Education, Taxes, and MMSD Board Goals

Graph from the Wisconsin State Journal, click image for accompanying story.

I was struck by the relationship between two things in recent Wisconsin State Journal stories.  The first of these is the graph above illustrating the cuts of over 150  Special Education staff positions (from Matt DeFour’s report on the new MMSD Middle School Mental Health initiative).    The second was this quote from Board President James Howard in Defour’s story on greater than anticipated cuts in state aid to the Madison Metropolitan School District:

School Board President James Howard said the board’s goal has been to not raise property taxes and, “I think that’s still our position.”

The short version of my reaction is that if your goal is hold the line on taxes, then I guess you are just fine with cutting programs and services, even those that serve the most vulnerable as Special Education does.  I’m not OK with that prioritization and am not OK with a Board and Board President who are.  The longer version  — including an analysis of how the 2008 referendum fits with this — follows.

[Note, as I was finishing this Board Member Ed Hughes put up a post indicating that he is more open to a property tax increase than president Howard and offering readers an opportunity to weigh in via a pollu.  When you are done here, read that post and vote).

Where to start?  I’ll begin with the obvious truth there are things that MMSD schools should be doing, ways they could be helping students, but are not and that these things cost money.   As a consequence of inadequate funding (among other things), MMSD is failing provide appropriate educational opportunities and services  for some students and excellent opportunities and services for many.  In other words, budget cuts impact education.  If you don’t believe the above, you should probably stop reading now.

The cuts to Special Education staff are one example (note I was cognizant of the 2006 cross-categorical teacher drop due to a change in case load allocations for “Speech and Language Only” students, the cuts to SEAs are somewhat surprising to me).  It is also worth noting that the approved Preliminary 2011-12 Budget appears to cut a further $3,231,626 from Education Services, the department in charge of Special Education, ELL and more (this figure may have changed slightly due to amendments, I’m using the initial Budget because the “approved Preliminary….” isn’t on line).  If any of these cuts come from Special Education, the district may be in danger of losing Federal Funding due to the Maintenance of Effort requirements  of IDEA which as explained in this memo from DPI  do not recognize “savings from reduced staff benefits as exceptions.”

Special Education is just one area where more resources would help; there are many others.  It should also not be forgotten that this preliminary — no new taxes —  budget was balanced by cutting staff compensation, as  Board Member Ed Hughes has said “underpaying our most important employees… a false economy.”

Now on to Board Goals.  I looked at in vain at the statues governing Boards of Education, at the MMSD Policies, at the District Philosophy, at the Mission Statement, at the Strategic Plan for any reference that could support not raising property taxes as a goal superior to providing the best possible education for the students in their charge.

You can look too, you won’t find it.  What you will find is much that calls for the Board to (in the phrase from the Strategic Plan) “vigorously pursue the resources necessary to achieve our mission,” the mission being:

…to cultivate the potential in every student to thrive as a global citizen by inspiring a love of learning and civic engagement, by challenging and supporting every student to achieve academic excellence, and by embracing the full richness and diversity of our community.

The last couple of MMSD budgets have each left about $10 million in revenue authority unused; the approved Preliminary Budget leaves (I believe) about $9 million (again, no final preliminary is on line, so I’m estimating).  It would not have taken, and does not now take much vigor to access these resources.  It may take  a little courage.

I realize that much has changed in the last few years — widespread economic hardship, cuts in state aid by both Democratic and Republican state governments, much slower than anticipated growth in property values, , the opportunity to cut staff compensation under the threat of union busting, dramatic cuts to the revenue limit base  — but despite all of these changes, if you go back to the principles and the details of Partnership Plan used to sell the 2008 Operating Referendum (which passed overwhelmingly) I think you can find plenty of justification for increasing property taxes in order to achieve the mission of the district.  Maybe not to the fully allowed limit (maybe) , but certainly beyond the level the Board President has stated as a goal.

That referendum is the primary reason why even with the FitzWalker mandated 5.5% cut in allowed revenue, Madison has the ability to maintain and even expand opportunities.   In more ways than one, that’s what over 68% of the voters agreed to.  They did not vote to freeze property taxes, they voted to raise them.

The strongest Partnership Plan based case for using the entire $10 million in referendum granted authority this year and every year is that that plan anticipated only a three year total of $9 million in cuts from cost to continue budgets, a total that was about doubled in the combined actual budgets of the first two years.

To me that is compelling, but some Board Members and others will point out the plan anticipated higher state aid and growth in property values than have been realized, and that these factors — along with general economic conditions — justify cutting at a higher level,  I don’t agree, but for the sake of argument I’m willing to stipulate that rather than relying on the “cuts from cost-to-continue ” metric,  we should also look at the total property tax burden.

Looking at the total levy instead of the total cuts is one way to deal with the diminished state aid and the lack of growth in property wealth to produce a conservative estimate of the tax burden agreed to by voters who ratified the Partnership Plan .  However if you are going to elevate  property taxes over other considerations in this manner it is only right to fully account for changes in property taxes and that includes dealing with the School Levy Credits.

As explained by Andy Reschovsky, the Levy Credits are categorized by the state as school aid but in fact function as property tax relief misdirected toward wealthier districts and property owners.  Shifting the almost $900 million a year allocated to the Levy Credits into general state school aids is a centerpiece of State Superintendent Tony Evers Fair Funding for the Future proposal.

Since 2006 the Levy Credits has almost doubled.  For the most part this has been ignored by School Boards in their Levy and Budget deliberations.  I think that was because districts almost always taxed to the max under revenue limits, so there was little reason to look at how the Credits impacted the net taxes of property owners.  One place where this would have made sense was in the otherwise detailed discussions of referendum related tax increases, but  — despite my advice at the time — MMSD did not include the Levy Credits in their presentations for  2008 referendum.

Since 2009-10 MMSD has ceased taxing to the max and has begun making minimizing tax burdens the top or near top consideration, the “goal.”  That means that the Levy Credits need to be part of the discussion, because as Reshovsky explains MMSD taxpayers benefit greatly from the Credits:

Using Madison as an exam-ple, in 2009, the average gross school mill rate was 9.79. The city’s school levy credit allocation resulted in a 1.76 mill rate reduction. Tax bills were then calculated using the net school mill rate of 8.03. Thus, the School levy credit resulted in a $352 tax saving for the owner of property worth $200,000 (.00176 times $200,000), and a tax saving of $880 for the owner of a $500,000 property.

For the purposes of this comparison of the levies anticipated in the Partnership Plan and  the actual/preliminary levies for the period covering the 2009-10 through 2011-12 budgets,  what is most important is that while cutting general school aids for the years 2009-10 and 2010-11, the Democrats increased the Levy Credits and that the Republicans in power have maintained these increases.  At the time voters approved the 2008 referendum, the Levy Credits for MMSD totaled 37,198,954.  For 2009-10 this increased to 40,934,795 and for 2010-11 they were 40,304,862.  I haven’t seen estimates for 2011-12, but the total funding for the Levy Credits is unchanged and it seems safe to assume that the share going to MMSD taxpayers will be about the same.

The table below uses  projected property tax totals from the Partnership Plan, the actual levies for the first two years and the levy from the approved preliminary budget for 2011-12.  To account for the Levy Credits  I’ve subtracted the Levy Credit increases over 2008 (3,735,841 for 2009-10 and 3,105,908 for 2010-11) from the levy totals (using the 2010-11 figure for 2011-12).

According to these figures,  MMSD could levy an additional $7,174,422 and still be within a  conservative interpretation of the tax increases the voters  approved with the 2008 referendum.  I think they should use at least this amount of their levy authority to advance their mission.

In the will of the voters as expressed in the referendum vote, I find no evidence that the community shares  Board President Howard’s stated goal to not raise property taxes and here and elsewhere I find much that supports reasonable tax increases.

Thomas J. Mertz

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2 Comments

Filed under "education finance", Accountability, Best Practices, Budget, education, finance, Gimme Some Truth, Local News, Referenda, referendum, School Finance, Scott Walker, Take Action, Uncategorized

2 responses to “Education, Taxes, and MMSD Board Goals

  1. Lucy Mathiak

    TJ, before you fall into trashing James please be aware that, as is the case with every board member, James learned of the gap from a reporter. Not from the district. He was asked to comment, as was I, and probably every other board member that the reporter could reach, to comment specifically on raising taxes.

    With no information on the gap or administration’s proposed response, I suspect that James responded the way most of us would. When we voted to set the preliminary budget, the board majority was very concerned about raising taxes above the amount approved in the 2008 referendum. We managed to put positions – notably for Occupational Therapy Assistants – back into the budget despite administration’s efforts to use them to solve the budget gap that we knew about. We also managed, as you are well aware, to assure that 4K students in the Allied Drive area will have 4K in their neighborhood. We did both of these things without raising taxes; instead, we made choices about how we use existing resources. I can guarantee you that those solutions did not come from the pollster who offers tax raises without the larger context. But you know that, too.

    James’ answer reflects that approach, although it is not reflected in the answer that was printed. You can stop bashing him.

    When we were setting the preliminary budget (which we received a mind boggling 10 days before we were asked to vote on it), many of us asked questions about the state budget and our level of confidence in the numbers that we were using. We were assured that these were highly vetted and developed numbers. Apparently not so much, but we were not alone in our surprise. It is surprising that the first knowledge that we (board members) had was when a reporter called.

    Since then, we have had a good deal of purple prose about what happened. The only option offered was to raise taxes. I suspect that some of us will be looking at a number of alternatives based on staff responses to a survey asking what we could do without and what we absolutely need to succeed. There are some big neon arrows in the frontline responses. None of those are reflected in the budget that administration brought forward. (I note that some board members don’t find the line item budget to be very helpful in shaping their opinions; I tend to find the line item budget to be very helpful in thinking through ways to solve real problems like OTA services and K4 that actually reaches our poorest students. It is reasonable to expect that staff responses to the budget survey of last spring will be reflected in solutions that come from the board as we set the final budget and tax levy in October.

    Between now and then, we will we working to get through the smoke and mirrors that were used in the preliminary budget and the dance of the seven veils that we will surely get in administration presentations on the budget. It may be that raising taxes is the truly the only option. But until there has been a full discussion based on verifiable information, I will not be committing to one course of action or another in fixing this hot mess.

  2. SEA

    One way to make sure the 4K program really works would be to make sure there is adequate SEA support in the 4K classrooms, which hasn’t been planned for, from what I understand. I don’t see how 4K is going to work without this.

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