Legislative Update: Our Spending Authority Goes Up; Rewritten Charter School Bill Tiptoes Toward Plausibility [Updated]

There’s been a considerable legislative activity affecting our schools lately, with the Joint Finance Committee completing its work on the Governor’s proposed budget and other legislative committees active as well. 

Here’s an update on two developments of particular interest to those of us in Madison – the retention of school districts’ ability to use property tax carryover authority to increase spending above otherwise applicable revenue limits and the most recent iteration of the Republican charter school expansion legislation working its way through committee. 

Other legislative developments will have significant impact elsewhere in the state in the short run and could well affect Madison significantly in the longer run – I’m thinking of the expansion of voucher schools into all of Milwaukee County and Racine and perhaps Green Bay – but the two developments that will likely have a more immediate impact are my focus for today.  

A.  Next Year’s School Budget:  How Much We Spend Is Now Up to Us. 

The Madison School District’s property tax levy for this year is about $245 million.  Under the Governor’s proposed budget bill, our tax levy for next year would be capped at about $243 million, or a $2 million reduction from this year.

As I have written before, an important wrinkle is that last year our $245 million tax levy was about $10 million less than our state-imposed limit.  Under current law, we’re able to carry over that $10 million cushion to this year.  This would make our maximum property tax levy about $253 million for next year, or $8 million more than this year, rather than $243 million. 

The Governor’s budget bill proposed to eliminate this carryover authority.  It turns out that this was apparently a drafting error and the elimination of carryover authority was not the Governor’s intent. 

Last Friday, the Joint Finance Committee unanimously approved a change to the budget bill that fixed this mistake by removing the provision from the bill that eliminates school district property tax carryover authority.  This is all to the good. 

To this point, our working assumption for our budgeting for next year has been the conservative one that we would not have the carryover authority.  Hence, the budget proposals that the superintendent has advanced were intended to limit our spending to match projected revenues based on $243 million in property tax levy (along with our other revenue streams like state aid).  

It is now clear that we will have an additional $10 million in tax levy authority to work with, to the extent that we choose to do so.  I have proposed an amendment to our budget that would increase our spending by about $2 million such that our property tax levy for next year would be the same as this year.  The additional funds would be earmarked for spending on maintenance and technology needs, as well as fund the additional expenditures we’ll need to incur to bring our Talented and Gifted program into compliance with state law.  

I’d be willing to at least consider additional expenditures as well, and would be more favorably inclined toward one-time uses of the money that preserve our budgeting flexibility for future years.

To my mind, having the additional spending authority changes the terms of the spending debate.  When we are up against our spending limit, proposals for additional spending need to be matched by an equal amount in cuts.   In this situation, the question is what are you going to cut in order to make room for your new proposal. 

When we are not up against the spending limit, as we currently are not, the question changes to whether a proposal for additional spending seems sufficiently worthwhile to justify increasing the property tax levy to cover the cost.  This is a more straightforward question though not necessarily an easier one to answer. 

If we decide not to endorse further expenditures (at least up to $10 million worth), we won’t be able to blame the governor for our choice but instead will have to own up to our decision that whatever the proposed expenditures would purchase is not worth raising property taxes to obtain.     

B.  SB 22, version 2.0

SB 22 is the charter school overhaul bill that is pending in the legislature.  The initial version of the bill authorized the creation of a new state bureaucracy, the Charter School Authorizing Board (CSAB), empowered to establish charter schools anywhere in the state.  The members of the Board were to be appointed by the governor and the leaders of the state senate and assembly.  Local school boards were shut out of the process. 

A long and contentious public hearing was held on SB 22 on March 23.  At the conclusion of the hearing, the chair of the Senate Education Committee, Senator Olsen, announced that in his view the bill needed some work. 

On May 25, Senators Olsen and Darling offered a substitute amendment  to the bill that takes a slightly different approach and smoothes off some of the rougher edges of the original.  The Senate Education Committee has scheduled an executive session on SB 22 on Tuesday, June 7.

There are a lot of provisions in the substitute bill, not all of which I understand, but the highlights seem to be as follows. 

The new version of the bill continues to authorize the newly-established CSAB to contract for the operation of independent charter schools, and also provides such authority to cooperative educational service agencies (CESAs).  The charter schools that would be so authorized would not be answerable to any local school board. 

The membership of the CSAB now includes the state superintendent of public instruction and two of his appointees, as well as six gubernatorial appointees.  The Fitzgerald brothers no longer get to appoint CSAB members. 

The substitute amendment brings local school boards back into the process a bit.  The proponent of a potentially independent new charter school would have to apply concurrently to the CSAB and the school board for the area in which the new school would be located.  The application is due by July 1 of a given year.  

The school board then has first crack at considering the application and has until October 1 to reach an agreement and enter into a contract with the charter school proponent.  Presumably, the relationship that would thereby be established would be similar to those that currently exist for charter schools and the new charter would not be “independent” within the meaning of the bill.

If the school board is unwilling or unable to enter into a contract with the charter school proponents by October 1, then the application moves to the CSAB, which would then have until February 1 to reach an agreement and authorize the new school as an independent charter, with no obligations or relationship to the local school board.

A CSAB-authorized independent charter school receives state aid equal to its student count times a fixed amount, currently $7,775.  The school district in which the independent charter is located may include the students enrolled in the independent charter in its student count for state aid purposes (this is a change from the original version of the bill), but its state aid is reduced dollar-for-dollar to match the state aid that goes to the charter. 

This approach is similar to how students who open enroll out of a school district are currently treated for state aid purposes.  It addresses the concern raised by rural school districts and others that under the initial draft of the bill state aid to independent charter schools was to be deducted off the top of the amount of general equalization aid that is divvied up among all the school districts in the state, such that in theory the funding of independent charter schools in Milwaukee would lead to a reduction in state aid to a school district in Antigo.    

The CSAB’s authorizing authority is initially capped at five contracts to be in effect for the 2012-2013 school year.  The maximum number of contracts in effect is increased by five per year until the limits come off for the 2017-2018 school year.   A single contract can authorize an entity to establish more than one charter school, though all must be located in the same school district or CESA territory.  The CSAB may not enter into contracts authorizing virtual charter schools. 

If the substitute bill passes in its current form, how would Madison be affected?  The most immediate practical impact might be on the Urban League’s Madison Prep proposal.  If the Urban League were willing to push back its timeline by a year, then presumably next July it could submit a charter proposal concurrently to the Madison school district and the CSAB. 

While the Urban League might feel confident that the CSAB would endorse the Madison Prep proposal, CSAB authorization would only yield an amount in state aid that this year is pegged at $7,775 per student.  As the Madison Prep proposal is currently structured, the Urban League is seeking in excess of $14,000 from the school district per student in its first year.

If the Urban League were to determine that the CSAB avenue for authorization could be financially feasible, then passage of the proposed legislation would change the dynamic of the bargaining over the Madison Prep proposal.  The school district might conclude that the Urban League will likely be able to obtain authorization for the charter school regardless of what the school district decides, and so the issue might become how much more than $7,775 per student (or whatever the state figure is at the time) is the District willing to pay in order to have some say in how the school is operated and in order to claim the school as part of the District. 

The Urban League would view the various options from a different perspective, of course.  I believe that the Urban League would prefer that Madison Prep be a part of the school district.  However, the organization would have to calculate how burdensome it would consider contractual terms the school district would insist upon and how much above the state’s fixed per-pupil charter amount the district might be willing to provide as it assesses the best way forward for its Madison Prep proposal. 

In short, if SB 22 passes in the form of the new substitute amendment, the calculus underlying school district consideration of potentially controversial charter school proposals would undoubtedly change.  The charter school proponents would have an alternative path toward authorization, but the capped amount of state aid available to CSAB-approved schools might nudge the proponents toward trying to cut a deal with the local school board nonetheless.   With the Madison Prep proposal, we may have an opportunity in Madison for an early look at how this dynamic would actually play out.

UPDATE:  My blog post includes my thinking out loud about how the incentives of both charter school proponents and school boards might change if the re-drafted SB 22 should become law.  The Madison Prep proposal seemed like the logical example to explore.  I certainly wasn’t presuming to speak for the Urban League in offering my speculation.

Urban League CEO Kareem Caire subsequently contacted me to clarify the Urban League’s position on the bill in case there was any misunderstanding.  I suggested that I post the message as an addendum to my post, and so here it is:

We want to ensure you and other MMSD board members are clear about where we stand on Charter School Bill SB22.

1.      We are not interested in nor willing to push our timeline back. We remain focused on August 2012 as an opening date for the school.

2.      We’ve expressed no “feelings of confidence” about anything relative to SB22 or its proposed authorizing body, and have no thoughts on this matter relative to Madison Prep; we have not communicated any thoughts as well. To suggest we “might feel confident” is not accurate and could be misleading to others.

3.      We believe Madison Prep’s students are worth as much as MMSD students and do not support the flawed funding system for public charter schools in Wisconsin that require public charter schools to deliver greater results with greater accountability for less money than what it takes to educate children in public schools generally. InWashington, DC where I came from, they have a “uniform per pupil funding formula” for all public schools – traditional and charter – which ensure charter schools get the same amount of funding per pupil as traditional public schools do…as well as facilities funding. FYI, you can learn more about how DC’s public charter schools are financed by clicking here. Their financing strategies are among the reasons that DC operates some of the most successful public charter schools in the nation.

4.      The initial draft of SB22 was meant to establish a second entity for authorizing public charter schools, giving prospective charter school operators a second option to traditional school district boards of education. There are 27 states in theU.S.that have more than one entity that can authorize charter schools. In the District of Columbia’s case, they have only one authorizer, The DC Public Charter School Board. The original intent of the legislation, pursued by the Wisconsin Charter Schools Association, was to (a) join the other 27 states and create a second authorizing entity for the entire State of Wisconsin and (b) establish an authorizer similar to DC’s that would focus on supporting the development of “high quality” public charter schools. The bill, like all other proposals in our state legislature, has become overly politicized and convoluted from the time it was given to state legislators to consider until now.

5.      As the largest state affiliate of the National Urban League, at times we will take positions on issues that will benefit all children and adults inWisconsin; particularly the demographics that we serve. This is why we spoke up on SB22.

6.      With regard to Madison Prep, we have stated very clearly several times over that we are not interested in pursuing avenues for authorization outside of MMSD. We ask that you follow that line of thinking with us. A separate avenue is not something we are interested in.

We remain focused and continue to forge ahead in our planning, conversations and deliberations. Thank you so much for offering your thoughts.

Onward. 

Kaleem Caire

President & CEO

Urban League of GreaterMadison

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