Study: School funding is a sham

April 20, 2010 Our Stories 1 Comment  E-mail This Post

State government’s counting it as part of its share of local school funding, but it doesn’t go to schools, according to a new report from the University of Wisconsin’s School of Public Affairs. The money, almost a billion dollars in tax credits, goes straight to taxpayers, and the study finds that property owners in the state’s wealthiest districts are benefitting the most.

Those in the Mequon-Thiensville district, for example, received $2,054 in school levy tax credit per pupil in 2009. In contrast, those within the boundaries of Milwaukee Public Schools received just $549 per pupil.

Property owners “in the state’s 21 property-richest districts received average per-student credits of $2,596, nearly seven times the average credit going to taxpayers in the poorest school districts,” the report says.

Through 2011, the state will spend $747.4 million a year on the credits, a sizable chunk of the $3.8 billion total of school property tax levies in Wisconsin.

Andrew Reschovsky, an economist at the Robert M. La Follette School of Public Affairs at the University of Wisconsin, says he began looking into the property tax credits after they survived 2009’s state budget cuts unscathed. Reschovsky isn’t the first researcher to study the credits, but “the actual dollar flows to different kinds of districts,” he says, “no one had looked at that.”

He recommends eliminating the credits and using the savings to expand homestead credits (which benefit homeowners who have a hard time paying their property taxes) and provide more direct funding for schools.

Part of the reason for the discrepancy between wealthy and poor districts is that most state funding for schools favors the poor ones, meaning wealthier districts rely more on property taxes. The school levy credit is distributed based on the size of the local district’s property tax levy. The more you pay in property taxes to your district, the larger your school levy credit will be.

According to the report, urban school districts weren’t the only ones to fall below the state average of $869 per pupil. Poor rural districts did too.

The school levy credit, created in 1986, has been around a lot longer than the “first dollar credit,” another credit created by the state in 2009 to lessen the school property burden. The first dollar credit is capped so that the vast majority of properties within a given district receive the same credit. Unlike the school levy credits, first dollar credits don’t vary widely, the report says, except among the wealthiest districts, where they are higher, and in poorer districts, where they are lower.

State government, under a law it passed in 1993, is required to fund two-thirds of K-12 public education in Wisconsin. But it’s counting the school levy and first dollar credits as part of its funding for schools even though schools don’t receive the money, Reschovsky says.

It’s given to municipalities to pass on to property owners. Schools may be factoring the credits into their budgets when deciding how large of a levy the community will be willing to swallow, but districts receive no direct funding from the credits.

“The credits are unambiguously designed to provide direct property tax relief to the owners of real property. Not a penny directly provides additional resources to school districts,” Reschovsky says.