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Kitchens, Olsen Split on Major Funding Formula Overhaul

By John Forester | May 29, 2018

From WisPolitics.com . . .

After eight public hearings across the state in five months, the co-chairs of the Blue Ribbon Commission on School Funding are split on the extent and nature of changes they could propose to the formula.

Still, both Sen. Luther Olsen and Rep. Joel Kitchens say they’ll meet Speaker Robin Vos’ call to “be bold” in the group’s recommendations as they zone in on aiding districts with declining enrollment, addressing special education reimbursement rates and more.

The two also said in separate interviews with WisPolitics.com this week they don’t anticipate the commission will touch school choice or open enrollment, two topics they had said were on the table when the body was first announced in December.

Still, Olsen and Kitchens, who are also both chairs of their chambers’ respective education committees, said they were looking at some changes to the formula, although they differed as to how far the commission would go to alter it.

Kitchens, R-Sturgeon Bay, left the door open to “completely overhauling it,” saying it’s “pretty clear there will be some fundamental changes we will recommend, but the extent of that is up in the air.” Olsen, R-Ripon, was more measured, emphasizing the need to provide more funding to districts with declining enrollments.

“I don’t see us overhauling the whole thing … (The formula) works really, really well for slowly increasing school districts. It doesn’t work so well if you’re stagnant, and it really works bad if you’re declining,” Olsen said.

Currently, as school districts lose students, the per-pupil revenue they get from the state decreases by around $10,500 on average per student, according to the Department of Public Instruction. Enrollment is calculated on a three-year, rolling average.

“Obviously your costs don’t go down by $10,000 when you lose a student,” Kitchens said. “So that’s, I think, one of the real key things — and I think that was one of the basic faults from the beginning in the system — is that districts that are losing students are really struggling because it’s just not fair.”

Roughly two-thirds of school districts are in declining enrollment, according to DPI. The districts range in size and demographics.

Kitchens said it was possible the commission would look at whole grade sharing as another way to address the issue. Under the practice, one district sends its students to another for instruction.

He added the commission should “look at some creative ways for districts to be able to combine services as well as to consolidate (districts).”

But Olsen said the body hasn’t “really had anybody come in to talk to us about that yet.”

Gov. Scott Walker last year nixed an Assembly GOP budget provision that sought to create grants to encourage the practice.

Kitchens also pointed to potentially creating a clearer path in state law to allow for the creation of more K-8 districts as an option to consolidate school services across declining enrollment districts. Currently, there’s no option to organize as a K-8 district, according to DPI, but it’s unclear whether that would hold up in court.

“Towns are so afraid of losing their identity if they lose their schools, but if you can do some of these things, then maybe you can allow those towns to still have their elementary schools then just share a high school,” he said.

Olsen also mentioned tweaking a component of the three-tiered equalization aid formula to better ensure districts that increase their revenue aren’t losing state aid.

“We have school districts that raise revenue through taxes. And they have to raise more than they are going to spend, because of their negative tertiary aid, so a percent of that they lose in state aid,” he said. “It’s a disincentive to increase their revenue.”

The tertiary aid tier of the formula seeks to hold in check those districts that spend a lot of money and aid others with extremely low property values.

DPI spokesman Tom McCarthy said if there’s no increase in state aid, the approximately 25 percent of districts currently impacted by negative tertiary aid would see a boost in state support and lower property taxes. But most other districts would see a property tax increase.

Olsen also said he’s open to making changes in the secondary aid tier. That tier’s cost ceiling is 90 percent of the statewide average cost across each district, a level Olsen said should be raised, possibly to 100 percent.

Bumping up the tier’s cost ceiling, McCarthy said, would mean some 95 percent of districts would see an increase through the secondary tier of the foruma, the primary driver for aid to districts.

Dem commissioner Rep. Sondy Pope, of Mt. Horeb, knocked the suggestions, saying the ideas didn’t go far enough to affect the formula’s fundamental problems.

“From what I’m looking at right now, we’re going to offer up a suggestion to further tweak a funding formula that has failed and I wanted more from this,” she said, after WisPolitics.com summarized Olsen’s and Kitchens’ comments to her.

Pope also noted much of the testimony the commission heard revolved around putting the brakes on the expansion of private school vouchers, adding she was “disappointed” the co-chairs seemed to have “taken off vouchers as part of the discussion.”

And she stressed the need to invest more money into K-12, saying “it is absolutely clear to me that the school districts and the public feel that we need to increase financial resources for schools.”

“If we don’t add considerably more financial resource to schools, I don’t think that we are really responding to what we heard because that was clearly asked for,” she said.

Meanwhile, on special education, Olsen said the commission has heard from many districts that are asking for an increase in the reimbursement rate after having to use regular education money, or Fund 10, to pay for special education costs.

DPI had previously requested an increase in the amount of money available to reimburse districts, with the intent to raise reimbursement rates to 28 percent in 2017-18 and 30 percent in 2018-19. The current rate, 26 percent, stayed static after those requests weren’t included in the budget.

Still, the budget did include an upper in the high-cost special education reimbursement rate. Under the change, if a district incurs more than $30,000 in special education costs for one student, the district would be reimbursed at 90 percent instead of 70 percent.

Neither Olsen nor Kitchens seem to have the appetite to go beyond a new plan to boost the revenue ceiling for low-spending districts. Under the sparsity aid law Walker signed earlier this year, districts now capped at spending $9,100 per year on students through a mix of property taxes and state aid would see that limit go up to $9,400 in 2018-19. The cap would then increase $100 annually to $9,800 in 2022-23.

“We really did that in the legislation, so I think we’ve got that covered,” Olsen said.

And Kitchens also said he could anticipate legislation from the commission to encourage retired educators to come back and substitute teach in schools, based on concerns surrounding the state’s teacher shortage.

Following the commission’s hearing in Madison June 4, Olsen and Kitchens are planning to sit down individually with each member along with representatives from the Legislative Fiscal Bureau to see what legislation they’d like to come out of the body.

The 16-member commission includes nine lawmakers and seven education experts, including superintendents from Green Bay and Grantsburg, two representatives from Milwaukee-area Catholic schools, a UW-Madison professor, a member of the Wisconsin Association of School Boards and a representative from Cooperative Educational Service Agency 6.

While the commission’s original plan was to slide the recommendations into the next biennial budget, Kitchens said it could ultimately be a combination of standalone bills and budget recommendations, depending on what provisions Walker would get behind.

Hear Olsen’s interview here.

Hear Kitchen’s interview here.

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