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A new report by UW-Madison economics professor Andrew Reschovsky provides more detail on how drastically school spending would be cut under Gov. Scott Walker’s proposed state budget. Reschovsky, who has frequently written about state finances, finds that 78 percent of the state’s school districts would be required to reduce school property taxes – even after getting a big cut in state aid and, in many cases, even after reducing educational programs and increasing class sizes.

The state Legislature’s Joint Finance Committee is scheduled to debate the budget’s impact on school funding on Thursday. Walker’s proposed budget for the 2011-13 biennium, which is undergoing the committee’s scrutiny, would lower the state’s school district “revenue caps” for the first time since the state Legislature created them in 1993. The caps limit the amount of state aid and local property tax funding a district can receive in a given year.

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Here’s how Walker’s budget would affect them and result in property tax cuts in most districts, according to the paper by Professor Andrew Reschovsky:

Since 1993, the state has generally permitted districts to raise their caps each year at the rate of inflation. Walker’s budget, however, would require a 5.5 percent reduction in the caps.

Both the “general state aid” (paid for by state tax dollars) and local property taxes that districts raise would count toward their revenue cap.

Walker’s budget would cut general aid by about $391 million. In most districts – 78 percent, the report estimates – the decline in spending required by the revenue caps would be greater than the cut in general aid, meaning these districts would also have to trim property taxes to hit the 5.5 percent reduction Walker would require.

The report adds, “In many districts, these property tax reductions would occur even though the local school districts would be forced to reduce educational programs and increase class sizes.”

The property tax cuts would be highest in both the richest districts, which rely most heavily on property taxes to fund their schools, and the poorest ones, which tend to be in high-cost urban areas with large property tax levies.

Andrew Reschovsky

In relatively affluent districts, where less than 10 percent of students qualify for free or reduced price lunch (an indicator of poverty), the average property tax cut required by Walker’s plan would be $316 per student, the report estimates.

In the poorest ones (such as Milwaukee Public Schools), where more than 60 percent of students qualify, the average cut would be $267 per student.

Districts could avoid these cuts if voters approve referenda raising their district’s revenue cap as permitted by state law.

Reschovsky says Walker’s plan doesn’t bode well for Wisconsin’s poorest districts.

“There are unintended consequences here, and one of them may be that poor districts will suffer disproportionately,” he says.

These districts would be required to make the second highest cuts in property taxes, according to his report, and would also receive the largest cuts in state aid.

Poorer district rely more heavily on it – the state formula that divvies up state aid to districts favors those with lower property values – and will therefore feel a greater impact when it’s reduced, according to Reschovsky.

Wealthy district, he says, “tend to have less or almost no reliance on general aid.”

Reschovsky and others have proposed including additional “poverty weights” in the state formula for school aid. Such a system, already in place in some states, would award greater funding to districts with greater poverty.

He says the additional funding recognizes the higher costs of educating a population with greater percentages of poor or special needs students.

But Reschovsky says such a change in the formula isn’t likely in a time of fiscal constraint.

His analysis relied on data from the 2010-11 school year. New data – including such information as enrollment and school spending – won’t be available until later this year.

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