Tax-Revenue Curbs Spurring Program Cuts, Wis. Officials Say

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Even as Wisconsin lawmakers have agreed this spring to put off a decision on overhauling their school-funding system, many local school officials are charging that state inaction and fiscal restrictions passed last year are causing widespread program cutbacks.

Administrators in several school districts are pointing to a law passed last summer in an effort to curb local property-tax increases as the culprit for tight budgets. The law limits the amount of money districts can raise to balance their budgets.

The impact, observers said, is that several low-spending districts have quickly been handcuffed and scores of other school systems see themselves headed for similar difficulties.

The restrictions have already forced the reduction or elimination of some extracurricular programs, spurred student protests, and raised the possibility of a court challenge to the state.

The law limits districts to budget increases of no more than $190 per student or the inflation rate, whichever is higher. The only way around the cap is to win voter approval.

Officials in the Rice Lake Area School District, for example, said the law has led to $265,000 in cuts this school year. Administrators estimate that current programs will cost $450,000 more next year, well over the state's limit.

A referendum on the school budget was handily defeated by voters in the northwest-Wisconsin community, who have since presented a petition for another vote on a smaller budget increase. District taxpayers will go to the polls this month to decide a $275,000 increase.

In the absence of voter approval, officials have promised to cut summer school, athletics, and other extracurricular activities such as the drama program and the student council, according to Superintendent Robert J. Foster.

"In the past, the proposals for cost controls have exempted low-spending districts, but this one has caught us,'' Mr. Foster said.

The district currently spends $4,849 per student, well below the state's $6,004 average.

Other districts are also facing problems under the revenue cap. In McFarland, 500 students walked out of school this month to protest the Madison-area district's plan to cut extracurricular programs.

"We are deadly serious about the fact that these issues need to be addressed soon,'' said William J. Vincent, the superintendent of the Elk Mound Area School District.

Mr. Vincent is the chairman of the Association for Equity in Funding, a group of 142 districts that is studying the possibility of suing the state over its method of distributing school aid.

"We can't just be focused on taxpayer equity,'' he said. "This has got to focus on student equity.''

Focus on Taxes

But for most state officials, the focus this year has been on the taxation issue.

In a dramatic move, the House passed a plan that would phase out local property taxes as a source of school funding. In a compromise with the Senate, however, lawmakers agreed to appoint a commission to look at the state's tax structure and school spending and adopted as its goal a system that would rely on state funding for at least two-thirds of the total. (See Education Week, March 30, 1994.)

State spending currently accounts for 39 percent of school funding in Wisconsin.

The school-finance debate is expected to be a top issue in this year's political races. Several candidates have already staked out positions on the issue.

Gov. Tommy G. Thompson, a Republican, has expressed concern that a severe property-tax reduction could force increases in other state taxes that might hurt the state's business climate.

Another Republican, Lieut. Gov. Scott McCallum, has backed the revenue-cap law and criticized districts for threatening to cut popular programs in an attempt to win budget-increase votes.

Bridging the Gap

Observers are unsure, however, how quickly the state will deal with the finance issue.

The finance commission is due to make its report in September 1995. Lawmakers, meanwhile, will begin work next January on a state budget that will cover both fiscal 1996 and 1997.

The only certainty is that the state will be forced to act at some point. During negotiations over this year's bill, Democratic lawmakers included a provision that will severely curtail local property-tax levies beginning in 1997.

State officials predict that the situation will only deteriorate until leaders act.

"Under the revenue cap, there will be a continuing string of examples of these problems--up until the November election and after that,'' Steven Dold, the assistant state superintendent of public instruction, said.

Mr. Foster of Rice Lake said that while many school officials are optimistic about the state's intention to re-examine the finance system and take on a greater share of funding, administrators must also deal with the reality that no changes have been made so far.

"For this district, there isn't a way yet to bridge the gap,'' he said.

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