Understanding Changes to School Finance

We recently wrapped up a legislative session that brings with it many changes.  One I have been watching closely is Senate Bill 2265.  This bill dealt with how our schools are funded and it had some major implications.  The full effect of this bill is a lot more complicated than a one line answer.  Even this little article doesn’t get into a few nuances that won’t affect our school.  The short hand version is that for Elgin/New Leipzig Public School the anticipated reduction in funding due to a loss in enrollment will not happen.  The legislature reinstated our funding levels from the 2018-2019 school year for the 2019-20 and 2020-21 school years.  If you desire a more technical answer you can read on.

The part of this bill I am sure many of you are already familiar with is that schools on the formula (pay attention to that phrasing, its important later) will receive a 2% increase this year followed by another 2% increase in what we get paid per student (also known as our per pupil payment).  This is breaking a 3 year freeze on per pupil payments.  The 2019-2020 school per pupil payment will be $9,839 followed by $10,134.  This is great news for schools who use the formula amount.

So why do I keep referencing a formula amount?  It is because Elgin/New Leipzig does not receive that amount, along with many other schools.  We instead receive $11,123.  This is what was set back in the 2012-2013 school year when school finance was reworked.  Schools who stood to suffer a major loss in revenue were held harmless, meaning their per pupil amount was adjusted so they would not lose revenue due to the new funding formula.  Prior to this year this amount increased along with the on-the-formula amount.  Because we are not on the formula, we will not receive a 2%/2% increase.  If our enrollment was steady we’d receive a 1%/1% increase.  Unfortunately this is not the case so we will also not receive this increase in funding either.

So at this point you may be thinking, well what do we get?  I am glad to say the answer is not nothing.  We stood to lose approximately $160,000 due to our declining enrollment.  This bill reset that 2012-2013 off the formula amount.   So what this does is hold our funding steady from the 2018-2019 funding amounts.  We get the same amount of state aid as this funding year for the 2019-2020 and 2020-2021 school years.

If we did increase in enrollment, we’d increase by the on-the-formula amount.  So the first X students who were funded by the off the formula amount in the 2019-2020 school year would receive the off-the-formula amount, while the rest of the students would be funded by the on-the-formula amount.

There were also some minor changes in deductions taken from local property taxes.  The changes hold a smaller percentage of mobile home, telecommunications, and other in-lieu taxes against our state funding.

Confusing?  Yes, it is a bit hard to follow.

You can look at this information like we have been given an allowance for the next 2 years and it is fixed at our 2018-2019 funding levels.  Will this continue into the 2021-2022 school year? No it will not.  What will happen in the next biennium?  I could not tell you.  I do know that the governor and other legislators want to get all schools on the same funding formula.  Presently that would result in a huge loss in funding for our school but on the same note it will be a new biennium.  So this conversation has been put on hold and the question of what our school’s funding will do has been tabled.  To the question of how we make school funding equitable using one formula, the legislature has functionally kicked the can down the road to the next biennium.

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