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Consolidation Incentives and Issues

Overview

Consolidation Aid is addressed under Wis. Stats. 117.08 (6) and 117.09 (6).

For a school district consolidation that takes effect July 1, 2019 or later, provide aid to a consolidated district in an amount equal to $150 per pupil attending school in the consolidated district for the first five years after the consolidation. In the sixth year, districts would qualify for 50 percent of the amount received in the fifth year after the consolidation. In the seventh year, districts would qualify for 25 percent of the amount received in the fifth year after the consolidation. Current consolidation aid provisions relating to higher cost ceilings and guarantees under the equalization aid formula, as well as related revenue limit adjustments, would not apply to these consolidations. The appropriation to pay consolidation aid is sum-sufficient (no proration).

Review links below for additional details.

Aid, Shared Costs, Valuation, Revenue

The 2009-11 biennial budget bill (2009 Wisconsin Act 28) increased from 10% to 15% the equalization aid formula factors (shared cost and guaranteed valuation) applicable for five years to newly-consolidated districts, starting in the 2009-10 school year. The 2013-15 biennial budget bill (2013 Wisconsin Act 28) extended from five to seven years the length of time during which consolidated school districts receive additional equalization aid and special adjustment aid, with a phase out in years six and seven. The 2015-17 budget bill (2015 Wisconsin Act 55) eliminated the 2013 changes to the equalization aid factor adjustments and created a new, recurring revenue limit exemption for districts that consolidated in 2009-10 or after. The 2017-19 biennial budget bill (2017 Wisconsin Act 59) made the enhancements to the aid formula related to cost ceilings and guaranteed valuation applicable only for a district consolidated before July 1, 2019 and created the new Consolidation Aid.

S.121.07(6)(e)1. Wis. Stats., Shared Cost

For a school district created by a consolidation under s. 117.08 or s. 117.09 that takes effect before July 1, 2019, in the school year in which the consolidation takes effect and in each of the subsequent four school years, the amounts under pars. (b) and (d) shall be multiplied by 1.15 and rounded to the next lowest dollar.

S.121.07(7)(e)1. Wis. Stats., Guaranteed Valuation Per Member

For a school district created by a consolidation under s. 117.08 or s. 117.09 that takes effect before July 1, 2019, in the school year in which the consolidation takes effect and in each of the subsequent four school years, the amounts under pars. (a) to (bm) shall be multiplied by 1.15 and rounded to the next lower dollar.

Special Adjustment Aid

S.121.105(3) Wis. Stats., Special Adjustment Aids

In the school year in which a school district consolidation takes effect under s.117.08 or s. 117.09 and in each of the subsequent four school years, the consolidated school district’s state aid shall be an amount that is not less than the aggregate state aid received by the consolidating school districts in the school year prior to the school year in which the consolidation takes effect.

Example

If district A received $500,000 in equalization aid in the year prior to consolidation and district B received $500,000 in equalization aid in the year prior to consolidation, for the first five years of the consolidation, new district C would never receive less than $1,000,000 in equalization aid, regardless of the current equalization aid formula.

Revenue Limits - Wis. Stats. 121 Subchapter VII

Rule Clarifications

  • 121.90(1m) - “Revenue" means the sum of state aid and the property tax levy.
  • 121.90(2bm) - “State aid" excludes all of the following: 121.90(2)(bm)1. Any additional aid that a school district receives as a result of s. 121.07(6)(e)1 and (7)(e)1 and 121.105(3) for school district consolidations that are effective on or after July 1, 1995, as determined by DPI.

Consolidated Districts

  • 121.91(2m)(t)1 - If two or more school districts are consolidated under s. 117.08 or s. 117.09, except as follows, in the 2013-14 school year and the 2014-15 school year, the consolidated school district's revenue limit shall be determined as provided under par. (hm), and in the 2015-16 school year and in each school year thereafter, the consolidated school district's revenue limit shall be determined as provided under par. (i).
  • 121.91(2m)(t)1.a - For the school year beginning with the effective date of the consolidation, the state aid received in the previous school year by the consolidated school district is the sum of the state aid amounts received in the previous school year by all of the affected school districts.
  • 121.91(2m)(t)1.b - For the school year beginning with the effective date of the consolidation, the property taxes levied for the previous school year for the consolidated school district is the sum of the property taxes levied for the previous school year by all of the affected school districts.
  • 121.91(2m)(t)1.c - For the school year beginning with the effective date of the consolidation and the two succeeding school years, the number of pupils enrolled in the consolidated school district in any school year previous to the effective date of the consolidation is the sum of the number of pupils enrolled in all of the affected school districts in that school year.
  • 121.91(2m)(t)2 - If two or more school districts are consolidated under s. 117.08 or 117.09, and an excess revenue has been approved under sub. (3) for one or more of the affected school districts for school years beginning on or after the effective date of the consolidation, the approval for those school years expires on the effective date of the consolidation.
  • 121.91(4)(L) - For a school district created by a consolidation under s. 117.08 or 117.09, beginning with the limit for the 2016-17 school year, the limit otherwise applicable under sub. (2m) for the fifth school year following the school year in which the consolidation took effect is increased by an amount equal to 75 percent of any additional aid that the school district received as a result of s. 121.07(6)(e)1. and (7)(e)1. and 121.105(3) in the fourth school year following the school year in which the consolidation took effect.

Spendable Revenue Outside State Revenue Controls

For districts consolidated before July 1, 2019, on the revenue limit calculation worksheet, for each of the five years after the effective date of the consolidation, the district would enter the equalization aid calculated on the combined district factors without the 1.15 multiplier.

For districts consolidated before June 30, 2019, in the five years after the effective date of the consolidation, the aid guarantee, under 121.105(3), for the new consolidated district has already been determined. Each year the newly consolidated district would run the equalization aid calculation with the 1.15 multiplier and then without the 1.15 multiplier (ceilings and guarantees). The difference between the equalization aid calculation without the 1.15 multiplier and the highest amount of either the aid guarantee, under 121.105(3), or the equalization aid calculation with the 1.15 multiplier is spendable outside the revenue limit. It is this additional aid that is excluded from the "state aid" definition under revenue limits (Wis. Stats. 121.90(2)(bm)1).

Issues to Consider

Some factors involved in school finance can be more easily and accurately calculated. For example, the value of the new district would be the combined value of the two consolidating districts and the students of the new district would be the combined students of the consolidating districts. The new value divided by the new number of students will give a new average value per student for the new district.

However, it is not possible to calculate a mill rate or a school tax for a new district after consolidation until it is known what the levy will be for the new district. The levy cannot be determined until many other questions are answered, particularly specifics about the new district’s budget. For example, will the new consolidated district still employ the same number of staff? Will it still maintain the same facilities? What will be the impact of consolidation on the number and variety of programs it offers? Future changes to the equalization aid formula could also effect aid to consolidated districts.

For questions about this information, contact Mark Elworthy (608) 266-9534