The Forward Institute Study on Educational Funding

The AEF commissioned a study by The Forward Institute to answer critical questions regarding the Wisconsin education funding system. Since 2004 Wisconsin has experienced a significant economic recession, seen alarming increases in student poverty rates, and an increasing burden of higher bilingual and special needs rates in many districts. This has all occurred during a time of historic cuts to public education, historic expansion of publicly subsidized private school tuition, and increasing burden on local property tax payers. Each of these factors has an impact on education funding, and therefore the education system itself.

The results of this study hold significant implications for education funding and the future education of our children.  The fundamental question which this study sought to answer is: “Is the education tax and funding system in Wisconsin fulfilling its constitutionally and statutorily mandated function to provide for a sound, basic education for all students regardless of need, without placing too great a burden on local property taxpayers?”

Significant results of this study include:

  1.  Funding and spending disparities exist between districts of differing higher needs enrollment rates. School districts of lower property wealth and high urban or rural poverty are experiencing overtly large negative impact due to this disparity, as are districts with high rates of ELL and SpN populations.
  2. There are school districts with higher populations of the three Vincent v. Voight higher needs student groups whose disparity differs greatly from the mean, and even further from the upper quartiles. Higher needs children in primarily high poverty rural and urban school districts are seeing greater disparity increasing over time. In terms of ELL populations, the disparity is largely a function of higher enrollment rate over time, and failure of aid to keep up with need in those areas seeing greatest impact.
  3. Traditionally accepted spending equity measures fail to account for the funding side of the equation, and fail to account for significant shifts in the distribution of district spending capacity. A majority of districts are no longer able to spend at the state average, a downward shift from a decade ago. These traditional measures can no longer assess increasing economic inequality amongst school districts in Wisconsin.
  4. The school funding system in Wisconsin has been trending away from equity at a faster rate since the 2007 Great Recession. Higher needs populations of students as defined in Vincent v. Voight (FRL, SpN, ELL) are at a greater funding and spending disadvantage than their more affluent peers since 2004.
  5. School districts are being forced to increase the tax levy in response to cuts in state aid. School districts with low levels of funding and spending disparity are able to sustain appropriate levels of funding by placing that burden directly on local property tax payers. The levy credit functions to take local funds out of the education finance system, and returns a pittance to local property tax payers as higher needs schools are in desperate need of resources. Even low property wealth districts are forced to levy higher rates to sustain even minimal levels of funding to support increasing populations of higher needs students. In particular, we hypothesize that the school finance system is legally vulnerable on this aspect of the funding statute.
  6. The Per Pupil Revenue Limit (PPRL) analysis shows that districts of higher poverty have significantly lower PPRL, and therefore less ability to receive aid and levy appropriate taxes to fund public education than more affluent districts. The magnitude of this negative effect is increasing over time.
  7. In reported education cost and spending data, our model shows that over time, FRL rate has a significant negative effect. In addition, districts that are able to increase tax levy also have a significant ability to spend more, and report higher education costs than districts unable to increase the tax levy. It also shows that increasing enrollment in a district over time results in lower spending ability.
  8. The 2004 mean Equalized Aid was $5930 and decreased by $170 for every $1000 in net tax effort. The magnitude of this decrease has grown over time. In 2005, compared to 2004, there was a $210 decrease for every $1000 in Equalized Aid. In 2011, the decrease was $290 per $1000 in Equalized Aid. This reflects a nearly threefold increase in negative slope since 2005 (Coefficients = 0.038 – 0.170 from 2004 – 2011). School finance in Wisconsin is a system.

What this report shows is that there is currently a systemic failure to ensure that the moral purpose of public education as defined by the Wisconsin Supreme Court in Vincent v. Voight is being fulfilled:  “An equal opportunity for a sound basic education is one that will equip students for their roles as citizens and enable them to succeed economically and personally.”

Policy Recommendations

  1. Adopt the “Fair Funding” revision of the funding formula proposed by State Superintendent Tony Evers.
  2. Public subsidizing of private schools, which have shown no educational efficacy when socioeconomic factors are accounted for, is contributing to the systemic destruction of public education. These programs should be sunsetted over a ten year period, with the appropriate funding being restored to the respective affected districts.
  3. Categorical Aids should be adjusted to address increasing need where appropriate, including increasing FRL rate in the overall equalization aid formula.
  4. Appropriate revenue should be dedicated to alleviating the overtly high burden on local property tax payers where appropriate.
  5. Revenue limits should be appropriate to address the increasing resources required for higher needs populations, rural schools, and cost of operating a high quality public school.
  6. A bipartisan commitment to the moral responsibility of public education to shape the future of Wisconsin should be acknowledged, as this is not a partisan issue – it is a moral issue.