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W hen thefinal guns o u n d e d

ending the Bobcats’41–8 drubbing of con-ference rival ThreeLakes, the victoriousfans from Florencebegan the celebration.However, a pall hungover the celebration,given the real possibil-ity that the Bobcatsmight never take thefield again. A lostfootball programwould be but one ofthe many casualtiesthat lay ahead forFlorence. It looked likely that the school dis-trict would dissolve.

The prospect that this small rural district(approximately 600 students) was facing disso-lution was an ominous sign for dozens ofschool districts. Florence represented a tremorthat could trigger a tsunami throughoutWisconsin. District after district looked atFlorence and saw far too many similarities totheir own profile.

On July 11 the Florence School District hadvoted to dissolve, an action that would send itsstudents in a starburst to neighboring schooldistricts. Nothing like this had occurred inWisconsin since 1990. All eyes were watchingFlorence since the factors affecting Florencewere endemic to small rural districts through-out Wisconsin. While most people felt sympa-

thy for the people ofFlorence, there wasalso a small factionhoping that Florencewould ignite a revo-lution of schoolfinance inWisconsin.

Cast in the roleof the villain in theFlorence drama wasnone other thanWisconsin’s systemof school finance,specifically the stateschool aid formula.Throughout the statein school boardmeetings, editorial

board conferences, and in the halls of the stateCapitol there was a growing consensus thatthe current formula was broken beyond repair.Wisconsin needed an entirely new way to fundeducation.

Stoking the notion of overthrowing theformula was a guerrilla movement that foryears had been meeting, plotting, and publish-ing studies; all with the express purpose ofdestroying the current formula. From the ashesof the formula they saw an opportunity tobuild a superior way to finance education inWisconsin.

Now, with the prospect of a poor, defense-less school district actually facing dissolution,these zealots had been delivered the strategic

AN EDUCATIONAL HEAD FAKEWHY WISCONSIN’S SCHOOL AID SYSTEM WON’T

CHANGE

GEORGE LIGHTBOURN

George Lightbourn is a Senior Fellow of the WisconsinPolicy Research Institute.

boost they needed. Tiny Florence offered theposter material that their movement had beenlacking. In a letter to his colleagues in theLegislature, Senator Roger Breske (whose dis-trict includes Florence) wrote, “[T]he way wedistribute state aid and revenue authorityneeds to change for the sake of all ourschools.” Further, he predicted that “an entireregion of districts would have to dissolvebefore Madison would sit up and listen.”What had been a low-boil policy debate wasabout to have the heat turned up.

Alas, at the eleventh hour the voters ofFlorence County did something they hadfailed to do in three previous attempts; theyvoted to increase their taxes, sending an extra$4.75 million to the schools over the next fiveyears. With that action, the Florence SchoolDistrict was back in business.

The vote by the people in Florence robbedthe reform movement of its poster child.However, the movement to replace the formu-la has not gone away. Expect talk of reform tocontinue, both in the rhetoric of this fall’s cam-paign, as well as when the Legislature recon-venes next January. But without a Florence-type poster child, the debate will have lesshyperbole. But it will not go away.

In the eyes of many, the legitimacy of oursystem for financing education has never beenmore severely under attack. But is it reallyunder siege? Let’s review the real picture ofeducation finance, both the push behind thereform movement and a handicapping of themovement’s chances.

The Case for Reform

The debate over school aids bears watch-ing for two reasons. First, there are many moreschool districts facing circumstances similar toFlorence. Look for budget pressures to pushother districts to the breaking point. Second,from any perspective, school aids are signifi-cant. The $11.3 billion devoted to school aids inthe current two-year budget, consumes no lessthan 43% of the state budget. Further, nothingaffects the local property tax bill to the degreethat school aids do.

In one sense, it is difficult to argue withthose calling for change. The current school aidformula almost defies understanding or expla-nation. If truth be told, it is really understoodby a few financial analysts in Madison, a hand-ful of legislators, and a select number of lobby-ists who are paid to find ways to tilt schoolfunding to flow one direction or another.

The concept behind the formula — toequalize the ability of both poor and rich dis-tricts to finance education—is relatively sim-ple. And it was simple in 1949 when equaliza-tion was introduced into state law. However,over the intervening decades, the formula hasbeen cluttered with patch after patch as legisla-tors and governors have tried to use the for-mula to accomplish a myriad of objectives.

How complex is the formula? The shortanswer is very! For example, a central piece ofdata needed to run the formula is the numberof students in each school district. That seemssimple enough, right? Wrong! Read the follow-ing excerpt from a Legislative Fiscal Bureaupaper used to explain the formula to legisla-tors:

• A five-year-old kindergartener in a half-day program is counted as 0.5 member. Apupil enrolled in a five-year-old kinder-garten program for a full day, five days aweek, is counted as 1.0 member. A full-time equivalency method is used forkindergartners attending a full day butfewer than five days a week.

• A four-year-old kindergarten pupil iscounted as 0.5 member if the pupil attendsfor at least 437 hours, unless the programprovides at least 87.5 additional hours ofoutreach activities, in which case the pupilis counted as 0.6 member.

• A pupil, age three or older, enrolled in apreschool handicapped education pro-gram is counted as 0.5 member.

Is that clear? Keep in mind that this clutterhas built up just over the way that students arecounted in the formula. There are dozens ofsimilar calculations required to run the schoolaid formula. In many ways the Wisconsin for-

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mula rivals the federal tax code in complexity.And, like the tax code, the results are oftenunpredictable.

The formula has so many moving partsthat it is impossible to predict what will actual-ly happen to the flow of dollars when changesare made. That is why, for example, that oppo-nents of Milwaukee’s school choice programwere able to show the choice program was tak-ing dollars away from districts in distant cor-ners of Wisconsin. Tracking those dollarsthrough the school aid formula became a realwhodunit in the halls of the Capitol.

Florence was caught in one of the many pol-icy cracks in the school funding formula.Among the factors robbingFlorence of aid was theirdeclining enrollments.Fewer students meantlower state aids which forFlorence meant shavingthe full time staff from 110to 86. No less than 60% ofWisconsin school districtswill see their enrollmentsshrink over the next sever-al years and face the samereduction in school aidsthat Florence experienced.

Of course, manyobservers said that itseemed logical that aidsshould go down as enrollments shrunk.However, the loss of aids is never met withresignation. Instead, the reduction of aids toFlorence was portrayed by Senator Breske andothers as a failure of the formula to do what ithad always done; bail out districts which hadalways looked to state aid to cure school dis-tricts’ financial ills. They saw the formula asthe enemy, a force that had turned againstlocal schools.

The Case for a Foundation Formula

Not only does the current formula comeup short in its mind boggling complexity,reformers argue that it has not kept pace withmajor forces affecting education today. Mostcritics of Wisconsin’s formula point to the

needs of special education students, as well aslow income urban students as two factors thatare not adequately addressed under the cur-rent school finance system. These critics arequick to point out that equity, the core preceptof the equalization formula, has outlived itsusefulness. In its place they suggest a formuladriven by adequacy. Each school district shouldhave enough money, regardless of where themoney comes from, to finance a sound basiceducation. Only through such an approach,they argue, can schools have the resources theyneed to address the basic educational needs oftheir students, including the added burdenthat comes with special education and lowincome urban students.

The approach advo-cated by these people is afoundation formula forfinancing Wisconsinschools. Foundation for-mulas are used by nofewer than forty states inallocating state aids tolocal school districts.Under a foundation for-mula, each schoolreceives aids, not basedupon the relative wealthof the district, but ratheron the basis of what isneeded to educate the

students in that district. A specific dollaramount of spending is required of each schooldistrict. State taxpayers usually provide thelion’s share of the funding. Implicit in definingthat ideal spending level is an assumption ofthe ideal school size, the ideal class size, theideal level of staffing and pay, the ideal cur-riculum, etc.

Three features of foundation funding for-mulas are touted as advantages: The formula issimple and easy to understand, it is based onresearch about what is required to educate acontemporary student, and it is seen as fairer.This last advantage does not stand up underanalysis, but whenever a foundation formula isdiscussed it is described as being a fairer wayof funding education.

Each school districtshould have enoughmoney, regardless of

where the money comesfrom, to finance a sound

basic education.

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Of course, a foundation formula requireschoosing what amount local schools should bespending. That amount can be determined in avariety of ways, including simply dividing theamount of available money into the number ofstudents. Alternatively, the foundation amountcan be set by examining, from the ground up,the amount required to provide the quality ofeducation desired. This requires costing outthe various components of the educationalexperience.

Only one such attempt at costing out theideal educational cost in Wisconsin has beenattempted. In 2002 the Institute for Wisconsin’sFuture, a think tank funded by organizedlabor, attempted to cost out what they consid-ered was needed. That analysis showed thatWisconsin’s funding of education came up25% short. In today’s dollars, that wouldequate to a need for an additional $1 billion.This exposes a major weakness of foundationplans: They establish an expectation that isbeyond the taxpayers’ capacity.

The Real Motive behind the ReformMovement

What is really behind the reform move-ment? It seems that the groups pressing fordumping the current formula are only margin-ally troubled by the distribution of local aidsunder the existing formula. And, truth be told,they are not really that troubled by the plightof rural districts like Florence.

In reality the push for a new school aidformula is a reaction to years of chaffing underthe spending limits placed on Wisconsinschools. Since 1996, schools have been limitedon the level of local taxes and teacher compen-sation. As the education community has beenforced to either cut spending or go cap-in-handto the voters for more money, they look for away to break the back of the current spendinglimits. If given a choice between a new schoolaid formula or eliminating cost controls, it islikely that they would favor eliminating thecost controls.

What are the Prospects for Change?

How serious is the challenge to the currentformula? The short answer is that there is littleprospect that the current school aid formulawill be replaced any time soon. The politics,funding, and culture are all working againstchange. Yet it is equally unlikely that efforts tooverthrow the current formula will subside.Let’s examine each of the reasons why it isunlikely that the formula will be scrapped.

East Wing Reality

Governor Doyle is the Democratic gover-nor that many in the education communityhad been looking forward to for sixteen years.He was elected partially on the premise that hewas the candidate most likely to supportWEAC, the union representing Wisconsinteachers. In his first year in office, GovernorDoyle appeared ready to take on the statusquo and shake up the world of educationfinance. He appointed a high profile task forcewhich was widely perceived as the vehicle formoving Wisconsin toward a foundation for-mula for education finance.

However, in the end, Governor Doylelooked at the risk and saw an inadequateupside to boldly championing an entirely newway to finance education. So he chose a well-worn path taken by many governors beforehim. He decided to stick with the current for-mula and add patches that he hoped wouldserve his agenda for education.

Governor Doyle discovered the time-wornlesson that campaigning for reform is onething, but actually navigating the waters ofreform requires a strong stomach and widepublic support. And, the reality is that, with-out support from the East Wing, significantchange to education finance is simply not inthe cards.

Constitutional Reality

In 2000 the Wisconsin Supreme Courtissued a ruling on Vincent v. Voight, the mostrecent decision on educational finance. It was a

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dandy. The constitutional challenge to theschool aid formula was supported by all sec-tors of the educational community. Theyargued that the formula failed to meet the testof the uniformity clause of the stateConstitution.

While the inner workings of the SupremeCourt remain shrouded in secrecy, the Vincentdecision provided a window into the backscratching that must have gone on behindclosed doors. It is evident from the court’sdecision that the justices came within awhisker of finding the formula unconstitution-al. Justice Crooks, who penned the majoritydecision, joined with three other justices infinding the formula metthe uniformity test andwould therefore stand.However, the sameJustice Crooks joined withthe three dissenting jus-tices in determining anew standard by whichthe adequacy of statefunding should be mea-sured. The new standardis that each child has aright to a sound basiceducation. In the shortterm, the Court’s decisionpreserved the status quo.However, in the longerrun the Court, in settingthe “sound basic education” standard loweredthe bar for future challenges to the uniformityclause.

The closeness of the Court’s decision wasan interesting side show. The importance oftheir decision was that the current system fordistributing aids was found to be constitutional.The closeness of the vote is insignificant com-pared to the absolute finding that the aid for-mula was constitutional. Any alternative formu-la that might be enacted would surely face acourt challenge, and given the 2000 ruling,would be undertaken with a considerable legaldisadvantage.

Fiscal Reality

Any change to the school aid formula, nomatter how small, is examined through theprism of the computer printout — that coldsplash of water that reduces even the most elo-quent policy rationale to the starkness of win-ners and losers. Veteran observers of statebudgets have heard generations of elected offi-cials decry the use of the printout in the devel-opment of public policy. However, very fewlegislators are willing to vote either red orgreen without knowing what the change willdo to schools in their district.

That is why formula change of any conse-quence takes grease. Grease in this case is the

extra money needed tomitigate the negativeeffects of formula changes.The last significant changein education fundingoccurred in 1996 whenGovernor Thompson andthe Legislature added $1billion of state tax revenueto school aids. That billiondollars was available onlydue to a state economythat was heating up.Unanticipated tax receiptsprovided the grease thatallowed the state to boostits share of school spend-

ing to two-thirds (which was linked to the impo-sition of spending restraints on local schools).The likelihood of that magnitude of fundingbeing available in the foreseeable future is limit-ed. No grease, no formula change.

So we should expect to see no fundamen-tal change in the way the state sends money tolocal school districts. Politics, money, and eventhe Supreme Court have ganged up in supportto the status quo. The support is admittedlylukewarm, but that is all that is enough. Thecurrent formula will probably even withstandthe outcry for change that will be heard thenext time a district like Florence is threatenedwith foreclosure.

Grease in this case is theextra money needed tomitigate the negative

effects of formulachanges.

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Do not expect the debate over the schoolfunding formula to ever be extinguished. But itwill never gain the traction required for realchange to occur. Talk of a foundation plan willremain an abstruse, bookish discussion thatresonates with a handful of legislative gadflies.The mainstream legislative mood will continueto reluctantly support the current school aidsystem, albeit adorned with yet more patchesand add-ons.

That is not to suggest that the movementsupporting a foundation funding formula forWisconsin will collapse, for it is a movementpopulated with noisy, active zealots. They will

continue to push for change, since their realmission is to get more money into localschools. Their frustration with the governorand the legislature will eventually boil overand they will once again take their case to thecourts.

So the outlook is for business-as-usual.The Florence Bobcats will take the field againnext fall; editorial boards will continue to rantthat our system of financing education is bro-ken beyond repair; and next January a newgroup of legislators will struggle to under-stand Wisconsin’s fifty-eight-year-old schoolaid formula.

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