State Aid: It Could Have Been Much Worse. No, Seriously.

One topic that I expect to address fairly often is the state funding formula for schools.  Let’s start the discussion with a memo that may have been the most stunning school-related document I read this past year.

It’s a three-page  memo dated July 3, 2009, from Dave Loppnow of the Legislative Fiscal Bureau to State Senator Mark Miller.   (If I understood how this blogging program worked better, I’d attach a copy of the memo.  But I don’t know how yet.)

By the time the memo was written, about a year ago, the news was just starting to sink in about how much the Madison school district stood to lose in state aid for the 2009-2010 school year.  Miller asked Loppnow to explain what happened.

Boiled down, Loopnow’s message was simple.  Madison should thank its lucky stars for the provision of state law that limits a school district from losing more than 15% of its general school aids from one year to the next.

For the 2008-2009 school year, Madison received $60.7 million in general school aids. For the 2009-2010 school year, the district was pegged to receive $51.5 million, or a loss of 15.2%.  (The Loppnow memo does not explain why the district was cut .2% more than the 15% maximum.  This may not seem like much, but it amounts to more than $100,000.)

The bombshell in Loopnow’s memo was that, in the absence of the 15% cap on reductions, Madison’s general school aids would have been cut from $60.7 million to $33.4 million, or a whopping 44.5%.

WTF?  How did this come about?  Well, as you probably already know, it’s a complicated story.  I’ll spare you the specifics of the state funding formula here.  (But I’ll get into the gory details in later posts – I promise! – so stay tuned.)

In the absence of the 15% cap, the operation of the school funding formula would have resulted in Madison losing $27.3 million in general school aids from 2008-2009 to 2009-2010.  The formula takes into account a district’s relative property value per pupil and it’s relative spending per pupil.

According to Loopnow’s memo, the vast majority of the $27.3 million decrease would have been attributable to the relative changes in Madison’s property value per student as compared other districts in the state.

The much bandied-about fact that we are a relatively high-spending district ended up having not all that much impact.  Our per-pupil spending was one factor, along with the property value figures, in what would have been, in the absence of the 15% cap, $6 million of the overall reduction.  The remaining $21.3 million reduction would have been entirely attributable to the changes in our property value per student as compared to the rest of the state.  (Our property value per student increased 5.5% to $931,839 in 2009-2010, compared to a statewide increase of 3.4% to $582,608.)

What are we to make of this?  One consideration is that some of the factors that have been identified as leading to our loss of state aid really didn’t matter.   For example, there was talk that voter approval of the District’s referendum to authorize spending in excess of the state spending caps would come back to bite us in the form of reduced state aid.  Didn’t happen.  It would have happened, except that we were getting hurt from so many different directions that this particular factor ended up being irrelevant, in the same sense that being shot becomes irrelevant if you’ve been electrocuted moments earlier.

Another point is that if we want to lay claim to a somewhat fairer share of general school aids, we need to work on our property-value-per-student figure, since this is what is killing us.  We may not want to be cheering for a reduction in overall property values for the District (although that’s what we got for this year).  This means it would behoove us to increase our student count.  The introduction of four-year-old kindergarten will help on this.  An underappreciated fact is that increasing our summer school enrollment would also help, since districts receive a fractional credit for additional students based on summer school enrollments.  In a later post, I’ll explain why I think we should be exploring a significant increase in the enrichment classes we offer in summer school.

Another implication is that it probably makes sense for us to plan on annual 15% cuts in state aid for the foreseeable future.  While it’s cold comfort, it is a fact that 15% cuts get smaller and smaller on an absolute basis as each succeeding year’s total state aid figure goes down.  15% of zero is zero.

Finally, a more basic point is that we need to have a pretty good understanding of how the state funding formula affects us before we can make intelligent recommendations as to how it should be changed.

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2 Responses to State Aid: It Could Have Been Much Worse. No, Seriously.

  1. Ed

    Good on the gory details, but also worth remembering that what the right hand gave (the 15% cap on cuts) was only needed because of what the left hand took away (adequate state support). Before the second cut in state aid (the one that spurred the 15% cap), MMSD was “only” slated fro a 13.1% cut.

    http://www.legis.state.wi.us/lfb/2009-11Budget/JFC/2009_06_10WILeg_possible%20effects%20of%20reduced%20general%20school%20aids.pdf

    I always fear the the “it could be worse” rhetoric lets people off the hook too easily.

    TJ

  2. Pingback: State Superintendent Tony Ever’s Framework for School Funding Reform « AMPS

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