lfb revenue limit changes for k-12 school districts

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Legislative Fiscal BureauOne East Main, Suite 301 • Madison, WI 53703 • (608) 266-3847 • Fax: (608) 267-6873

March 15, 2011

TO: Members

Wisconsin Legislature

FROM: Bob Lang, Director

SUBJECT: Potential Revenue Limit Changes for School Districts Under Governor's 2011-13

Budget Bill

This memorandum provides information on the potential changes to revenue limits for

school districts, compared to the 2010-11 base year, under current law, and the 2011-13 budget bill

(Senate Bill 27/Assembly Bill 40) as proposed by the Governor.

Under revenue limits, the amount of revenue a school district can raise from general school

aids, computer aid, and property taxes is restricted. A district’s base revenue in a given year is

equal to the general aid, computer aid, and property tax revenues received in the prior school year.

Base revenue is divided by the average of the district’s enrollments in the prior three years todetermine base revenues per pupil. Under current law, a per pupil adjustment ($200 in 2010-11) is

added to the base revenue per pupil to determine the district’s current year revenue per pupil.

Current year revenue per pupil is then multiplied by the average of the district’s enrollments in the

current and prior two years to determine the district’s initial revenue limit. Other adjustments (such

as the low revenue ceiling and declining enrollment) are then made to the revenue limit. Under the

low revenue ceiling adjustment, any district with base revenue per pupil below a statutorily-

specified low revenue amount ($9,000 per pupil in 2010-11) may increase its revenues up to that

amount.

Under current law, the per pupil adjustment would be $275 in 2011-12, and that amount

would be indexed to inflation beginning in 2012-13, which would result in an estimated per pupil

adjustment of $280 in 2012-13. The low revenue ceiling under current law would be set at $9,800

per pupil in 2011-12 and each year thereafter. Under the bill, the current law per pupil adjustment

would be replaced with a 5.5% reduction to a district’s base revenue per pupil in 2011-12 and no

adjustment in 2012-13. The low revenue ceiling under the bill would be set at $8,900 per pupil in

2011-12 and each year thereafter.



The attachment presents information to illustrate the possible revenue limit changes under

current law and the bill compared to the 2010-11 base year. The attachment shows the 2010-11

three-year rolling average pupil count for districts under revenue limits and the 2010-11 base

revenue per pupil for districts, which excludes any revenue limit authority from nonrecurring

adjustments and will be the starting point for the 2011-12 revenue limit calculation. To illustrate

the change in revenue limit authority resulting from the per pupil adjustments under current law and

the bill, the attachment shows the results of multiplying the per pupil adjustment under eachscenario times the pupil count for a district and takes into consideration the low revenue ceiling

amount under each. The attachment shows the change to the base year under current law that would

result from the $275 and estimated $280 per pupil adjustments in 2011-12 and 2012-13,

respectively, and the change to the base year under the bill that would result from the 5.5% base

reduction in 2011-12 and no adjustment in 2012-13.

The bill as a change to current law shown in the attachment is based on the reduction in the

per pupil adjustment and the low-revenue ceiling. In 2011-12, the current law per pupil adjustment

would be $275. Under the bill, a district's base revenue per pupil would be reduced by 5.5%. In

2012-13, the estimated per pupil adjustment would be $280. Under the bill, there would be noadjustment to the 2011-12 base revenue per pupil. The cumulative effect for a school district in

2012-13 as shown in the attachment would be a reduction of $555 per pupil (the $275 adjustment in

2011-12 plus the estimated $280 adjustment in 2012-13) plus the 5.5% reduction made in 2011-12.

A small number of districts are shown in the attachment with an increase in revenue limit

authority under the bill. These districts were eligible for the low revenue ceiling in 2010-11 but

chose not to levy to that amount. As a result, these districts have 2010-11 base revenue below the

proposed low revenue ceiling of $8,900 per pupil in 2011-12. Thus, the per pupil revenue for these

districts would increase in 2011-12 compared to 2010-11, even after the base reduction provision in

the bill.

It should be noted that this information is a static estimate of the effect of the proposed

changes as if the changes had applied in 2010-11. If a district has increasing enrollment, the

proposed changes would affect more pupils, and the effect would be greater than that shown in the

attachment. Conversely, if a district has declining enrollment, the effect would be less. In addition,

school districts would determine whether to levy to the maximum allowed under the proposed per

pupil adjustment, or low revenue ceiling, whichever would apply.

A number of other changes would be made to revenue limits under the bill. Revenue limit

adjustments for school safety expenditures, above-average transportation costs, and school nurse

compensation costs that would first begin in 2011-12 would be deleted. A revenue limit adjustmentbased on the general aid adjustments made for open enrollment pupils that are not included in a

resident district’s enrollment would be created. The effect of these adjustments are not reflected in

the attachment. The repeal of the prior year base revenue hold harmless adjustment is reflected as

part of the 5.5% reduction in base revenue per pupil in 2011-12.

BL/RK/sas

Attachment



2010-11

Three Year

Current Law

Average

Base Revenue

Change to Base Year

Bil

l Change to Base Year

Bill Cha

nge to Current Law

School District

Enrollment

per Pupil

2011-12

2012-13

2011-12

2012-13

2011-1

2

2012-13

Page17

Winter

367

$10,992

$100,925

$203,685

-$222,035

-$222,035

-$322,960

-$425,720

Wisconsin Dells

1,704

10,053

468,600

945,720

-942,312

-942,312

-1,410,912

-1,888,032

Wisconsin Heights

882

10,002

242,550

489,510

-485,100

-485,100

-727,650

-974,610

Wisconsin Rapids

5,518

9,591

1,517,450

3,062,490

-2,913,504

-2,913,504

-4,430,954

-5,975,994

Wittenberg-Birnamwood

1,248

9,424

469,248

818,688

-646,464

-646,464

-1,115,712

-1,465,152

Wonewoc-Union Center

398

11,489

109,450

220,890

-251,536

-251,536

-360,986

-472,426

Woodruff J1

472

10,034

129,800

261,960

-260,544

-260,544

-390,344

-522,504

Wrightstown Community

1,264

9,590

347,600

701,520

-666,128

-666,128

-1,013,728

-1,367,648

Yorkville J2

332

10,818

91,300

184,260

-197,540

-197,540

-288,840

-381,800

STATEWIDE

849,578

$10,081 $257,211,479 $495,093,319 -$464,584,927 -$464,584,927 -$721,796,406 -$959,678,246

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