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Revenue Updates and Budget Negotiations
By Wisconsin School Administrators Alliance staff | May 22, 2025
Biennial budget negotiations are in full swing, with significant developments and ongoing debates shaping the state’s fiscal future. Legislative leaders met with Governor Evers yesterday to continue to discuss their priorities in the budget. The Governor has said he is optimistic that the state budget is on track despite federal funding uncertainty. He has echoed comments made by key Republican lawmakers, suggesting that deliberations are getting stuck on tax cut proposals.
SAA continues to strongly advocate for our priorities in the Capitol and is actively engaged in ongoing discussions with the Governor’s office and key legislative leaders. Recently, we’ve heard that some lawmakers are considering increasing funding for high-cost special education reimbursement aid instead of general special education aid.
While additional support for high-cost reimbursement would help students with the most significant needs—and is broadly supported—it would not meet the wider funding challenges that most districts face. School districts across the state have clearly called for an increase in special education categorical aid to a 60% reimbursement rate, funded at a sum sufficient level.
As these conversations continue, it’s essential to understand the difference between the two funding streams—categorical aid and high-cost reimbursement—and how each would affect your district’s budget. If the legislature only increased high-cost aid, that investment would fall far short of addressing the statewide need for sustainable, equitable special education funding.
The Legislative Fiscal Bureau has projected the state will finish the 2023-25 budget with a more than $4.3 billion surplus — a slight improvement over its January estimate — but also now expects lower tax collections over the following two-year period. The net impact is $335 million less in tax revenue for the Capitol to play with as GOP lawmakers and Dem Gov. Tony Evers try to reach agreement on the 2025-27 budget.
In a memo to the co-chairs of the Joint Finance Committee, LFB Director Bob Lang wrote the agency projects the state will take in $30.7 million more through June 30 between increased tax collections and additional department revenues compared to what it had expected in January. The agency also believes net appropriations will be $39.5 million below that earlier estimate. That will combine to boost the state’s projected surplus to just over $4.3 billion.
LFB then projects the state to take in nearly $1.5 billion in new tax revenues for 2025-27.
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