Robert M. La Follette School of Public Affairs
Friday, March 11, 2011

Analysis outlines possible effect of state budget on local school district revenues

School revenue limit figures revised

Tax policy expert Andrew Reschovsky has released new figures estimating revenue limits for school districts based on the detailed proposals included in the Wisconsin governor's executive budget for the 2011-13 biennium. Read more ...

The Analysis

The analysis is available online as a La Follette School working paper. Simulation results for individual school districts are available from the author.

A new analysis by a La Follette School of Public Affairs economist suggests that school districts could see an aggregate 7 percent reduction in allowable revenues relative to the 2010-11 revenue limit — if the Wisconsin governor's budget includes a mandated reduction of $500 per pupil in the sum of general aid received from the state and local property tax revenue. In general, the districts with higher property values would face smaller percentage reductions in the revenue limits.

Professor Andrew Reschovsky bases his estimate on a simulation using data on districts' revenue limits in the current year. Media have widely reported that the governor's budget, scheduled to be unveiled Tuesday, will mandate a new revenue limit that mandates a $500 per-pupil reduction in the sum of general aid and property tax revenue. The budget is anticipated to reduce state aid to schools by more than $900 million, Reschovsky says.

State aid to local school districts make up the largest portion of the state's budget.

Using data from the Wisconsin Department of Public Instruction, Reschovsky calculates each district's revenue limit for the current year, based on a $200 per-pupil increase in the allowable limit mandated in the 2009-11 state budget. Next, he calculates what revenue limits would have been for the 2010-11 school year if each district's limit had been reduced by $500 per pupil. "Although this simple simulation exercise is unable to account for increases and decreases in enrollment between this year and next, it provides a rough estimate of the possible impact," Reschovsky says.

"In aggregate, the impact of lowering revenue limits would be to reduce total allowable revenues by $594.7 million," Reschovsky says. "As expected, percentage reductions in the districts with the lowest revenue limits would be 7.4 percent, while allowable revenue in the highest-revenue-limit districts would fall by 5.3 percent."

Even with district employees paying a larger share of their health insurance, costs will continue to increase, as will the proportion of public school students who qualify for special education and who are eligible for free and reduced price lunches, Reschovsky notes. "These increases have cost implications for districts because federal and state statutes mandate many additional services," Reschovsky says. "With lower revenue limits, many school districts will be forced to eliminate programs and increase class sizes. I would predict that many districts will find it hard to avoid substantial teacher and staff layoffs."

Tensions run high ahead of Wisconsin Governor Scott Walker's budget announcement, March 1, 2011, Appleton Post-Crescent

Municipalities, schools likely targets of Gov. Scott Walker's budget reductions, March 1, 2011, Wausau Daily Herald

Wis. gov. to outline ultimate intentions in budget, March 1, 2011, Atlanta Constitution

Chalkboard: Expert predicts steep school cuts in Walker budget, March 1, 2011, Capital Times

How much could your district lose under Walker's budget?, February 28, 2011, Milwaukee Journal Sentinel

Schools prepare for massive cuts in state aid, February 28, 2011, WKBT.com

UW Madison analysis shows reported cuts to negatively impact schools, February 28, 2011, Wisconsin Department of Public Instruction news release

Impact of reported per-pupil revenue limit reductions for Wisconsin's 424 school districts, February 28, 2011