Schools Running Off Funding Cliff

The Wisconsin Legislature raised few eyebrows during the budget process last summer when it cut almost a billion dollars from aid to local school districts, and then back filled it with $789 million dollars in stimulus money. Many now say this move puts the financial footing of several school districts in jeopardy in the near future.

Since first issuing stimulus awards, the federal government has warned recipients about not spending the one-time money on on-going expenses in order to avoid a “funding cliff.” Wisconsin superintendents worry, if the state does not find a way to replace those federal funds in the education funding system soon, districts will plummet off that “funding cliff.”

“All of that one time money that was put in the state budget is going to come to haunt us a year from now,” said William Andrekopoulos, MPS superintendent, at a recent meeting.

Some lawmakers are aware of the problem, and have heard from districts about their concerns.

“They’re worried about bankruptcies in some cases,” said Senator Alberta Darling (R-River Hills).  Not in my district, but around the state. They know it’s coming.”

“Everything’s going to be up on the table again and the problem is going to be exacerbated again because we don’t have the revenues,” Darling said of future school budgets. “The state isn’t going to be able to find that money, that’s for sure. Those districts are going to have a heck of a time putting their budgets together.”

School districts say they are already having a tough time putting their budgets together with their current levels of state aid. Their rising expenses are continuing to outpace their revenue intake. If the state is forced to slash school aid after the stimulus (also known as American Recovery and Reinvestment Act or ARRA) funds run out, many districts will find themselves in a dire situation.

“We’ve talked about the ARRA funds and we’ve talked about the funding cliff. The funding cliff will occur for the 2011-2012 budget,” said Andrekopoulos. “In 2011-2012 all of that one time money will be out of the budget. So in a year from now, you can be sitting in a worse position, because if you don’t control your costs that are continuing and you’re going to get less money from the state – so you need to do some really drastic things.”

Districts around the state are talking about layoffs, program cuts, closing schools, referendums and consolidation with neighboring districts. Meanwhile, the state is directing districts to “tax to the max.” However, districts have already been doing that. Some districts increased property taxes more than 20 percent this year. They realize ultimately, increasing property taxes is a short term solution at best.

“I think we’ve hit a point where you can’t get anymore out of taxpayers. Plus it pretty much guarantees that the educational offerings at most school districts is going to diminish if that’s the only source of revenue,” said Beloit Superintendent Milton Thompson.

Even as a short term solution, many districts could still be forced to take some drastic actions.

“There are things that we have to do in this district controlling benefit cost,” Andrekopoulos said at a recent meeting of the MPS School Board, “We have to look to see if there are things that we can privatize or outsource. We can’t be afraid of that if other people can do this cheaper. We have to look at closing schools and we have to look at transportation. These are tough [decisions], and they’re tough to make, and the public has to understand this.”

In the long run, solutions to Wisconsin’s education funding system will likely have to come form the top.

Darling anticipated “The state is going to have to look at all its mandates, the costs of unfunded mandates and the costs that puts on schools. We’re really going to have to rethink the way we deliver education to get high quality.”

Looking from his school district in Beloit, Thompson believes whatever changes occur will not come without sacrifice.

“Wisconsin has always prided itself on being a progressive state, and I think that part of that progressiveness has to be to be willing to look at different solutions to this,” said Thompson. “It has to be a long term solution. The path that we’re on now I don’t think contains any long term solutions to this issue.”

By Bill Osmulski
MacIver News Service