Education Funding – Part I of Series


General School Aids, Total Categorical Aids, School Levies

In Wisconsin, public schools are funded through a combination of three things: general aids, categorical aids, and levy tax credit (while there are other revenues like federal aid we will only look at state aid and gross property tax for the purposes of this analysis – otherwise referred to as partial school revenues – approximately 90% of total revenue). The general school aids are funding provided by the state to all 422 Wisconsin public school districts (368 K-12 districts, 44 elementary (K-8) districts, and 10 union high school districts) based on the school district’s ability to pay for students, which is assessed by their taxable property. Categorical aids are special categories of education spending which can be based per pupil or given as an award or grant.  Examples of categorical aids include special education, achievement gap reduction, pupil transportation, and sparsity aid. Levy taxes will be described at a later point. The School Choice funding will be done as a separate report in the education funding series.

In Wisconsin, current law limits the annual amount of revenue each school district can raise, this is called the Revenue Limit or Revenue Cap.  What a school can spend on education for a year is a set limit, comprised of two factors, the state aid and the levy amounts (the amount the schools tax locally). If the state provides more state aid, the amount the locals can tax reduces to keep them under the revenue limit or cap. If the state provides less aid, the amount the schools can tax locally goes up. Estimated state aid comes out July 1 every year (released June 29 for 2018-19 school year), and the finalized aid values for schools is made available in October of that school year.

1995 Act 27 increased state funding for schools from $3.032 billion in 1995-1996 to $4.035 billion in 1996-97. This is when the state began funding two-thirds of K-12 partial school revenues (1993 Act 437), which was supposed to reduce the reliance on local property taxes to fund K-12 education. Two-thirds funding was eliminated in the 2003-05 budget (2003 Act 33) and general school aids became a sum-certain appropriation. According to a report by the Legislative Fiscal Bureau, “the state’s share of K-12 revenues has ranged from 61.73% to 65.76% over the last 10 years.”

Categorical aids are paid either on a formula basis or as an award or grant and are outside the revenue limits. Meaning if a school receives categorical aid funds it is not counted in the diagram above, it is regardless of the school districts revenue limits. Unlike general school aids, categorical aids are distributed to schools regardless of the size of the school district’s tax base.  A general school aid is determined based on a school districts ability to adequately fund a student’s education, categorical aids are given based on the category, not on the district’s need or ability to pay for a student. Some categorical aids are paid based on the district characteristics, like sparsity aid. Most categorical aid programs are sum certain, meaning if the amount appropriated in a year is not sufficient to completely fund the entire categorical need, aid payments are pro-rated to schools. Categorical aids will be more closely analyzed as a separate report in the education funding series.

Table 1 – 20 Years of General Aids and Categorical Aids

Table 2 – Changes in Education Spending Year over Year

Table 3 – 20 Years of State Aid and Levy Changes

Table 4 – Administrative Comparison

State aid, gross school levy, and total costs have seen upward trends almost every year, with the exceptions of Gov. Walker’s first year, when all three went down, and over two years under Doyle, when school levy went down half a percent in 2005 and state aid went down 2.7% in 2009. (In 2009, Doyle removed state funding for schools and replaced it with American Recovery and Reinvestment Act funds provided by the Obama Administration.) Looking at the overall change over 20 years, state school aid changed by +36.48%, levy changed by +77.58%, and total costs by +51.32%.

This graph represents the change of school aids in percentages from the beginning of an administration to the end of an administration, or to the most recent data available, in the case of Gov. Walker. There are also calculations for the difference between the change over from the last year of the previous administration to the first year of the next administration. Change over previous administration has a downward trend for Walker and Doyle in most categories, or a small positive percentage. Having only one fiscal year for McCallum, his percentage change for his administration was 0.0% in most categories but had an upward trend coming from the change over the end of Thompson’s term. Overall, categorical aids have clearly gone up much more than general school aids (96.53% change for categorical aids vs. 29.23% for general school aids). School revenue limits are not affected by categorical aids.