 million in the
2007-'08 school year in time to reduce next year's tax bills.

So on Tuesday, when they approved the second-latest budget in state
history, they did what some called the next best thing by putting the
same amount into the school tax levy credit. The credit increase is
expected to be signed into law by Gov. Jim Doyle.

That would be a boon to residents in districts such as Elmbrook and
Mequon-Thiensville, where taxpayers have long complained that their
money is siphoned off to support schools in other parts of the state.
But it would mean less money for school systems such as Milwaukee and
Racine, where the argument is that residents with less wealth need
more help to ensure their children get a chance at an education on par
with those in richer communities.

The reason for the difference is that, unlike general school aid, the
state's school levy tax credit is distributed based on the school
property tax burden in individual municipalities. That largely means
the credit goes to residents in the wealthiest areas.

This would be the second year in a row the levy credits have
increased. After a decade holding steady at $469.3 million annually,
two years of increases would bring that amount to $672.4 million. The
latest increase would take effect a year from now.

Equalization aid, in contrast, is distributed to districts in a way
that rewards those with low property wealth and below-average
spending. General aid to schools is budgeted at $4.7 billion for the
current school year.

"We didn't create that system," said Chris Thiel, a legislative and
fiscal policy analyst for Milwaukee Public Schools. "We certainly
think the goals of the system are laudable."

Elmbrook biggest winner

The biggest winner in a $79.3 million shift to the levy credit is the
Elmbrook School District, which gains nearly $1.5 million as a result,
according to a Legislative Fiscal Bureau analysis. The district with
the most to lose is Milwaukee Public Schools, where residents can
expect $1.6 million less than they would have received if the $79.3
million had been paid out in equalization aid.

Overall, the fiscal bureau's analysis shows about 25 school districts
in the five-county metropolitan Milwaukee area benefit from receiving
the payment through the levy credit instead of aid.

Under state-imposed revenue limits, both aid and credits largely go to
paying down the property tax burden in a community and do not affect
the overall revenue collected by the school systems.

"I love the school levy credit," said state Sen. Ted Kanavas
(R-Brookfield), who represents residents in the Elmbrook School
District as well as those living in another levy-credit winner, the
Pewaukee School District. "This is the only time we ever get anything
for schools."

Some get minimum aid

One of the reasons the Elmbrook and Pewaukee school systems fare so
well under the levy credit vs. an aid increase is that, under the
state's funding formula for distributing aid, both receive the minimum
amount possible from the aid system. A $79.3 million increase in the
aid pool for the state's 426 school districts would mean only $966
more for Elmbrook and $146 for Pewaukee, according to the fiscal
bureau analysis.

In contrast, Milwaukee would have gotten about $6.5 million more if
that money had been infused into the aid formula, the analysis
determined. The Racine and Waukesha school districts would have
received a little more than $1.9 million each.

With the levy credit, which would be applied to tax bills homeowners
will receive about a year from now, Racine property owners would get
about $670,000 less, the fiscal bureau analysis found. Waukesha
residents would get about $380,000 less than they would have if the
state had increased its aid payments.

That's one of the reasons state Rep. Bill Kramer (R-Waukesha) said he
is unhappy with the new budget, although he also pointed out that the
numbers were "very preliminary."

But he said putting the money into levy credits to help reduce
property tax burdens was better than doing nothing after the
Legislature missed its chance to increase aid for the current school
year.

While Kanavas said residents in districts that benefit from the school
tax credit have earned it through years of supporting other school
districts with their tax dollars, Kramer said the same is true in
Waukesha.

"Not to the extent that Elmbrook does, but we're in that donor
(category) as well and we still don't win," he said.