MADISON, Wis. – Public school funding and local school taxes are tricky topics in Wisconsin.

That was particularly true in the recent economic recession, which posed a double problem.

On one hand, public schools were cutting their budgets, laying off employees and desperate for revenue, due to decreasing tax revenue.

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But local property tax owners were feeling the pinch as well, and many could not afford to pay higher levies to help local schools make ends meet.

But landmark legislation in Wisconsin – Gov. Scott Walker’s 2011 Act 10 budget repair bill – has minimized the tax burden on residents while also allowing public schools to weather the economic storm without major cuts that impact student learning.

School districts now have much more control over their budgets and how money is spent. That has made them less likely to ask struggling taxpayers to approve tax referendums at the ballot box.

And when schools do ask voters to approve extra taxes, they tend to ask for less, and seek temporary rather than permanent increases. As a result voters have been approving more school tax proposals than in the past.

“Referendum numbers over the last four years are down,” Dale Knapp, research director at the nonprofit Wisconsin Taxpayers Alliance, told EAGnews. “We were looking at an average of 60 per year between 1998 and 2008. Over the last four years, 2011 through 2014, we’ve averaged around 35 per year, and it’s been real consistent.

“Over the earlier time frame, an average of about 40 percent of these referendums passed. Over the last four years that’s jumped to two-thirds. The number of districts asking has gone down, but the percentage voters are approving has gone up.”

Act 10 makes a difference

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Wisconsin, like most states, was in a precarious position when the economic recession hit in the latter part of the last decade, and state lawmakers were forced to make some difficult financial decisions.

Act 10 lowered overall state aid for public schools by eight percent. That move was necessary for the state to balance its budget during a time of economic distress.

In the past, school districts could have made up for that lost revenue by automatically increasing local property taxes, without a vote of the people.

But Act 10 protected taxpayers by lowering school revenue limits – the amount of revenue schools can receive through a combination of state aid and local taxes – by 5.5 percent.

Some would argue that the cuts in state aid, along with the decreased ability for schools to impose higher taxes, left districts in an impossible financial position, particularly since state aid and local taxes comprise at least 80 percent of a typical school budget.

But Act 10 gave school boards a way to deal with that problem by vastly increasing the amount of control they have over their budgets.

“Because the state had to cut to balance the budget, it had to cut aid to local districts and they didn’t want local governments to raise taxes to make up the difference,” Knapp said. “Districts took about a 5 percent cut in their budgets (overall) in the 2011-12 school year, and Act 10 gave them some cost savings to offset that so they didn’t have to lay off staff.”

The biggest change under Act 10 involved new limits on school employee labor union collective bargaining privileges.

In the past the unions were allowed to negotiate contract provisions involving salaries, employee insurance and many other benefits. That drove school labor costs through the roof.

Act 10 eliminated employee benefits as a subject of collective bargaining, and limited teacher raises to the annual growth in the consumer price index.

The biggest game-changer was the part of the law that allowed public schools to shop for the best deal for employee health insurance, and increase the amount employees pay toward insurance premiums to 12 percent.

Previously, many teacher union contracts stipulated that school districts purchase expensive health coverage from WEA Trust, an insurance company closely associated with the state’s largest teachers union. Many union contracts also forced school districts to cover most or all of their employees’ share of insurance premiums.

Act 10 also required public school (and all public sector employees) to pay half of the annual contribution to the state employee pension system. In the past most school districts paid the entire amount for employee pensions.

Eliminating that responsibility accounted for about two-thirds of the $366.3 million in savings reaped by school districts through Act 10, according to Wisconsin Taxpayer Alliance data.

Those savings greatly eased the burden on schools that was caused by the cuts in state aid and revenue limits.

“I think that flexibility over the last few years has allowed (school districts) to manage their budgets within the very tight revenue limits,” Knapp said.

That, in turn, allowed school districts to maintain staffs and programs without having to beg local voters to approve new taxes beyond the revenue limit.

“I do think it had an impact on the numbers,” he said. “If we would have seen a cut in revenue limits without this flexibility (Act 10 reforms), we would have seen a huge increase in referendums.”

Instead, the average number of school referendums in Wisconsin have been lower than in the past, meaning “so far, given the numbers, (Act 10 has) done pretty much what it was intended to do,” Knapp said.

Temporary vs. permanent referendums

The other trend – the increasing percentage of school tax proposals approved by voters – is likely a product of school officials becoming smarter about how they ask taxpayers for additional funding, Knapp said.

Essentially there are two types of school referendums – requests for permanent levies on property within a school district, and requests for temporary taxes that expire within a few years.

Voters have historically been far more likely to approve the latter.

Permanent property tax increases have “historically passed at about one-third,” Knapp said, while temporary levies are approved by taxpayers about two-thirds of the time.

Over the last four to five years a higher percent of school levies have been of the temporary variety, resulting in an increasing number of referendums meeting voter approval. That means more revenue for more schools.

“I think districts have finally seen the difference in approval rates and have made a conscious effort, even with the economy improving, to stick with the shorter referendum,” Knapp said. “We’ve seen a significant drop in the number of requests for permanent increases.”

Knapp also believes the lower school revenue limits imposed by Act 10 have made some voters more inclined to vote “yes” on millage proposals.

Some are more likely to support the ballot proposals because Act 10 effectively lowered the amount of taxes school boards can levy without voter approval, according to Knapp. Having a choice over taxes – as opposed to having them imposed – can make a big difference to voters.

Other voters feel bad for local schools and their challenging financial plight, he said.

“I think some voters look at revenue limit cuts as hurting public school finances,” Knapp said. “They are willing to pay more in property taxes if it funds public education.”