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Rising referendums: Competing sides search for solutions

By Heather Graves

WISCONSIN – The consensus across school districts and party lines is clear – Wisconsin’s school funding system has flaws, and it has had them for many years.

What those flaws are and how they can, or should, be fixed long-term is where the consensus stops and the debate starts.

Demographics and technology needs have changed drastically over the past nearly three decades of the funding formula’s existence.

In turn, the needs of districts have also changed.

Balancing ever-changing educational needs and a funding formula created in the early 1990s, districts often struggle to make ends meet – leading most to turn to referendum.

Retired Republican state legislator Luther Olsen said the nearly 30-year-old funding formula does the job, compared to before when there was no cap on spending.

“What was happening is that schools were writing checks and the state was having to sign its name on the bottom, and when it said it would fund whatever a school spent, there was no concern,” he said. “If somebody is putting money in your checking account, like the state was, just keep spending.”

Seymour Community School District Superintendent Laurie Asher said while the original intent may have been equality, it hasn’t worked.

“I think that is one of the biggest challenges from the state funding system that it currently is,” Asher said. “Is that it is based on an amount from quite a few years ago – and it has only created a larger gap between the top spending districts and the lower spending districts. There is such a wide range of how much we spend per student.”

Since being enacted in 1993, few changes have been made to the formula.

However, the topic hasn’t remained stagnant.

Olsen, along with State Rep. Joel Kitchens (R-Sturgeon Bay), served as co-chairs of the bipartisan Blue Ribbon Commission on School Funding in late 2018 through early 2019.

The commission was charged with examining how tax dollars are distributed to schools and making recommendations to better serve students across the state.

Kitchens and Olsen are both familiar with the needs of school districts – serving on their local school boards for several years.

Kitchens served on the Sturgeon Bay school board for 15 years, 13 as board president, until taking office in the State Assembly in 2015.

Olsen spent 21 years on the Berlin school board, serving as president for nine years before he left in 1997.

The commission held eight public hearings in 2018, gathering testimony from administrators, teachers, parents, students and community members.

As a result, the commission put forth 20 recommendations for legislative action – such as restoring the state’s commitment of two-thirds funding, per-pupil adjustments with inflation and weighting low-income pupils in the general school aids and updated revenue limit formulas.

A complete list of recommendations can be found at tinyurl.com/blueribbonrecs.

“I certainly think it was a worthwhile thing, doing the Blue Ribbon Commission,” Kitchens said. “I think it was the most systematic look at our funding formula and comparing it to other states that has been done in a very long time. It was a good exercise. There are a number of other bills that I think are still being looked at, and I would hope that we would still have a chance to get those done this time or in the future.”

Former Green Bay Superintendent Michelle Langenfeld, who served on the commission, said she sees the work as just the beginning.

“My recommendation would be to continue the work of the Blue Ribbon Commission by bringing together a more inclusive team that reflects the demographics of our school communities, as well as includes a research component, and members of the business community to take a deeper look not only into our current funding practices that are unfair and inequitable but also to look at those practices that are working well not only across Wisconsin but across the country,” Langenfeld said.

The topic also sparked local discussion in the form of a community task force through the Greater Green Bay Chamber’s Partners in Education initiative.

Since 2017, leaders from businesses, nonprofits, and K-12 and post-secondary education have met regularly to discuss equity in public school funding.

Those involved said understanding school finance and its impact on school districts is an important community conversation.

“This committee brings together local education, community organizations and business owners for the purpose of understanding school district funding and its impact on the local school districts,” Asher said. “This is important because of the combined vested interest in our communities shared by these groups. The schools’ ability to provide strong programs directly connects with the ability of organizations and businesses to hire and retain local talent.”

Green Bay Area Public School District Superintendent Steve Murley said the conversations facilitated by the Partners in Education – Equity in School Finance committee allows for open, honest dialogue about “how this process works, the impact on local districts and schools and consideration for changes that would positively impact area districts and the state as a whole.”

What remains a topic of concern for many is the increased need for districts to go to referendum just to keep the status quo.

“I think in the past, a referendum was used more for building facilities and bonds, on an as-needed basis,” Asher said. “So a one-time only. We are seeing an increase in the operational (referendum), and I think that is based on the length of a broken funding system. And in order to provide the same services, many school districts now have to ask their communities for that additional funding.”

Currently, Olsen said the only stable source of revenue for school districts is property tax.

“I wish we had a stable source of revenue for schools,” he said. “The only stable source you got is the state’s share, which comes from income tax and sales tax, and they change with the economy. So property taxes, you just set them and that’s what it is.”

Stable is not how one current state lawmaker and former school board member describes school funding.

Describing state aid over the past 10 years as “volatile,” State Rep. Kristina Shelton (D-Green Bay) said stability is far from what districts have.

“What school districts need is a stable source of income so that they know and can project how they are going to meet the needs of students, families and teachers,” she said. “And what’s unfortunate is this formula and this discussion has turned into political football, so that politicians can score points. And when we see an increase in the number of referendums in a district, it’s a response to the funding volatility. It’s a response to the reality that they are facing.”

From her experience serving on the Green Bay school board for nearly three years before taking office in the State Assembly earlier this year, Shelton said districts know what it takes to meet the needs of their students, families and teachers.

When things don’t add up, she said, they are forced to go to a referendum.

“They are pulling (one) of the only main levers that they have at their disposal,” she said. “And I think it is unfair and inequitable. I’d rather see the state step up and provide that funding so that they don’t have to constantly do that.”

School funding equity is what politicians in both parties said they want when it comes to the formula.

“In my mind, the goal at the state level has been to bring up the bottom,” Olsen said. “If the tops want to spend more, that’s their prerogative. I want to make sure kids get an adequate education, and the way you do that is to make sure the bottom isn’t so far behind the top.”

Shelton said Wisconsin needs a school funding formula that is “transparent, equitable and sustainable, and unfortunately, what we found is our formula is none of those things, and it is harming Wisconsin kids, families and teachers.”

“We know that this gap is widening,” she said. “The wealth of your zip code shouldn’t indicate the wealth and success of your school district. School districts and schools are the centers of the community, they are community hubs. And it is our job to ensure that every Wisconsin kid, wherever they live, has access to the services that they need and that there is a level of equity there. And we know from the research that there is a growing problem here, and it is time for us to step up and address it.”

Savion Castro, vice president of the Madison school board, said student demographics are changing and the approach to public education needs to change with it.

“I think a lot of people are waking up to some of the long-standing problems that have existed in public education for a while, and districts want to change, and they need the resources to do that,” Castro said. “I think education has to be an evolving institution, because at its core, I think, education is supposed to prepare people to be citizens of the country, community and world in which they are growing up in. And as those things evolve, i.e., the institution has to evolve. But that doesn’t just happen automatically, that takes resources.”

Olsen said school districts hurting the most from the formula are the ones with declining enrollments because it eats away at the state funds each district receives.

“When you lose a child, you lose $10,000, if you were spending that,” he said. “That really does not work, and that’s where the thing runs into problems.”

Kitchens said he agrees this logic is flawed.

“I wrote a bill about it, and I’m going to go back in and try (again),” he said. “(It) would be to acknowledge that there are fixed costs that districts have that don’t go away when you lose students. Acknowledge that, so that (districts) would not lose that entire amount.”

Kitchens said 2019 Assembly Bill 368, which was drafted from one of the commission’s recommendations, was aimed at modifying how declining enrollment adjustments to revenue limits are calculated, therefore lessening the amounts districts lose from declining enrollment. 

Under the bill, benchmarks based on the three-year rolling average in the 2018-19 school year would be set for subsequent years.

If a district’s three-year rolling average was less than the benchmark, the school district would have received a revenue limit adjustment.

The bill failed in April of 2020.

Kitchens said he plans to revisit the idea in the near future.

The need to address declining enrollments is an issue echoed on both sides of the aisle.

“Lowering and declining enrollment is certainly an issue that we need to work closely (on),” Shelton said. “And I’m from the school of – those closest to the issue need to be closest to the decision-making. So I would really want to bring in our leaders and look at the Blue Ribbon Commission and then say, ‘OK, what other action should we be taking to address this?’ Because again, it is an issue that is not likely to go away anytime soon.”

When looking around the country, Kitchens said Wisconsin’s formula stacks up fairly well.

“When I look at other states, our formula compares, I think, very favorably with other states, but it’s not perfect,” he said.

Olsen said the complexity of the school funding formula is the benefit because simple things rarely work out as planned. 

“I’ve been on some national committees, and we talked about school funding,” he said. “They always said Wisconsin is really complicated, but it’s fairer than any funding formula, and if you look at the mathematical studies, we rank pretty high on our equity amongst school districts and kids.”

Others said the formula’s complexity is part of the problem.

“I think it is really complicated,” Asher said. “My opinion, I don’t necessarily know if the current system can be fixed, because it is so complicated, and a tweak here would have an effect we probably don’t know about in the system.”

Pete Kempson, Seymour business manager, said the increase in referendums in the state reflects the broken system.

“It is frustrating for a district to have to do that (go to referendum),” Kempson said. “But I think it also shows how broken the funding system is in the state. There needs to be a mechanism where schools can be funded without having to go back and ask the public to continue to fund schools.”

Shelton said that is possible with one step – pass Gov. Tony Evers’ proposed biennial budget.

“The governor’s budget that he proposed is fiscally sound and fully funds public education,” she said. “So the question that we have for our state is: ‘Do we believe in public education, and will we step up to fully fund (it) so our students, families and teachers can be successful?’”

Olsen said an increase in referendums is expected, given the current formula. 

“I used to say that fair is where you take your cattle for show,” he said. “In reality there’s not that much in life that is really fair. It’s just the way the system works. No matter how much you spend per child, the high-spending districts go to referendum, the low-spending districts go to referendum nowadays. It’s just the nature of the beast – where the state says this is how much we’re going to give you. Where if you want more, no matter the reason, you need to get the voters’ approval.” 

Others said this is exactly where the problems lie.

“The structure of how (districts are) funded and how we are operating is not sustainable, and it is all connected,” Shelton said. “It is not that the process is inherently itself bad. It’s that we are relying on it so much that it is stressing the system.”

Pete Ross, Green Bay director of operations, said he sees the potential for fewer referendums if the state would reset the revenue cap and adjust it to inflation – a recommendation brought forward by the Blue Ribbon Commission.

“We’ve been asking for inflationary increases since the revenue cap was put in place,” Ross said. “And I do believe when Gov. (Tommy) Thompson put the revenue cap in place, he intended that it would have inflationary increases. It did actually for a couple of years, and then the Legislature took that away.”

Shelton said the commission set forth clear recommendations – a blueprint – to address the formula’s flaws and now, it’s time for action.

“It’s exciting because I think we have a very clear path forward of what we need to do to at least get started addressing these flaws,” she said. “It’s frustrating that the state continues to kick the can down the road and sort of put their hands up and say ‘There’s not much we can do.’ It is doable. And it’s unfortunate that we have a Republican-controlled Legislature that continues to tell people we can’t do hard things.”

Kitchens said it is easy to blame the formula.

“‘Oh, the formula is broken, that’s why we have to go to referendum.’ But it is more complicated than that,” he said. “It is honestly a silly exercise to think that you can come up with a formula that is going to be fair to all of the different districts around the state and all of the different circumstances. It is impossible, which is why we do have that referendum clause.”

Kitchens said most taxpayers, at this point, have become accustomed to referendums.

“And it does sort of make the district a little more accountable and have to sell it,” he said. “And I know, I was a school board member, it stinks to have to do that all the time – go out and sell yourselves. I guess what I’m saying is the success rate on referendums are really pretty darn high at this point, because I think citizens understand that it is going to be necessary for an awful lot of school districts.”

In terms of changes to the formula, Olsen said he would like to see students weighed on needs, with special needs getting more funding. 

“We know that lower-income kids cost more, they’re harder to educate, and English language learners, and one of the changes would be to weigh students,” he said. “To say if you have whatever you have for low-income students, that may count as 1.2, or English language learners would count as 1.1, or whatever it turns out to be. To me, that would be even more fair, because not all kids, as you know, are equal as to what it costs to educate them.” 

Kempson said the difficulty with change is it “creates winners and losers.”

“And no representative in Madison wants their district to become a loser,” he said. “So whatever solutions can be brought forward, they need to hold districts harmless, which creates a huge fiscal responsibility for the state.”

Though Shelton agrees change needs to happen, she rejects the need to have winners and losers.

“I don’t think there has to be some win and some lose,” Shelton said. “I think we have what it takes financially and at the grassroots level to build and support and sustain a type of public schools that we all need and deserve.”

Shelton said the state has what it takes to fully fund and support public education.

“So when people say there are some winners and losers – I’d say, ‘You know, it seems like the system is set up that way right now, but it doesn’t have to be that way going forward,’” she said. “We can have a public school system that works for everyone and is fully funded.”

Press Times Editor Ben Rodgers contributed to this story.

This story was produced by the NEW News Lab, a collaboration of newsrooms that focuses on issues important to Northeast Wisconsin. 

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