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Published in Print: September 5, 2001, as Wis. Governor Strikes Spending-Cap Loophole

Wis. Governor Strikes Spending-Cap Loophole

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Gov. Scott McCallum of Wisconsin used his line-item veto last week to reject a provision tucked into the newly approved biennial state budget that would have allowed local school boards to sidestep a requirement that they get voters' permission before increasing spending beyond state-imposed caps.

In striking down the provision, the Republican governor cited its expense to the state, but made an exception for three cash-strapped districts in rural areas.

The measure would have allowed school districts to raise their state-imposed revenue caps by 0.78 percent, as long as two-thirds of the members of the local school board voted to do so. The effect would have been that spending could rise between $10 and $140 per pupil, depending on the property wealth of the district.

The estimated cost to the state: $45 million over two years. The state is committed to paying two-thirds of school costs.

"Clearly, this budget increases the state's already strong commitment to elementary and secondary education," the governor said in a letter to the Senate that was made public on Aug. 30. "Funding additional revenue-limit flexibility, beyond these commitments, would severely strain the state's resources and increase local property taxes."

Eight years ago, the state agreed to cover two-thirds of all public school costs in the state, up from 42 percent. In exchange, the legislature froze school district spending at 1992-93 levels, a move that lawmakers said would ensure the state could pay its bills. School boards were permitted to expand their budgets by 3.5 percent annually, in anticipation of inflation, and teacher-salary increases were limited to 3.8 percent each year. Districts were required to ask voters in referendums for any further funding.

Critics of the system argue that circumstances are changing rapidly in Wisconsin and that the school finance system needs to be overhauled. Because funding is tied to enrollment, they contend, districts that lose students—as is happening in many rural communities—are financially handicapped but still required by the state to provide high-quality services. In addition, they say, more students are being diagnosed with special needs that require expensive services.

"This is a big mistake," Karen Royster, the director of the Institute for Wisconsin's Future, a Milwaukee-based nonprofit organization that advocates loosening the caps, said of the governor's veto. "The school districts are facing such terrible financial problems. The increase would not have been massive, but it would have allowed for some districts to meet their basic operating costs they can't handle right now."

Ms. Royster cites dozens of stories about schools in rural, urban, and suburban communities struggling to pay for programs under the current system. For example, one section of a secondary school in western Wisconsin was condemned only days before the opening bell this year, she said. Teachers held classes on the lawn.

But the governor argued that allowing such increases would be fiscally irresponsible.

"If all districts made full use of the available flexibility in both years, the state would fall $33 million short of its commitment to fund two-thirds" of school expenses, Mr. McCallum said in his letter. "In addition, districts already have the authority to exceed limits through the referendum process."

Rural Districts Get a Break

Gov. McCallum made three exceptions during the veto process.

The Laona, South Shore, and Winter school districts, all located in the northern part of the state, are now allowed by law to increase their revenue caps in accordance with a formula that takes into account enrollment, provided local school boards agree to the measure by a two- thirds vote. All of the rural districts provide services for 400 or fewer students, are rapidly losing pupils, and cover 275 square miles or more.

"This will make a marked difference," said Henry C. Lamkin, the superintendent of the 250-student South Shore district, which laid off 19 percent of its teaching force last year because of budget constraints. "This doesn't mean that I'm going to run out and hire five new teachers or start offering scuba classes. It means we don't run a deficit of $160,000."

While a handful of districts such as South Shore may be in great need, a majority of systems in Wisconsin are well-funded, argued Michael M. Birkley, the legislative director for the 15,500-member Wisconsin Taxpayers Alliance, a Madison-based organization that opposes making it easier to exceed revenue caps.

"If kids aren't getting new books and roofs are leaking, ... either the school board hasn't got the courage to ask the taxpayers if they want to pay more or the taxpayers have not been convinced of the need," Mr. Birkely said.

A portion of the money originally allocated for the revenue-cap provision as outlined by a legislative conference committee was used instead by the governor to restore $14 million in funding for a prekindergarten program for 4-year-olds, said Faye Stark, the state's policy and budget director.

Lawmakers had suggested paring state funding for the program by 40 percent. The program is offered in some 230 districts in the state. "Research has shown that early education is an important factor in academic achievement, ... especially for pupils from economically disadvantaged families," Mr. McCallum said.

Critics, however, say that the governor is fueling a fiscal meltdown.

Gov. McCallum "maintained funding for programs that serve only a fraction of the population," Ms. Royster said. "He's ignoring real costs and a real financial crisis."

Vol. 21, Issue 1, Pages 24,30

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