What’s the Story on All the Additional State Aid for Madison Schools?

The State Journal ran an editorial today—“Great News for Madison Schools – that criticized School Board members for bemoaning the impact of Governor Walker’s cuts in school funding when in fact it looks like the Madison School District will unexpectedly receive about 25% more in state aid for the 2012-13 school year – about $53 million, up from this year’s $42 million.

It’s true that MMSD stands to get a bigger dollar increase in state aid next year than any other school district in the state.  How in the world did this happen?  Overcome by a newly-found spirit of bipartisanship, did Governor Walker just decide to shower the extra millions on the Madison schools as a goodwill gesture?

Uh, no.  When it comes to general state aid to schools, the governor and legislature decide how big the overall funding pie is going to be.  The long-standing school funding formula set out in state law determines how large a slice of that pie each school district is to receive.

There is no mystery about the size of the overall pie.  The last budget under Governor Doyle appropriated $5,025,190,300 for elementary and secondary school aids for 2009-10 and $5,271,555,900 for 2010-11.  Under Governor Walker’s budget, this total was cut to $4,845,083,000 for 2011-12 and $4,913,986,100 for 2012-13.  So Governor Walker slashed general state aid to schools by about $538 million over the biennium.  This is hardly cause for celebration.

How next year’s $4.9 billion in general state aid is split up among the state’s 424 school districts is determined by the school funding formula.  I describe how the formula works here.  This year, to just about everyone’s surprise, the formula has turned out to be Madison’s friend.

Last year, application of the school funding formula resulted in MMSD qualifying for about $15 million in general state aid.  This amount was increased to about $43 million by virtue of the hold-harmless provision of the law that capped each school district’s reduction in state aid at 10% of the previous year’s total.

How could it be that the same formula that calculated that MMSD was entitled to $15 million in state aid in 2011-12 would determine that the district was in line for $53 million for 2012-13?

The formula is a funny thing.  For Madison at least, the formula critically depends on student enrollment in the district and operates in a highly-leveraged fashion.  Madison’s enrollment has been around 25,000 for several years.  Many thousands of those students have very little impact on the amount of state aid the district receives.  I don’t know precisely where the break-even point is, but it could be that the first, say, 20,000 students enrolled in the district have minimal impact on the state aid calculation.  If 20,000 is the actual break-even point, then at that level of enrollment, negative tertiary aid for Madison would just cancel out the secondary aid to which the district is entitled.  This would leave the district with only primary aid, which is some amount less than $1,000 in state aid for each student.

Once the cut-off point is exceeded, though, that increased enrollment starts to pay off in a big way.  This is illustrated by the 2012-13 calculations.  For purposes of the formula, the significant difference for Madison is that our student enrollment increased by 1,492 students this year, as student count is calculated for purposes of the formula.

The bulk of this increase is attributable to the first year of the district’s four-year-old kindergarten program.  Assuming appropriate programming is provided, four-year-old kindergarten students count as .6 students each for purposes of the school funding formula.  So, if MMSD enrolled about 1800 four-year-old kindergarteners, its student count would increase by more than 1000.

Summer school expansion also played a role in our enrollment bump, although it had a much smaller impact than 4K.  Students enrolled in summer school are counted as .4 students for funding formula purposes.  We expanded our summer school program last summer and increased our student count by about 100 students as a result (representing about 250 additional summer school students).

This increase in student count explains our increase in state aid.  DPI prepared a spreadsheet for Madison, as it does for every school district, that explains how the $54 million in state aid for Madison was calculated.  I still have to refer back to my earlier blog post to keep straight how the formula works, but if you have a handle on the steps you can actually follow along on the spreadsheet.  Here is the sheet:

I re-ran the numbers to see what the state aid figure would be if our student count had remained the same – if it had been last year’s 25,714 total rather than this year’s 27,206 total.  I found the result jaw-dropping.

If our student count had remained constant from last year to this year, Madison would have qualified for about $30 million in general state aid.  Instead, with our 1,492 additional students, we qualify for about $53 million in state aid.  While overall Madison still receives less than $2,000 per student in general state aid, each of our additional students this year generates about $15,000 in additional state money.

This highlights the significance of student count to the school funding formula.  The amount of state aid a district receives is the total of the calculations for the district of primary, secondary, and negative tertiary aid.  The underlying calculations for each level of aid takes into account the district’s student count, often in several ways.

For example, secondary state aid is calculated by starting with a dollar figure that is fixed for most districts ($8,222) and multiplying that by a school district’s student count, and then multiplying that total again by a percentage that is calculated on the basis of a school district’s total property value per student.  So both of the variables in the formula increase secondary aid as student count goes up.

Indeed, for Madison, every $10,723 decrease in the District’s property value per student figure (currently $815,138) translates into an additional $2.24 million in secondary state aid.  Due to our increased enrollment and stagnant property values, the school district’s property value per student figure decreased from $869,006 to $815,138 this year, and, not coincidentally, our secondary aid went up from $22.4 million to $53.7 million.

The impact of student enrollment on Madison’s state aid has a couple of obvious implications.

First, in addition to all its other benefits, four-year-old kindergarten is a money-maker for the District.  At the time the School Board approved the start of 4-year-old kindergarten, we projected that the program would have a net cost for the District of about $8 million per year.  My understanding is that we had in the neighborhood of 1800 students enrolled in the program this year.  Counting each of the four-year-olds as .6 students, this increased our student count by 1080.  At about $15,000 per student, the institution of 4-year-old kindergarten generated about $16 million in additional state aid, roughly double its cost.

Second, summer school remains an underutilized opportunity for MMSD.  Each qualified summer school student increases our student count by .4.  At least this year, an additional .4 student generated about $6,000 in additional state aid.  Assume that a student takes two two-hour classes during his or her summer school day.  If each class has 20 students, the two classes would each generate about $60,000 in additional state aid.  An individual summer school class does not cost the District anywhere near $60,000.  Summer school thus seems to hold the potential to be another money-maker for the District.

This revives my interest in an idea I have had for several years.  We should expand summer school beyond the credit-recovery programs that are its current focus, important as those programs are.  We should invite our teachers to submit proposals for summer school classes they would be excited to teach.  We should select the most promising proposals and offer those classes, paying the teachers a much healthier stipend than we currently offer summer school teachers.

Capitalizing on the wonderful skills and talents of our teachers, we could offer some great summer school classes, offer our students enhanced learning opportunities, make our school district more attractive to families, provide an opportunity for some of our best teachers to be paid something closer to what they’re worth, and qualify for more in additional state aid than we’d incur in expenses.  Seems like a no-brainer to me.

And references to no-brainers brings us back full circle to the “Great News for Madison Schools” editorial.  Next year’s increase in state aid for Madison is certainly welcome.  But a little perspective is in order.

For the 2008-2009 school year, Madison received $60.7 million in general school aid. We’re now celebrating the fact that for 2012-13 we’re in line for only about 11 percent less in state aid than MMSD received four years ago.

From some viewpoints, and particularly from the perspective of this year’s state funding total, this can be considered great news, I guess.  But perhaps next year’s bump in state aid just tends to show that over time the quirks in the state funding formula tend to even out a bit.  The broader message is that from a statewide perspective, the overall trend in support for public education is heading nowhere but down.  That’s neither great nor news.

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9 Responses to What’s the Story on All the Additional State Aid for Madison Schools?

  1. Mad4Madison says:

    Ed –

    I am going to call out a bit of the rhetoric in your post above. Yes, a $537,677,100 reduction in Education funding at the state level is a large number. But while you say it was “slashed” (4th paragraph), it is a 5.5% difference bewteen Doyle and Walker. Doyle was $10.3 billion to Walker’s $9.8 billion. Is that a slash? I don’t think I see TV ads for the latest tech gadget at the local store where they are “slashing” prices by 5%. I am sure this is semantical and I am sure it also has political undertones. Just like I am sure you wouldn’t say that the projected property tax increase coming up (4.3%??) is a “massive increase?” Basically, if you call 5% reduction a “slash”, then you need to call a 4.3% increase a “massive increase.” So can we simply discuss the numbers without the qualifiers?

    It is interesting that our student count increase is attributable to 4k. That would mean our enrollment as a District is either flat or slightly down. I also must applaud the line of thinking that you are sharing about expanding the use of Summer School and realizing a variable “bump” in school funding. Dare I say you are thinking that education can be viewed through a lens of a business man? That is not a snarky comment – or intended as one. It is a realization that we can have effective and rewarding education programs that can actually assist with increasing the revenues to the District. Educating students in a cost effective manner should not be viewed as a negative! They are not mutually exclusive. So I appreciate your thought process here.

    Now for the real question – what will the District do with the $11,000,000 more from the state? Do you treat it like an annuity and increase recurring expenses (progrmas, hiring, salaries) or do you use it to make investments in infrastructure (can you do that with State funding or are they separated??) or do you use it as tax relief?

    • Mark says:

      All this wonderful information & clarification, and all you can find to comment on is to zero in on the “political slant” of the use of the verb “slash” ?!?

      But yet at the same time, *no* comment at all from you about the insinuations just DRIPPING from the WSJ editorial about how this all is some kind of evidence that “liberal Madison” is paranoid about Walker. Hmmm.

      I like that politics doesn’t tend to intrude on the discussions on this blog, and I try to respect that. But I could not pass on noting the double standard here.

      p.s. I also, as an MMSD parent, would be very (personally) receptive to non-remedial summer school classes …

      • Mad4Madison says:

        I didn’t read the editorial, so I really can’t comment. Not sure that means a double standard exists with my post above. It is just that I am becoming numb to the political slants on all sides. I merely wish to point out that state wide, school funding was reduced 5.5%. If you want to call it a slash, fine by me. But then be sure to call a 4.x% increase to property tax a massive increase. I am a big fan of “it must work both ways.” That is not political, but rather apolitical.

        As for politics on this blog, well yeah… I wish that were the case. But in reality, Ed is an elected official. Hate to point that out. And while many, many of the posts and comments are fairly middle of the road, there have been some that do contain political elements. Such is life. And I will gladly read / hear those (sorry Ed, when I read your posts I hear your voice so to me I am listening rather than reading) comments in order to get to the thinking that Ed has on these issues. I continue to commend him for posting and I will continue to read / hear them well into the future!

  2. Mark says:

    Thank you (as always) for the clear & complete summary/clarification, Ed. I wish the WSJ editorial board looked at this even half as closely as you did, and gave us a more accurate evaluation of what it all means, but … if there is only going to be one person who understands this between the two organization, I’m glad you’re on the school board & not in their newsroom!

    • I appreciated reading Mark’s and Mad4Madison’s exchange. I do take the point that “slash” is perhaps not the best verb to describe a 5% reduction, though $500 million does seem like a lot. I don’t think of myself as trying to project a “middle of the road” perspective, though. I hope that my views on the topics I write about come through. I do try to write in straightforward manner and explain the bases for my opinions. This is in part why my posts tend to end up so darn long. I also try, at least a little, to provide a fair description of opposing views and I stay away from name-calling, cheap shots and ad hominem attacks. It’s gratifying that the comments readers post almost invariably follow the same approach. (By the way, I have to approve comments from readers who have not previously posted here. Comments from readers who have previously posted go up automatically. I can count on one hand the number of non-spam comments I have not approved, and those few comments were pretty worthless.)

      What will the School Board do with the additional millions of state aid? That’s up to the Board. Speaking for myself, I think we should use some of it to reduce the amount of fund balance we are planning to use to meet next year’s budget. We had originally thought that it would be another year or so before increased state aid caught up with our cost of providing 4K and so planned to use some of our fund balance this year (initially $4 million) to bridge that gap. It is now clear that for the upcoming school year 4K will generate more in additional state aid than it will cost, so there no longer seems to be much of a justification for using the fund balance. I also suspect that the Board will want to use some portion of the additional state aid to reduce the increase in the property tax levy.

  3. MaryLouise Griffin says:

    Speaking of summer school, I believe the last time fees were increased for enrichment courses was 2002. At $20 for three weeks at 2 hours a day, this has been the best deal in town and still would be at twice the price!

    • Thanks, Yes, summer school is a bargain when you compare the $20 cost of enrichment classes with that of other summertime alternatives for school-aged children. That price is unlikely to go up much — state law places strict restrictions on what a school district can charge for a summer school class and still include the students in the class in the district’s enrollment count.

  4. Laura Chern says:

    More summer school is a great idea – but you might consider air conditioning some of the older buildings.

  5. I sit on a committee for another of Dane’s School Districts and I thank you for explaining the state school aid formula. It was the first thing I requested training in when I joined my district’s cooordianting committee 15 years ago and it was an eyeopener as the local municpalities learned that their economioc development strategies were increasing the amount of the local school costs on the property tax levy! One factor that is also not looked at is the incredible differences in cost of living within the state. Our minimum cost of living if you look at the self sufficiency studies done is over 50% higher than grant county which is just over an hour away. this is not taken into account in most of the federal and state formulas and i nthe case of welfare reform led to the increase in poverty in Dane County and Madison whereas palces with lower costs of living saw successes under the same program, The more we look at the formulas the more we might better understand how to develop strategies to improve our services and grow our economy

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