Explanations of Wisconsin’s public school financing system usually fall into one of two categories: Gross simplification or an approach that Janesville School District Chief Financial Officer Dan McCrea described as “granular.”

The first is usually employed to make a political point, and the second would be interesting only at a convention of school business managers.

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But with Janesville property values going up, and Janesville school enrollment doing down, it’s crucial for people to understand how the system works and what it means for their schools and their pocketbooks.

The Janesville School Board is expected to approve the 2019-20 budget Tuesday night.

Step one: Understanding revenue limits

All of Wisconsin’s public schools, technical colleges, cities, towns and counties face revenue limits. The limits were imposed in 1993 in an effort to keep local property taxes in check.

At the most basic level, revenue limits dictate how much revenue a school or municipality can generate through local property taxes.

But here’s the kicker: The amount of money technical colleges and municipalities can generate through property taxes goes up when the property base expands through new construction.

That’s not how it works for public schools.

Step two: Counting kids

School funding is based on school “membership,” which is not exactly the same as enrollment.

McCrea refers to enrollment as the “belly button count:” Each child counts as one.

The membership method counts students in preschool or 4-year-old kindergarten as 0.5 or 0.6, depending on the program. Students in grades kindergarten to 12 are counted as one.

Students are counted for membership purposes on the third Friday in September. Between September 2013 and September 2018, the district’s membership dropped from 10,023 to 9,528. This fall, membership was 9,637. The slight uptick was due to more children in kindergarten classes and an increase in open enrollment for other districts.

To determine what the revenue limit is, membership is multiplied by the amount the district is allowed to raise per student, a figure that’s set by the state. This year, that about is about $9,700.

To that amount are added any exceptions. When school districts go to referendum, that amount is added in.


Step three: Calculating taxes

At a Janesville School Board Finance Committee meeting last week, McCrea explained what that would mean for local taxpayers: As enrollment goes down, state aid goes down. However, the amount that can be raised per student, that $9,700 amount set by the state, remains the same.

That means that more of the burden will shift from the state to the local taxpayers.

That hasn’t happened yet, but a recent property re-evaluation in the city of Janesville has left people nervous about tax increases. Assessments will go up an average of 31 percent, city officials say.

What does that mean for school taxes?

The tentative school budget, which probably will be approved next Tuesday, calls for total spending of $121.45 million, down from $121.55 million last year. Of that, $35.7 million will be covered by local property taxes. That’s down from $37.52 million last year, a decrease of 4.85%.

For taxpayers, that translates to an estimated tax of $8.10 per $1,000 of equalized property value, down from last year’s $8.51, a decrease of 4.82%.

But because property values are going up an average of 31 percent, doesn’t that mean the total amount of school taxes also will go up?

Probably not, McCrea said.

Here’s why: The school district will be collecting a smaller property tax total.

“We’re asking for a smaller amount of money from a larger pool (of property value),” McCrea said.

What’s next?

Enrollment has been dropping across the state, with rural districts being hit harder. Brodhead, Clinton and Parkview school districts all have struggled with declining enrollments.

Here’s the challenge: Declining enrollment is spread across 13 grades in numerous buildings. In Clinton, they have three buildings; Janesville has students in 20 locations. Even if a school loses enough students to eliminate a grade, that school still would need to be heated, it still would need school counselors and administration, maintenance people and secretaries.

Districts such as Parkview have resorted to referendums to cover operating expenses. The referendums are non-recurring, meaning that the district has to return to the public in another three years.

Between November 2017 and April 2019, 82 Wisconsin school districts had non-recurring referendums. The majority were for operating costs to maintain existing programs.

The Whitewater School District asked to exceed the revenue limit to maintain “comprehensive instructional and co-curricluar programs.”

Other districts used non-recurring referendums to upgrade technology.

McCrea said Janesville School District officials were not considering a referendum anytime soon.

School board members have noted that with new businesses in the area, such as SHINE, and the development of new housing projects, enrollment might even go up.