Proposed Milwaukee Schools’ Referendum Could Cost State Additional $200 Million

Will Flanders:

If a proposed $640 million referendum for Milwaukee Public Schools passes, local taxpayers won’t be the only ones on the hook. A referendum of this size would result in as much as $200 million additional dollars in state money to Milwaukee Public Schools.

How does a local decision to raise their own taxes affect state finances? Because shared costs between state and local governments work differently depending on the property wealth of a district. When a district with substantial property wealth votes for a referendum, the effect is some reduction in state aid, with local taxpayers shouldering more of the burden. But when a low-property wealth district like Milwaukee passes a referendum, a portion of that cost is born by the state. This aid comes through what is known as Equalization Aid — funding designed to create spending equality across all of Wisconsin’s more than 420 school districts.

To estimate the impact on Equalization Aid, I used DPI’s Equalization Aid worksheet, and altered the amount of shared cost for Milwaukee by the proposed amount of the referendum. A few cautionary notes are worth mentioning here. First, this worksheet simplifies the process, so the figures presented here are estimates. It should also be noted that if the referendum amount varies substantially from the amount in news reports, or if the time frame for the funding changes, these estimates would be further off. Finally, if other districts implement referenda at the same time, this calculation would change. I include both MPS’s $640 million proposal, as well as the smaller “Plan B” proposal estimated at $319 million.

Madison is also planning a substantial tax and spending increase referendum in 2020.