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Summary of 2005 Wisconsin Act 25 Comparison of Joint Committee on Finance/Legislature and Final 2005-07 Budget Act with Governor's Vetoes

Provisions Related to
Elementary and Secondary Education
and State Agency Operations

Also Includes Listing of Key Provisions from the
Department's 2005-07 Budget Request but NOT Included in
Governor's Final Bill

Prepared by Policy and Budget Team
Department of Public Instruction
July, 2005

GENERAL SCHOOL AIDS

General Equalization Aids

AGENCY REQUEST:

  • Increase general equalization aids to school districts by $107,938,600 GPR in FY06 and $218,575,800 GPR in FY07 to provide a 2.5 percent annual increase.

GOVERNOR:

  • Increase general equalization aids by $285,000,000 GPR in FY06 (6.6 percent) and $415,000,000 GPR in FY07 (2.8 percent).
  • It is estimated that school property tax levies under the Governor's budget will decrease by 1.0 percent in FY06 and 0.3 percent in FY07 (including the $150 million increase in the school levy tax credit). If the levy credit increase is not counted, school property tax levies are projected to increase by 3.9 percent in FY07.

JOINT FINANCE/LEGISLATURE:

  • Reduce Governor's funding by $143,600,000 GPR in FY06 and $184,800,000 GPR in FY07-results in a net increase in equalization aids of $141,400,000 GPR in FY06 and $230,200,000 GPR in FY07, for a biennial total increase of $371,600,000 GPR. This would result in annual increases of 3.3 percent in FY06 and 2.0 percent in FY07.

VETO BY GOVERNOR:

  • Partially veto nonstatutory sections related to authorizing the Department of Administration (DOA) secretary to lapse and transfer certain monies to the general fund. Authorize the DOA secretary to transfer $330 million from the general fund to the general equalization aids appropriation in the Department of Public Instruction. Request the DOA secretary to transfer $155,000,000 in FY06 and $175,000,000 in FY07.
  • Results in a net increase in equalization aids of $296,400,000 GPR in FY06 and $405,200,000 GPR in FY07, for a biennial total increase of $701,600,000 GPR. This would result in annual increases of 6.9 percent in FY06 and 2.4 percent in FY07.

Streamlined Sales Tax Revenue

AGENCY REQUEST:

None.

GOVERNOR:

  • Recommends that any additional sales tax revenue generated during the 2005-07 biennium due to the Streamlined Sales Tax Project, in excess of amounts anticipated, be used to increase general school aids in FY07.
  • Under this recommendation, the Department of Revenue will make a determination of any additional revenue from the project by September 1, 2006.

JOINT FINANCE/LEGISLATURE:

  • Delete the Governor's request.

VETO BY GOVERNOR:

N/A

School Levy Tax Credit

AGENCY REQUEST:

None.

GOVERNOR:

  • Increase the school levy tax credit by $150 million beginning in FY08 (for the 2006-07 property tax year; credit is paid in FY08, but distributed based on school property tax levies from December 2006).
  • The increase would be distributed under a new formula based on each municipality's share of general equalization aid, as determined by the Department of Revenue. This would permit the additional payments to better reflect a municipality's property value, providing a higher proportion of the payment to municipalities with lower property values (i.e. the additional payment is more "equalizing"). The current school levy tax credit of $469.3 million is distributed based on a municipality's school property tax levy.
  • Funding for the increased credit would not be needed until FY08. The Governor's budget does not increase appropriations in the 2005-07 biennium; however, an increase of $150,000,000 annually over the base funding level would need to be provided in the 2007-09 biennium.

JOINT FINANCE/LEGISLATURE:

  • Modify Governor's proposal by providing a $50 million increase (rather $150 million) effective for the 2006-07 property tax year, and distribute the new funds as under current law (rather than based on equalization aid level). Total levy credit would be $519,305,000, an increase from $469,305,000.
  • As under the Governor, funding for the increased credit would not be needed until FY08.

VETO BY GOVERNOR:

  • Partially veto this section to provide an additional $73,745,000 in school levy tax credits beginning with property tax bills mailed December 2006 (2006-07 tax year). This has the effect of setting the appropriation amount at $593,050,000 beginning in 2007 and continuing thereafter.
  • As with above changes, since this partial veto affects payments made in July 2007, funding for the increased credit would not be needed until FY08.

Parental Consent Threshold for Chapter 220 Program

AGENCY REQUEST:

None.

GOVERNOR:

None.

JOINT FINANCE/LEGISLATURE:

  • Set the threshold for the percentage of pupils for which Milwaukee Public Schools (MPS) is required to receive written consent from the pupil's parent or guardian to transfer the pupil under the intradistrict transfer (Chapter 220) program at 95%, rather than the current law 100%, in 2005-06 and each year thereafter. If MPS does not meet the threshold, it loses equalization, intradistrict, and transportation aid related to the number of pupils by which MPS is short of the threshold.

VETO BY GOVERNOR:

N/A

Negative Tertiary Aid Exclusion for Certain Costs

AGENCY REQUEST:

None.

GOVERNOR:

None.

JOINT FINANCE/LEGISLATURE:

  • Provide that, for equalization aid paid in the 2006-07 and 2007-08 school years, certain costs supported by monies drawn from a district's fund balance would be excluded from shared costs if the result would be an increase in the district's equalization aid payment.
  • Require that a school district could only expend the funds under this provision on the balance of the district's unfunded pension liability under the Wisconsin Retirement System or on debt service costs for debt that was issued to refinance the balance of the unfunded pension liability.
  • Under the equalization aid formula, districts with shared costs per pupil above the secondary cost ceiling ($7,679 in 2004-05) and equalized value above the statewide average ($407,263 in 2004-05) would generate negative aid as a result of any increase in shared cost. Had this provision applied in FY05, a total of 117 negative tertiary aid districts would have been eligible to spend reserve funds, if available, on any unfunded pension liability costs without incurring additional negative tertiary aid.
  • To the extent that negative tertiary districts make these expenditures, there would be a redistribution of aid under this item from lower-value to higher-value districts related to these expenditures.

VETO BY GOVERNOR:

N/A

REVENUE LIMITS

 

Per Pupil Revenue Limit Adjustment

 

AGENCY REQUEST:

None.

GOVERNOR:

None.

JOINT FINANCE/LEGISLATURE:

  • Reduce the per pupil revenue limit adjustment from $248 (under current law projections) to $120 in FY06 and from $252 to $100 in FY07. It is estimated that this will reduce statewide revenue limit authority for school districts by about $350 million over the biennium ($110 in FY06 and $240 in FY07).

VETO BY GOVERNOR:

  • Restore the per pupil revenue limit adjustment back to current law. Under current projections, the adjustment will be $248 in FY06 and $252 in FY07.

Declining Enrollment Revenue Limit Exemption

AGENCY REQUEST:

  • Maintain the current three-year pupil enrollment rolling average calculation for revenue limits, but change the current 75 percent hold harmless non-recurring exemption to a recurring exemption that districts could retain in their base revenue limit for the following year.
  • Making the 75 percent revenue limit exemption recurring would (compared to current law) provide roughly $25-30 million in additional annual statewide revenue limit authority (above the $25-30 million now allowed on a non-recurring basis), beginning in the second year of the recurring exemption implementation (2006-07 if implemented in 2005-06).

GOVERNOR:

  • Modify the agency's request by, beginning in FY07, requiring DPI to calculate a school district's revenue limit by using either a three-year or five-year rolling average of pupil enrollment for both the current and prior year calculations. Provide that DPI shall use the enrollment calculation that would provide each school district with the greatest revenue limit.

JOINT FINANCE/LEGISLATURE:

  • Delete the Governor's request.

VETO BY GOVERNOR:

N/A

Low Revenue Ceiling Adjustment

AGENCY REQUEST:

  • Increase the per pupil low revenue ceiling amount by $400 annually, to $8,200 in FY06 and to $8,600 in FY07, to continue to provide the state's lowest spending districts with the opportunity to narrow the disparity with the highest spending districts.
  • There is no state fiscal impact. However, this proposal would allow over 125 of the state's school districts to increase their revenues beyond the annual allowable per pupil adjustment each year with an estimated fiscal impact of $15-25 million in additional revenue limit authority in FY06 and $25-35 million in additional authority in FY07.

GOVERNOR:

  • Modify the agency's request by increasing the low revenue ceiling exemption from $7,800 in FY05 to $8,100 in FY06 and $8,400 in FY07.

JOINT FINANCE/LEGISLATURE:

  • Approve the Governor's request.

VETO BY GOVERNOR:

N/A

Unused Revenue Limit Carryover

AGENCY REQUEST:

  • Increase the allowable percentage of unused revenue limit carryover for school districts from 75 percent to 100 percent beginning in FY06.
  • There is no state fiscal impact, but this change would provide school districts additional revenue limit authority. The use of such authority would be dependent on local school board decisions.
  • Had this provision been in effect for the calculation of revenue limits for FY04, the 100 percent carryover adjustment would have generated revenue limit authority of nearly $3.7 million for those districts, an increase of approximately $900,000 compared to current law.

GOVERNOR:

  • Approve agency request.

JOINT FINANCE/LEGISLATURE:

  • Approve the Governor's request, but make it effective for FY05 instead of FY06.

VETO BY GOVERNOR:

N/A

CATEGORICAL AIDS

Advanced Placement (AP)

AGENCY REQUEST:

  • Request $200,000 GPR annually in FY06 and FY07 to award grants to school districts to partially reimburse the costs related to offering AP courses to students. Grants are available only to schools that are not currently offering AP courses or programs. Grants will be awarded based on the number of students participating in AP courses (limited to $300 per student per semester).
  • Request 1.0 FTE consultant to administer the AP grants and to serve as a gifted and talented lead position ($66,300 GPR in FY06 and $86,700 GPR in FY07).

GOVERNOR:

  • Modify the department's request to provide $100,000 GPR annually for grants in FY06 and FY07.
  • Approve the department's request to provide funding for 1.0 FTE consultant to administer the AP grants and to serve as a gifted and talented lead position.

JOINT FINANCE/LEGISLATURE:

  • Approve the Governor's request.

VETO BY GOVERNOR:

N/A

Supporting Gifted and Talented Students

AGENCY REQUEST:

  • Request $182,000 GPR annually in FY06 and FY07 to serve academically talented pupils across the state by establishing a school district cooperative grant program that will provide challenging advanced curriculum and assessments for middle schools.
  • The model is proposed to be funded at 13 sites (12 Cooperative Educational Service Agencies [CESAs] and Milwaukee Public Schools). At each site, four to six middle schools would participate with approximately 25-30 pupils.

GOVERNOR:

  • Modify request by providing $91,000 GPR each year in grants for advanced curriculum and assessments for gifted and talented middle school students.

JOINT FINANCE/LEGISLATURE:

  • Modify the Governor's request by providing an additional $91,000 GPR each year for gifted and talented middle school pupils, for a total of $182,000 GPR each year.

VETO BY GOVERNOR:

N/A

Pupil Transportation Aid

AGENCY REQUEST:

  • Increase the current transportation aid appropriation by $21,130,000 GPR annually in FY06 and FY07 to do the following: (a) fully fund the current appropriation; (b) double the state statutory transportation reimbursement rates to reflect increased costs of transporting pupils in all districts; and (c) provide eve