Cash-strapped Wisconsin school districts brace for Walker's second budget proposal

2013-01-27T06:30:00Z Cash-strapped Wisconsin school districts brace for Walker's second budget proposalMATTHEW DeFOUR | Wisconsin State Journal | | 608-252-6144

The Portage School District next year plans to close two rural elementary schools and a charter school and may lay off or reduce hours for 13 employees to balance its budget for the next three years.

And that's assuming voters pass a $2.6 million operating referendum on April 2, Superintendent Charles Poches said.

Like most other districts in the state, Portage has already switched to a less expensive health insurance plan, frozen salaries, and increased employee contributions for pension and health insurance premiums. Voters also have approved nearly $20 million in higher property taxes in three referendums since 2003.

"Still it's not enough," Poches said. "Every school district has dealt with reductions and tried to find as many efficiencies as they possibly can, but are now having to make significant reductions in staff."

Now school district officials are bracing for Gov. Scott Walker's second state budget proposal on Feb. 20. Even with additional state aid for the 2013-14 budget, as Walker promised on Friday, districts are uncertain about what it will mean for their already squeezed finances.

Educators across Wisconsin blame 20 years of state-imposed limits on how much revenue they can generate from state aid and property taxes for perennial program cuts and increasing class sizes. When former Gov. Tommy Thompson introduced the limits in 1993 to help keep a lid on property taxes, he also committed the state to covering two-thirds of the cost of K-12 education, but the state share has declined to about 62 percent.

"The revenue limit is the villain," said Jamie Benson, superintendent of the River Valley School District just west of Dane County, which recently approved $630,000 in cuts, including 13 layoffs that affect art, English, business, technical education and computer classes.

The layoffs were based on the state increasing funding $50 per student. An increase of $200 per student might spare three of those layoffs, Benson said. Portage's layoffs are based on no increase.

"You can't have a revenue cap increase per year that goes up at 2 percent or less when your expenses, whether it's lighting, gas, books, technology or staff, go up at a higher rate," Benson said.

Different challenges

Not all school districts face the same challenges. Those with declining enrollment or historically lower spending levels, like Portage, are more likely facing more dire financial straits, said Miles Turner, executive director of the Wisconsin Association of School District Administrators.

"Some districts are doing alright," Turner said. "And yet I hear from a lot of them that if they have to keep going like this, they won't be able to keep going."

The last state budget cut a record $800 million in K-12 aid over two years, but districts reeled from an ever steeper, unprecedented 5.5 percent reduction in their revenue limits. The reduction represented a $1.6 billion swing in school funding from the 2 to 3 percent annual funding increase the state had historically allowed.

Walker has maintained the cuts were offset by changes in collective bargaining that let districts more easily switch health insurance plans and require employees to contribute to their pension and health insurance premiums. But many districts also found themselves laying off staff and cutting positions vacated by a crush of retiring educators.

Possible financial incentives

In his State of the State speech earlier this month, Walker suggested creating financial incentives for high-performing and rapidly improving school districts. And he called for expanding private school vouchers without offering specifics.

In an address Friday to the annual convention of school boards and administrators in Milwaukee, Walker promised to increase funding for public schools, but offered no new details other than suggesting the additional money could help high-performing schools provide teacher bonuses.

It's unclear if Walker will raise the revenue limits, but he wants to "keep property taxes in check." The state can increase aid to districts, but if it doesn't also raise the limits, the net result would be a reduction in property taxes with no additional funding available to schools.

State Superintendent of Public Instruction Tony Evers, speaking at the convention on Wednesday, said the state should be spending money on career and technical education to strengthen the middle class. But since 2004, he said districts have cut 20 percent of their career and technical education workforce, with half of those cuts coming in the past two years.

"Revenue caps and state budget cuts have consequences," Evers said. "We've all heard the claims that the past cuts did no harm or somehow even helped. I am here to tell you that is not the case."

Evers has requested $615 million in additional state aid over the biennium, but the majority of that would be added in the second year as part of a more ambitious proposal to overhaul the state's complicated school funding formula. The request also calls for increasing revenue limits by $225 per student next year. Sen. Luther Olsen, R-Ripon, chairman of the Senate Education Committee, has called for increasing revenue limits by $200 per student.

Receptive to increase

Many superintendents say they would welcome such an increase, even though it could still mean tough decisions about budget priorities and property tax increases.

Mount Horeb Superintendent Wayne Anderson said he expects next year's budget will be the most challenging he has faced in 17 years. The board will be considering insurance changes, student fee increases and increased class sizes. A $200 per student revenue increase "may be overly optimistic," he said.

For Verona, the difference between no increase in revenue limits and a $200 increase would be a $1 million swing, said Superintendent Dean Gorrell. Like many superintendents around the state, Gorrell said next year's schools budget picture remains uncertain.

"We're waiting to get a read from the governor's budget," Gorrell said.

Bill Foster, president of Slinger-based School Perceptions, which has advised more than 100 school districts in Wisconsin over the past decade on budget planning, called next year's budget situation "bad." Some districts are facing severe cuts for the first time and others that have already cut programs may be facing a downward spiral as students use the state's growing open enrollment program to attend a neighboring district, costing the home district funding.

The recent recession also is contributing to school district financial woes, as the housing market slump may be discouraging districts from taxing the maximum allowable amount, UW-Madison economist Andrew Reschovsky said. The number of referendums allowing districts to exceed the property tax limit also is down in recent years, though the rate that voters are approving them reached a high in 2011.

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