DPI warns of ‘problematic situations’ for schools if state budget is not passed soon

State Superintendent Tony Evers has sent a memo to members of the Legislature’s Joint Finance Committee warning of “problematic situations” for schools throughout the state if a state budget is not passed soon. “With the state budget not being settled, there’s a lot of uncertainty across all superintendents and people managing the finances of school districts across the state of Wisconsin,” Brad Saron, superintendent of the Sun Prairie School District, said in a follow-up Wisconsin State Journal article. “And what that means is, really, everything is on hold.”

According to the State Journal article:

Evers said school officials are worried funding increases they have been told for months are coming could be diminished as lawmakers work on an incentive package for Foxconn.

“I think there is a fair amount of concern (from school district officials) that we’re not sure we’re going to get this money,” Evers said. “So until a budget is finalized, I think there will be ongoing concerns.”

The state budget is normally scheduled to be completed by end of June every two years, but debate on transportation issues, education issues, and the proposed massive tax incentives to bring a Foxconn manufacturing plant to southeastern Wisconsin have delayed deliberations this year.

In his memo to legislators, Evers said:

As you know, the Department is required by state law to certify state general school aids for public school districts annually by October 15th, which involves processing a significant amount of data. In addition, school districts rely on the October 15th certified aid amounts and other data provided by the Department to set property tax levies by November 1st. The first quarterly payments to private choice schools and independent charter schools must be calculated and distributed in September. Finally, a delayed budget could impact the distribution of categorical aid that is paid earlier in the school year.

This memo outlines the problematic situations that will ensue if the budget is not signed into law in the near future. The 2017-19 biennial budget must be signed into law by the dates indicated below, in order to complete the specified calculations and payments:

  1. August 31st – to enable the Department to distribute Sparsity Aid payments to school districts on the same timeline as prior years (paid in September), otherwise payments will be delayed.
  2. September 5th – to enable the Department to incorporate the indexing of the per pupil payments for the 2017-18 school year in the statutorily-required September payments to independent charter schools and private schools participating in any of the state’s parental choice programs. Otherwise, changes in funding will be allocated across the other payments.
  3. October 3rd – to enable the Department to run the October 15th General Aid Certification, incorporating the aid deductions to all school districts related to the Independent Charter School Program, the Wisconsin Parental Choice Program, Racine Parental Choice Program, Special Needs Scholarship Program and the aid deduction to Milwaukee Public Schools for the Milwaukee Parental Choice Program. Districts have the authority to essentially levy back for these deductions. Missing this deadline may result in insufficient state aid deductions, which will increase cost to the state general fund.
  4. October 27th – to enable school districts to set levies, incorporating the revenue limit exemption for resident incoming choice pupils and pupils receiving a Special Needs Scholarship, based on an accurate per pupil payment amount for the 2017-18 school year. Failure to meet this deadline may result in districts under-levying the costs for choice and charter programs.

Read more in the Wisconsin State Journal:

Schools gear up for new year without state funding set

Schools across Wisconsin are starting a new year without knowing exactly what’s coming from the state as lawmakers continue to put off passing a new two-year state budget. For many school officials, the delay isn’t worrying them much at this point. But for some, spending on staff, new course materials and training is on hold.

Legislative Update – August 9

A kindergartener today will be about 37 years old by the time the state would possibly break even on tax breaks and government incentives for Foxconn, the foreign corporation proposing to set up shop in southeastern Wisconsin. Critics are asking whether some of those incentives could instead be used to strengthen community infrastructure across the state, including public schools. The latest on the Foxconn deal and state budget deliberations is below. To see education-related bills circulating, visit www.weac.org/budget.

Assembly may vote on Foxconn deal next week

The Assembly may vote on the Foxconn bill as early as August 17, leaders have announced.

Fiscal bureau says state won’t break even – possibly – until 2047

Democrats are demanding Republicans slow down deliberations on the Foxconn bill after a new Legislative Fiscal Bureau analysis found the state’s break-even point, at best, would be fiscal year 2042-43. That’s if the Taiwanese electronics manufacturer creates 13,000 jobs at a planned $10 billion facility. But it would be “well past” 2044-45 before the state reaped more tax revenue than the $3 billion it’s slated to dole out to the company if only 3,000 jobs were created.  

Questions arise on oversight of potential Foxconn deal

Red flags are being raised over the $3 billion government spending proposal for the Taiwanese corporation, as it would be overseen by a state agency with mixed results on tracking such awards and clawing back money from companies that default. The Wisconsin Economic Development Corporation (WEDC) would be tasked with awarding up to $1.5 billion in state income tax credits for job creation and another $1.35 billion for capital investment. That means WEDC will have to accurately track Foxconn’s job creation efforts, on which the agency has a spotty record. A state audit in May found WEDC was not certain about the numbers of jobs created or retained as a result of its awards. Along with troubles tracking job creation numbers, the agency has been inconsistent with efforts to “claw back” money awarded to companies that later eliminated jobs or outsourced them to other countries.

Details of the deal

The Foxconn bill would create two refundable tax credits, paid from a sum sufficient GPR appropriation. In addition, Foxconn would be able to claim 7.5% manufacturing and agriculture credit (MAC) on income from Wisconsin operations, and “it appears likely that most of the proposed tax benefits would be refunded to Foxconn and not used to offset its state tax liability,” analysis shows. The estimated payments of the credits would begin with $2.35 million in 2018-19, and would not end until 2034. (This assumes Foxconn’s zone employment will increase from 1,040 positions in the latter part of 2017 to 13,000 by 2021 and stay at that level with an annual average salary of $53,875).

The bill also includes incentives to keep a southeastern Wisconsin firm called Fiserv in the state. These taxpayer-funded incentives would total $2 million annually from 2019-20- through 2023-24 for a total of $10 million, plus Fiserv would receive an additional $500,000 annually in capital investment credits.

Education Bills Introduced in Senate:

  • SB-382 School Employee Tuberculosis Screening (Olsen, Luther) Screening school district employees for tuberculosis. Referred to Senate Education Committee
  • SB-383 School Aid Payments (Olsen, Luther) The payment of state aid to school districts and payments to operators of independent charter schools and private schools participating in a choice program or the Special Needs Scholarship Program. Referred to Senate Education Committee

Legislative Update – August 4

Special Session on Foxconn

The Foxconn special session bill (AU7 AB1) has been introduced, and Assembly Republicans held a hearing Thursday on legislation that could provide massive incentives for a planned Wisconsin plant. The Washington Post reports that the tax deal/incentives could cost the state $230,700 per worker. The Assembly Jobs and Economy Committee is expected to vote on the bill Thursday, August 10, and full Assembly may take up the bill by mid-August. Assembly leaders said the bill may not go to the Joint Finance Committee despite its fiscal price tag. After heavy criticism over the lifting of permitting and wetland restrictions in the bill, and the quick timeline, the governor weighed in saying there were “environmental protections” and that a few weeks for the Legislature to debate the legislation and the hefty price tag is “a pretty good amount of time.” Read more about the Foxconn deal.

Fiserv

Part of the special session bill also offers incentives to a company called Fiserv headquartered in Brookfield, which is looking to leave Wisconsin. The bill essentially allows the firm to continue to receive tax incentives even if it doesn’t grow jobs. In fact, it appears they could cut the workforce and still receive government incentives.

DPI Hearings

The Wisconsin Department of Public Instruction will conduct two public hearings on Aug. 21 related to the Assembly Education Committee’s Review of administrative rules and creation of rules related to whole grade sharing.

Foxconn Update From WisPolitics:

Neylon to delay committee vote on Foxconn bill to consider amendments

Rep. Adam Neylon tells WisPolitics.com he plans to push off an exec on the Foxconn legislation to consider amendments, including language that would seek to have the company give preference to Wisconsin vendors and workers. Neylon’s Jobs and the Economy Committee had originally planned to vote on the bill .

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Foxconn special session starts Tuesday amid growing pushback

Governor Walker on Friday called for a special session starting Tuesday on tax breaks and other incentives to bring a massive Foxconn plant to Wisconsin. The governor introduced a bill on Friday to implement the Foxconn Memo of Understanding that lays out expectations for the Taiwanese electronics maker to create up to 13,000 jobs over six years and for the state to provide up to $3 billion in incentives. The plant will be built in the Racine-Kenosha I-94 corridor.

Insiders say this will move fast, evidenced by GOP leaders calling for a public hearing already this week, with a done deal expected by late August.

Meanwhile, Democrats and others are raising questions about the deal.

In an op-ed in UrbanMilwaukee.com, Rep. Jonathan Brostoff of Milwaukee questioned whether $3 billion in state money and incentives could be spent in other ways to boost the state’s economy and improve our quality of life.

“If we are willing to spend billions of taxpayer dollars then let’s employ Wisconsin workers, fix every pothole in our state, hire community connectors and park staff, invest in renewable energy infrastructure, fully fund our world class university system, hire teachers for our schools, and invest in the success of small businesses across our state,” Brostoff writes.

Rep. Dave Hansen of Green Bay wrote in the newiprogressive.com that the state should be extremely cautious in any use of taxpayer dollars to lure Foxconn to the state, citing concerns that new technologies could eliminate any promised jobs.

“Given recent accounts of how its workers are treated and Foxconn’s strategy of getting every last nickel and dime it can from taxpayers to lower their costs, Governor Walker and any legislator thinking of supporting what could be a $3 billion incentive package should be very wary,” Hansen writes. “To do otherwise would be a serious case of legislative malpractice.”

By the way, the deal waives all environmental regulations and permits.

In a column on FastCompany.com, Greg LeRoy, executive director of Good Jobs First and author of The Great American Jobs Scam, says the Foxconn deal “exemplifies everything that’s wrong with our nation’s economic development system.”

“Even if the project creates all 13,000 jobs the politicians said it potentially could – and I find that absolutely not credible given how automated high-tech manufacturing has become – that means a cost of more than $230,000 per job,” LeRoy writes. “At that price, the deal is a sure loser for Wisconsin taxpayers. That’s because there is no way the typical Foxconn worker will pay $230,000 more in state and local taxes than she and her family will consume in public services over her work time there. At that price, the deal can only be accurately described as a transfer of wealth from Wisconsin taxpayers to Foxconn shareholders.”

Others have questioned whether Foxconn can be trusted to follow through on its promises, noting that it backed out of a major deal in Pennsylvania. Advocacy group One Wisconsin Now cautions that Foxconn “has a long history of over-promising and under-delivering on their claims of investments and job creation.”

“For example,” OWN says, “Pennsylvania is still waiting on hundreds of promised jobs created at a $30 million facility announced in 2013 that has yet to materialize. Are they really preparing to invest such huge sums in Wisconsin and create well paying jobs when they are lowering costs in factories in China by replacing workers making less than $4 per hour with robots?”

Foxconn jobs a boon for Wisconsin, but with $3 billion incentive deal, a steep tradeoff

Wisconsin taxpayers could pay a steep price for what state leaders call a “transformational” prize: a Foxconn manufacturing operation in southeast Wisconsin that the Taiwanese company says could eventually employ as many as 13,000. Last week’s Foxconn news was the rare announcement that won plaudits from both parties at the Wisconsin State Capitol.

Legislative Update – July 27

WEAC Legislative Update

An Assembly bill (AB-452) referred to the education committee would terminate Wisconsin’s voucher program, including special needs vouchers, and repeal the achievement gap reduction program. Instead, the bill calls for expanding the student achievement guarantee program (SAGE).

Foxconn and the budget

The Foxconn deal was unveiled Wednesday by the U.S. president and Wisconsin governor. Wisconsin Dems urged caution, demanding that the corporation adhere to promises it makes about the number and quality of jobs and workplace safety. Here are the brass tacks about the tax credits totaling up to $3 billion over 15 years, provided by the WI Economic Development Corp.

  • The Foxconn investment is the state’s largest economic development project.
  • The factory floor area will be 20 million square feet.
  • The average salary will be $53,875 plus benefits.
  • The project requires an estimated $10 billion of capital investment to construct the facility.
  • Of the $10 billion, $5.7 billion will be sourced from Wisconsin businesses.
  • The project is estimated to include 13,000 jobs directly at Foxconn and 22,000 indirect and induced jobs.
  • The project is estimated to generate $181 million in state and local tax revenues annually, including $60 million in local property taxes.
  • Foxconn plans to be operational in 2020.
  • There will be a memorandum of understanding that will outline terms of the incentives based on expected job creation and capital investment.
  • The contract will contain clawbacks that will require the company to pay back tax credits if the jobs and investment are not kept in Wisconsin.
  • The Tax Incremental Financing District tools available to the municipality where this is located will be expanded to ensure the capital available for local infrastructure.

A special session will be called to pass an incentive package.  The WEDC document says:

  • Tax incentives will be tied to actual performance.
  • Foxconn will be eligible to earn incentives based on its actual job creation and capital investment.
  • Foxconn will be eligible for a sales tax holiday for the purchase of construction materials.
  • Incentives are projected to cost between $200 million and $250 million a year.
  • Once fully staffed, Foxconn’s payroll will be estimated at $700 million a year.
  • The maximum amount of credits Foxconn will be eligible to earn is $3 billion over 15 years:
    • Up to $1.5 billion in state income tax credits for job creation.
    • Up to $1.35 billion in state income tax credits for capital investment.
    • Up to $150 million for the sales and use tax exemption (sales tax holiday).

Public schools, taxpayers would pay greater share of voucher costs under new state budget plan

Legislative Update – July 26

Taxpayers would see the price tag for school vouchers triple under the Senate budget plan, the nonpartisan Legislative Fiscal Bureau has discovered. Senate Democrats called out the proposed shift of the costs of the unaccountable voucher program onto local taxpayers.

For the Racine and statewide school choice programs in the 2015-17 biennium, state aid to public schools was reduced by $43.1 million. Under the Senate Republican plan for the 2017-19 biennium, aid is estimated to be reduced by $120.3 million, nearly three times the amount over the last budget. But according to the Department of Public Instruction, districts are given a non-recurring revenue limit exemption, allowing them to make up the aid reductions through a combination of property taxes and school aid. In part, that’s caused by the Senate proposal to increase the income limits for receiving a taxpayer-funded private school tuition subsidy. Under their plan, families at 220 percent of the federal poverty level would qualify – including far more students than those in poverty.

Under Governor Scott Walker’s education budget, vouchers would siphon $101.5 million from public schools. Neither option is best for Wisconsin students, WEAC President Ron Martin said. Instead, that funding should be restored to the public schools serving all children, no matter where they live or what their family circumstances are.

School districts would pay for large share of vouchers under plan, fiscal bureau says

A budget plan proposed by Senate Republicans would increase funding for the state’s three main private school voucher programs by nearly $60 million over the next two years, according to an analysis by the Legislative Fiscal Bureau made public on Tuesday.

Legislative Update – July 25

A provision in the Senate Republicans’ budget plan announced last week has public school advocates sounding the alarm on how it would harm districts in areas of the state with low property values.

As we reported in the July 18 WEAC Legislative Update, referendum restrictions included in the Senate GOP plan would exclude from ‘shared cost’ any amount levied by a district in a prior year for either operating or debt service costs that were authorized by a referendum if doing so would not increase the district’s equalization aid entitlement. That means that districts with low property wealth wouldn’t see any state equalized aid increases if they pass a referendum for additional spending.

The Department of Public Instruction has created this map showing in green the districts that would potentially be adversely impacted by this provision.

Guns and Schools

The Assembly Education Committee is holding a public hearing on AB427, requiring a firearm education curriculum be established for high schools to offer as an elective course.

The Budget and Foxconn

According to U.S. House Speaker Paul Ryan, reported by the Wall Street JournalFoxconn will be making an announcement on Thursday that the corporation will choose Wisconsin for a production center. The potential of the international company coming to Wisconsin has fueled budget speculation over the past few weeks, including the deadlock on transportation funding. Read related Milwaukee Journal Sentinel story.

Insiders are watching to see what kind of deal the state makes with the corporation, as they say there have been instances in other cases of corporate tax breaks and investments only for the firm to fall short on its end of the deal. And, while the jobs and infrastructure that may come could benefit one part of the state, northern rural communities may wonder if the tax breaks are helping them at all, if in fact the firm does open a center in the state. That all remains to be seen.

Voucher Expansion

When it comes to education, nothing’s a done deal in the long-overdue budget debate. While the Assembly has its own ideas, and the Senate Republicans introduced their own plan last week. The Joint Finance Committee does not plan any meetings this week. The bottom line is this: GOP lawmakers want to expand voucher eligibility, but disagree on how much.

Comparison of Three Different Education Budgets

As part of those negotiations, the Assembly and the Senate have each put forth their own version of an education budget. The Wisconsin Budget Project has released a summary highlighting the major areas of difference in the two budget proposals, and comparing them to the Governor’s proposal. The summary also includes notes on the reaction of education advocates to various provisions in the different versions of the budget. Read summary here: Competing Proposals for Wisconsin’s Schools: A Comparison of Three Different Education Budgets.

Legislative Update – July 20

Latest in the Legislature
More on the Senate Republicans’ budget proposal unveiled earlier this week has been unpacked, including provisions that would impact voucher schools. Reactions are everywhere, with Democrats telling the GOP to “get it together,” while the governor says “we’re a lot closer than we think.” In fact, by Thursday afternoon, Assembly Republican leaders said they will accept the governor’s offer to redirect $203.5 million in income tax cuts he had proposed, using funds instead to fund transportation in the budget.

Additionally, the Senate proposal does not include the governor’s idea to move to lifetime licenses for teachers and administrators (page 487, #16), but instead calls on the DPI to ease the process in a few ways. By January 1, 2018, the DPI would have to submit a rule revising PI 34. The new rule must maintain a high standard of quality for teachers and simplify the licensure system as much as practicable, including the following: (a) simplify the grade levels licensees can teach and adopt broadfield subject licenses; (b) enable school districts to increase the number of teachers by offering internships and residency opportunities; (c) simplify out-of-state licensure reciprocity; and (d) expand pathways for existing licensees to fill high needs or shortage areas. The State Superintendent would also be required, by rule, to create a permit that allows a person enrolled in an educator preparation program to work in a school district as part of an internship, residency program, or equivalent program.

The Senate proposal also increases the score needed on a civics exam to graduate and changes parameters of Teach for America grants to increase funding and shift responsibility to the Department of Workforce Development, among other things (page 643).

By the Issue
More Campus Speech Legislation.
AB 440 would create requirements and prohibitions regarding free speech at the University of Wisconsin and technical college systems. The bill declares that it is not the role of a UW institution or technical college to shield individuals from speech that is protected by the First Amendment of the U.S. Constitution. The bill imposes requirements throughout both systems, including the campuses are open to any speaker who is invited by students or faculty and that administrators must remain neutral on public policy controversies. It was referred to the Assembly Committee on Colleges and Universities.

Voucher Accountability Bill, Including Requiring Background Checks for First Time, Signed.
SB293 was signed by the governor today. The bill, supported by State Superintendent Tony Evers, expands accountability provisions for voucher schools and makes technical changes. The bill expands the DPI’s authority to remove schools from the program, for the first time requires background checks for voucher school staff, and fixes the special needs voucher funding flaw that unfairly hurt public school students. It also removes the ineffective law allowing voucher schools to monitor their own accountability standard. Current enrollment and income caps are maintained in the bill – although there’s talk that a budget bill may tinker with one or both of them.

Legislative Update – July 18

Latest in the Legislature
Senate Republicans today released their own budget proposal. In it, the Senate GOP includes all actions taken by the Joint Finance Committee mid-June, along with some areas of K-12 funding that have been agreed upon by the Senate and Assembly. Senate leadership is hoping the plan will prompt Assembly Republicans to engage on the outstanding issues holding up the budget, and that the finance committee would move swiftly to move a budget through.

Transportation has been the sticking point with the budget, and the Senate proposal includes $712 million in transportation bonding. Of that, $362 million would come from the segregated transportation fund, with the remaining $350 million coming from the general fund. Governor Walker’s initial proposal included $500 million in borrowing — the lowest level of bonding since the 2001-03 budget.

Here’s a quick glimpse of the proposal as it relates to public school finance, school referenda and programming.

  • Increase per-pupil aid $200 in 2017-18 and $204 in 2018-19.
  • Delete requirement that districts certify employees are required to pay at least 12% of costs and payments associated with its employee health coverage plans. However, districts would have to submit reports annually to the state outlining employee health care, including plan design, premium contributions, self-insurance contributions, deductibles, copays, coinsurance, and other methods by which employees contribute to health care costs.
  • Referendum restrictions would be incorporated. You’ll remember that currently there are five stand-alone bills circulating to limit local control for school spending. The restrictions rolled into the budget proposal include:
    • Referendum elections could only be held on regularly scheduled election days.
    • Allow school boards to reduce revenue limits by rescinding all or a portion of any increase to a district’s revenue limit approved by an operating referendum.
    • Exclude any operating or debt service costs resulting from a referendum from shared costs under the equalization aid formula. This has the potential of permanently harming some low-property value districts by preventing them from receiving state equalization increases if they passed a referendum.

Also noteworthy:

ENERGY EFFICIENCY EXEMPTION.
Somewhat restores the energy efficiency exemption
under revenue caps, by imposing a two-year freeze on energy efficiency projects.

HIGH-COST SPECIAL EDUCATION AID.
Increase the amount school districts are reimbursed for high-cost special education
to 90 percent of eligible prior year costs above $30,000. Currently districts are reimbursed at 70 percent.

HIGH-COST TRANSPORTATION AID.
Expand the high-cost transportation aid
to cover districts that are 145% of statewide average, rather than 150% as under current law. In cases where a district qualified for the aid one year but not the next, the district would receive half of what it did the preceding year.

LOW-REVENUE ADJUSTMENTS.
Increase the low-revenue adjustment
from $9,100 per pupil to $9,300 in 2017-18 and $9,400 per pupil in 2018-19. The low-revenue adjustment would be increased by $100 per pupil each year after until it reaches $9,800 in 2022-23, at which time it would be maintained at $9,800.

OPEN-ENROLLMENT TRANSFER AMOUNT.
Increase the open-enrollment transfer amount
for a regular education student by $100 each above the current law, indexing amount from each year 2017-18 to 2020-21. Currently, the transfer amount is indexed to general and categorical aid increases to public schools in the same way per pupil payments to private voucher schools and independent charter school payments are adjusted – which accounts for the governor’s proposed increase for private school tuition subsidies of $217 per pupil.

PER-PUPIL ADJUSTMENTS.
Maintain current law stipulating no per-pupil adjustment
in the 2015-16 school year and thereafter.

MENTAL HEALTH.

  • Provide $3 million for a categorical aid mental health program to reimburse school districts and independent charter schools for social workers.
  • Provide $3.5 million in Community and School Mental Health Collaboration Grants, which is far above the $1 million increase the governor proposed.

SPARSITY AID.
Delete $100 increase per pupil in sparsity aid
, and instead provide $100 per pupil for districts with between 745-1,000 students. In cases where a district qualified for the aid one year but not the next, the district would receive half of what it did the preceding year.

TECHNOLOGY.
Provide $9.2 million for personal electronic computing device grants
to school districts, private schools, independent charter schools, and tribal schools. Grants would cover $125 per ninth grade pupil and would require schools to provide equal matching funds.

Legislative Update – July 17

Latest in the Legislature
Senate Republicans announced they will release their own budget proposal Tuesday, something Capitol insiders have been speculating about for some time. The state budget is currently two weeks overdue. According to statehouse insider WisPolitics, a spokeswoman for Majority Leader Scott Fitzgerald said the document was still being drafted by the Legislative Fiscal Bureau.

On the Issues

Opioid Antidote. Special Session Assembly Bill 1, allowing school personnel to administer a potentially life-saving opioid antidote to a student in an emergency free from liability, was signed into law.

Competitive Bidding. A proposed Department of Transportation “reform” bill, LRB 3884/1, would allow technical colleges and municipalities to use alternative delivery methods in awarding construction projects, such as construction managers or a fixed-price, variable-scope approach to maximize the amount of work on a fixed budget. What does this mean for schools? An Assembly Bill (AB 307) is also moving through the Legislature, mandating schools to use competitive sealed bids for school construction projects. If the Assembly bill continues to move, it’s worth asking why some entities would be allowed flexibility, while the hands of school boards would be tied.

Prevailing Wage. A bill moving through the Legislature to repeal prevailing wage, SB 216/AB 296, was the topic of discussion over the weekend, drawing sharp criticism from Democrats.

Follow state budget developments and sign up for updates at weac.org/budget.