6 thoughts on “June 12th School Board Update – End of School Year”

1. Some quick thoughts about comparisons with 1993.
   1. Implementation of SAGE has resulted in about 100 new FTE classroom positions. At an average salary & benefits cost of about $50,000. Sage represents (about) $6 Million in costs to the district (80% paid for by the state).
   2. These numbers do not include associated costs of classrooms and support services. Small class size means more classrooms needed.
   3. With the QEO 3.8% salary & benefit growth (in Madison it has been about 4.2, but let’s stick with the minimum) and an assumed average percentage of the total budget for salaries & benefits in this period of 80% (1993 base figure of $160 Million, it is now 86%, I don’t know what the historical figures are) then QEO “mandated” growth has been about $100 Million. MMSD can choose to go to arbitration to side step this growth, but the potential for savings is minimal because the district would incur costs of arbitration and most likely lose.
   4. Nationally cost of living has increased about 38% since 1993. I don’t have local figures, but if the national percentage is applied to the “other” $40 Million, then inflationary growth in the costs of goods and services has been about $15 Million since 1993.
   5. In 1993 the average assessed home value in Madison was $97,926. In 2006 it is 239,449. That’s an increase of 244%. If the MMSD budget had grown at this rate it would now be $488 Million.
   None of this accounts for the growth in special education, ELL, or the costs associated with increases of low-income students.
   I like comparisons, but without context and details they can be misleading.
   TJM

2. Correcting a typo. Sorry for the confusion.
   In #1, the figure should be $5 Million. In reality I think the number is 102 and the salary & benefits figure for 2006 is about $56,000, that would give a figure in the $5.7 Million range, so my typo was more accurate than what I had intended to write. The numbers may differ, but the point remains that SAGE has contributed to the growth of the budget.
   Again, apologies.
   TJM

3. Thanks, TJ for the additional context. There are many factors to consider with respect to local public education spending growth ($130M+ since 1993, despite revenue caps). I believe it’s critical to also review the entire tax picture. This WISTAX chart provides a very useful look at how actual taxes have changed since 1993, including the growth in local, state and federal payments. In fact, Wisconsin taxes rose 10% in 2005.
   http://www.schoolinfosystem.org/archives/2005/12/wednesday_morni.php
   A very good teacher friend frequently laments the fact that public education is stuck in an agrarian / Frederick Taylor mode. I agree with this sentiment.
   The local district Administration’s annual “same service” or “cost to continue” approach perpetuates more of the same. We live an an era of unprecedented learning opportunities. $332M+ annually offers a rather large bucket of cash to educate our next generation.
   We can make arguments for or against the growth in the District’s budget. The bottom line for me, particularly after some recent travel through communities with dwindling tax bases, is that this is a rich district. Perhaps, rather than focusing on “same service” or “cost to continue”, we might consider a few new possibilities. Peter Gascoyne wisely advocated this approach both in written form and before the Madison School Board recently:
   http://www.schoolinfosystem.org/archives/2006/03/a_5_year_approa.php
   Without question, there are many good things happening in our public education system. I do, however find it terribly ironic that Milwaukee, for a variety of reasons, will likely have far more public education innovation over the next few decades than Madison. Perhaps it’s like Nixon going to China.

4. Jim
   Let me start with the Wisconsin Taxpayer’s Alliance information. First, the nonpartisanship and objectivity of the organization isn’t quite as clear as they claim. Ten of sixteen board members have also served on the board of the Wisconsin Manufactures & Commerce and of political contributions of the sixteen board members skew 90/10 GOP/Democrat. http://www.legis.state.wi.us/assembly/asm78/news/pdf/Press%20Releases/2006/Jan.Contribution%20Breakdown%20V2.0.pdf.
   That doesn’t mean their reports aren’t accurate, but it does invite questions about what information is included or excluded and how it is presented. I think that anyone who has read their publications will agree that the definition of “efficient, responsible government” that WTA begins with has at its center low taxes, limited services and small government. That’s fine, it isn’t where I start from but many people agree with that definition and it does need to be taken into account when considering their findings.
   One place this comes out is by presenting individual and business/corporate taxes as a single number. This disguises the shift in the tax burden from businesses to individuals, something I think most voters should be concerned with. Since 1993 their has been a significant drop in the percentage of property taxes paid by the manufacturing sector and of corporate taxes as a percentage of all income taxes. As 2002 Wisconsin ranked 45th among the states in the “Business Share of State and Local Taxes.” These numbers are from the Institute for Wisconsin’s Future, a group that could be considered the mirror image of the WTA and like the WTA they choose their measures and shape their presentation to reflect their position. http://www.wisconsinsfuture.org/publications/taxes/TaxHellHoax.pdf
   See also here: http://www.taxadmin.org/FTA/Meet/re_sum02/mazerov.pdf (from the Center for Budget and Policy Priorities, an organization I know nothing about).
   You can also look at figures for how the individual tax burden falls by income. Overall, Wisconsin is pretty flat, neither regressive nor progressive, but property taxes (the most important component of school funding) when presented as a percentage of income fall disproportionably on the lower end middle portions of the income distribution. These are also for the IFWF: http://www.wisconsinsfuture.org/publications/taxes/IncidenceReport.pdf
   I can’t seem to find an online version of the WTA report cited, but the very conservative anti-tax Tax Foundation reports that (what appears to be) state and local taxes as a percentage of income has fallen in Wisconsin from 12.3% in 1993 to 11.6% in 2006. http://www.taxfoundation.org/files/wisc.xls. The WTA data is also not inflation adjusted. Again, WTA choose to present total taxes paid, without an inflation adjustment and not taxes as a percentage of income. One way shows shrinkage, the other shows growth. It is clear which is more useful for the WTA agenda, but taxpayers and voters need to decide for themselves. Local property taxes account for 61% of the MMSD budget and state contributions (mostly from income taxes) 29%. Federal taxes/funds, where most of the “growth” WTA identifies occurred account for only 4% of the MMSD budget.
   You can draw your own conclusions from all this; mine are that the WTA report has little of use to say about changes in the taxes paid by most Wisconsin or Madison residents, little useful to say about the tax structures in Wisconsin and even less useful to say about the MMSD budget.
   This longer than I intended, but I do want to say a few things about the Peter Gascoyne presentation. Despite the limitations of any projections I think that MMSD could do more and better long range planning. I also think this has to be a continual process with adjustments made to deal with changing mandates, economic climate, demographics and other factors (I don’t think we are in disagreement here, except that I might see more limitations in the ability to project beyond a year or two). I do differ in a few places. First, I don’t think that MMSD has been lurching from crisis to crisis with no plan so much as I feel that school finance structures and the QEO have placed MMSD and all the state’s districts in a positions that are nearly impossible. So the crises are real, but the limitations on what can be done are just as real. I think one example of the kind of thing Gascoyne is talking about is the Virchow, Krause functional analysis MMSD commissioned. I also think that moving toward a WSF funding model should be investigated http://www.schoolinfosystem.org/archives/2006/06/weighted_studen.php and that a related school based model is also worth giving consideration to (see here: http://www.schoolinfosystem.org/archives/2006/03/leveling_the_pl.php). But neither of these will be of much help without serious reform of school finance.
   This is probably where I differ most from Gascoyne. He wrote:
   “I think there are two basic approaches that can be taken. One is to endeavor to cut approximately $8 million each year, to address each budget year on its own, and to effectively ignore the looming structural gap….I would like to respectfully recommend a second approach. That rather than look at the budget picture one year at a time, that you instead look at where the budget will be (approximately) five years from now”
   I think there are two other approaches that are worth giving significant energy to. First, working within the current finance structures the district can appeal to the voters to exceed revenue caps. I may be an optimist, but as the squeeze worsens I think that this will become increasingly possible. The results of the pending referendum may provide a clue as to the viability of and (I hope) give momentum to this approach. It will take a lot of work to convince the voters to do this, but there are many who would rather do the work than see the quality of public education in Madison significantly diminish. The second approach involves changing the finance system at the state level and working for federal funding that at least approaches the spending required by federal mandates. Again, this will take work, but there are already many working on these and many solid proposals on the table.
   I’m not saying ignore the cuts or restructuring that will be necessary if changes aren’t made, but I am saying don’t surrender the possibility of addressing the core problem by devoting all our resources to making the best of a bad situation.
   Last thought on Milwaukee (and this may be applicable to the MMSD budget too): The worse things become, the wider range of options that appear reasonable. There is good and bad in this truism, but it depends on things getting bad and I don’t want that to happen here, even if in the long run it might produce changes I favor.
   TJM

5. Hi TJ:
   Thanks for the notes and links. My point with respect to WISTAX and the overall tax burden is that local property taxes don’t exist in a vacuum. Total taxes paid as well as the perception of value received is a factor in voter’s decision making. I do find the whole thing interesting in that our good Senators, Russ Feingold and Herb Kohl voted FOR a large corporate tax break last fall:
   http://www.zmetro.com/archives/003331.php
   These type of decisions do, as you point out, shift the burden to individual income taxes. (There’s no shortage of discussion on these topics) I keep an eye on tax policy and votes at the local, state and national level and have to say that I don’t believe either major party has much concern for the “little guy”.
   Now back to our local discussions…..
   Jim

6. At the risk of being annoyingly pedantic, I think it might be useful here to distinguish between “approaches” and “methods”. I think of an approach as focusing on HOW a problem is addressed, while methods or measures focus on WHAT is actually done.
   My observation, as of March 2006, was that the district’s approach to the long-term budget situation was to give it little, if any, attention. The focus of the board, and in turn, the larger community, was the present year’s budget. My words were intended to invite the board and others to put greater focus on the long-term situation. My suggestion of a task force to do so was just one possible method, among many, to conduct that long-term budget examination. Today, I am more optimistic the longer-term outlook will be addressed, given the new board, and it’s leadership.
   I agree that we must consider all possible measures to deal with the long-term budget situation, including a budget referendum. If a 5-year $40 million budget referendum was passed, we would “buy” a year’s relief. The year the referendum passed no cuts would be required of the board, and five years later, instead of facing a cumulative $40 million gap, the cumulative gap would only be $32 million. (Of course, the cumulative gap would jump to approximately $48 million the year after the referendum funding ended, assuming the gap increases at the same rate each year – which it won’t.) A long-term budget referendum would not answer the problem, but it would most certainly help a lot. I think passage of such a referendum, though difficult, would be more feasible if the public sensed there was a clear long-term plan to deal with the district’s finances, and that their financial assistance, in the form of the referendum, was just part of the plan, not the whole thing.
   There are certainly enormous systemic issues with school financing in this state, and in this country. I believe these will only worsen over time as Baby Boomers retire and reduce their inputs to taxes collected, and increase their draw from taxes spent. We should definitely pursue righting the funding system. But we should expect little, particularly here in Madison where we already receive funding per student that is 10-15% above the state average. I would imagine the greatest gains from “righting” the current school funding system would come to districts where funding is currently below the state average. However, I would hope that a correction of the system would reduce the structural gap for us, that perhaps the current structural gap of approximately $8 million each year might be cut by as much as half, or more. But I am all too aware that to the degree the gap is reduced, pain is experienced somewhere else in the state, either as taxes are increased or spending elsewhere is reduced. There is no free lunch, as they say.
   Personally, I have no problem with higher taxes, but obviously others do. I think more people would be willing to pay more taxes provided they felt the money was well spent. They do not want it wasted, or perceived as wasted. That’s where budget transparency – a lamentable term – comes in. It hopefully provides a very clear picture to everyone of how money is spent so they need not fear their tax money is wasted, at least not that portion earmarked for schools.
   Please do not take the above as implied criticism of the suggestions, nor as gloomy portents that little good will come of their pursuit. A $40 million gap is enormous. (And, of course, the gap only gets larger still the more years you go out.) It will take many measures to deal with it. No doubt, referendums and the state’s school funding system would be among the measures a long-term budget task force would consider.

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