WEAC Research Paper

The Effects of School Revenue Caps

Background

Wisconsin Act 16, passed in 1993, imposed a five year limitation on the total amount of money that public school districts were allowed to raise through a combination of state aids and the local property tax. For a five year period (1993-98) the annual increase in a district's revenue per pupil was limited to a specific dollar amount ($190 in 1993-94) or the rate of inflation times the per pupil cost. Beginning with the 1994-95 school year, the per pupil dollar amount was to be adjusted for inflation.

There were significant changes in this legislation made in the 1995-97 state budget. For example, the revenue controls were made permanent, and the per pupil increases were set at a fixed dollar amount ($200 per pupil in 1995-96 and $206 per pupil in 1996-97). This means that districts can no longer choose between a fixed dollar amount and the Consumer Price Index.

After the first year of implementation, many district officials charged that the revenue controls were beginning to harm existing programs and services because district expenses were increasing at rates in excess of the allowable amounts.

During the summer of 1995, the Wisconsin Association of School District Administrators and the Wisconsin Education Association Council surveyed public school superintendents to determine the specific effects of the state revenue caps on district programs and services. Seventy-seven percent of districts participated in the current study. A nearly identical study was undertaken in 1994. At that time, responses were received from 79% of the superintendents.

On the respective surveys, superintendents were asked to indicate the effects of the revenue caps on district programs and services. They also were asked to describe any unique budgetary circumstances which exist in their district and to give their own opinions about the revenue caps. This paper summarizes the responses of the superintendents.

Actions Taken by Districts in Response to the Revenue Caps

Superintendents were given a list of 24 cost-cutting actions which might have been taken in their district to comply with the state's revenue caps. The table on page 5 shows the percent of superintendents who report taking each of these actions during the 1993-94 and 1994-95 school years. In addition, superintendents indicated what they expect to happen in 1995-96.

As the list of district actions is reviewed, two points should be kept in mind:

  1. This study does not speak to the magnitude of cuts or increases. In other words, an increase in class sizes may be very modest in one school district, while in another the increases may be substantial. This study does not differentiate between the two examples just described; instead, each is treated as a case of "increased class size."
  2. The actions listed in the table are occurring during a period in which the population of students in the public schools is growing. In this study, for example, the participating districts report that in January, 1994, their student population totaled 709,930. By January, 1995 the number had reached 726,756. Superintendents estimate that by January of 1996 the total student population for the 327 participating districts will have climbed to 741,092. Over the two year period this represents an increase in the student population of 4.4%.

Overall, 91% of participating districts report that they have taken one or more of the 24 actions during the 1994-95 school year or expect to do so in 1995-96. During the first year of the revenue caps (1993-94), the typical district reported that it had taken four actions (median value) in order to cut spending. For the 1994-95 school year, the median number of actions per district also is four. However, for the upcoming school year, the median value increases to six cost-cutting actions per district.

This pattern of increased cost-cutting measures is consistent with the written comments made by many superintendents. That is, up to this point in time, many districts have been able to weather the revenue caps by postponing expenditures or by using their fund balance. However, many superintendents report that in future years extensive cuts in programs and services will be necessary.

In their written comments, the superintendents from districts with stable or decreasing student populations indicate that they are being hit especially hard by the revenue caps. In contrast, superintendents from districts in which the student population is increasing significantly generally report that they are having fewer cuts in programs or services.

In fact, the 48 districts with a declining student population project a median number of seven cost-cutting measures during the 1995-96 school year (mean = 8.1). At the other extreme, districts showing a high student population increase (defined as 7% or greater), report three fewer cuts (the median value is 4 cuts; the mean is 5.1).

The most frequent responses of districts during the past two years have been to cut back on the maintenance and improvement of buildings and grounds. Significant numbers of districts also are delaying building maintenance or improvement projects. In the short run, such actions may seem to be expedient. However, the long term consequences of ignoring maintenance or improvement projects are invariably negative. This is especially true for older buildings and/or buildings which fail to meet minimal standards for safety or student programs.

In addition, approximately one-fourth of the districts are taking the following steps to control spending:

  • delaying/reducing purchase of textbooks and curricular materials;
  • limiting purchase of consumable supplies, such as paper;
  • delaying/reducing purchase of computers and other technology;
  • offering fewer staff development opportunities for teachers;
  • delaying/reducing hiring of new staff; offering fewer field trips for students;
  • increasing class sizes; increasing teacher workload;
  • increasing administrator workload;
  • increasing student fees;
  • using the fund balance to support the budget.

From the perspective of student learning, many of these actions (including increasing class sizes and delaying/reducing purchase of textbooks, curricular materials, and consumable supplies) may have direct, negative effects on student achievement. The cuts in technology/computers also should be of particular concern because the current status of computer technology in most school districts is marginal, at best. We know, for example, that there are about 40 computers in each public school building in Wisconsin, or about one computer for every ten students. Although the school average is 40, slightly more than 5% of buildings have 100 computers for student use. In contrast, about the same percent of buildings (5.2%) have ten or fewer computers.

These figures remind us of the inequities in student access to this important technology. It also is important to recognize that irrespective of the number of computers in buildings, the majority of computers in use tend to be old and incapable of using the software packages and new hardware developed over the past few years. In short, there are very few Wisconsin school districts which are ready for the so-called "information super highway."

Responses of School Districts to the Revenue Caps

The numbers following the action listed below show the percentage of superintendents who have taken that action in 1993-94, followed by 1994-95, and (projected) 1995-96:

  1. Delaying building maintenance or improvement projects — NA — 51.3 — 54.7
  2. Spending less for maintenance of buildings and grounds — 44.3 — 44.0 — 51.0
  3. Spending less for improvements of buildings and grounds — 44.2 — 50.0 — 53.8
  4. Delaying/reducing purchase of textbooks, curricular materials — 30.6 — 25.3 — 31.2
  5. Limiting purchase of consumable supplies, such as paper — 28.8 — 23.2 — 31.2
  6. Delaying/reducing purchase of computers, other technology — 43.9 — 43.7 — 53.2
  7. Offering fewer staff development opportunities for teachers — 30.9 — 22.9 — 33.7
  8. Teacher layoffs — 22.8 — 9.1 — 15.9
  9. Layoffs of teacher aides or other support staff — 24.6 — 10.7 — 20.7
  10. Administrator/supervisor layoffs — 10.1 — 4.0 — 4.3
  11. Reducing counseling or similar services — 5.0 — 3.4 — 7.6
  12. Delaying/reducing hiring of new staff — 34.4 — 28.7 — 39.4
  13. Reducing extracurricular programs — 9.2 — 5.8 — 9.1
  14. Limiting programs for students who are at risk — 13.4 — 11.9 — 17.1
  15. Limiting programs for gifted and talented students — 19.0 — 15.6 — 23.5
  16. Offering fewer courses — 15.4 — 9.4 — 15.2
  17. Reducing transportation services for students — 11.6 — 5.8 — 9.8
  18. Limiting summer school programs — 21.7 — 15.9 — 20.5
  19. Offering fewer field trips for students — 27.6 — 12.8 — 22.3
  20. Increased class sizes — 32.0 — 26.6 — 35.5
  21. Increased teacher workload — 21.7 — 18.3 — 26.0
  22. Increased administrator workload — NA — 33.9 — 37.3
  23. Increased student fees — 35.6 — 23.9 — 28.1
  24. Using fund balance to support budget — 20.8 — 21.7 — 24.5
  25. Other — 3.9 — .3 — .3

Unique Budgetary Circumstances

One hundred and seventy-two superintendents (52.5%) wrote a response to the statement, "Describe any unique budgetary circumstances in your district, such as a new building that must be staffed, deteriorating facilities in need of renovation or replacement, increasing enrollment or declining enrollment, which will be compromised by the revenue caps." To review one-half of the randomly selected written responses, click here.

The Attitudes of Superintendents Toward the Revenue Caps

Superintendents were presented with three statements about the revenue caps. The statements, along with responses, are summarized below.

1. In the long run, the caps may have a positive effect on my district's programs and services.

Nearly four of every five superintendents (242 or 78%) disagreed with this statement. Slightly more than 15% indicated they were uncertain, while only 21 superintendents (6.8%) agreed.

2. It's too early to say how the revenue caps will affect my district's programs and services.

In response to the statement that it's too early to determine the effects of the revenue caps, 58% of superintendents disagreed. These figures suggest that the cuts are harming existing programs and services. About one-fourth (27%) agreed with the statement, while the remainder (15%) indicated they were uncertain.

3. In the long run, the caps will have a negative effect on my district's programs and services.

Three-fourths of superintendents (74.9%) agreed with this statement. In contrast, 6.8% of superintendents disagreed, while the remainder (18.5%) were uncertain.

Reactions of Community Leaders

While the vast majority of superintendents have a negative view of the revenue caps, a similar perception is not shared by most community leaders. In fact, when asked to indicate how their community leaders feel about the revenue caps, nearly one-half of the superintendents (47%) report that their community leaders support them. A significant proportion of superintendents (41%) say that their community leaders tend to be ambivalent ("uncertain"), while about one-in-ten superintendents (11%) report that their community leaders oppose the revenue caps.

To read other comments made by superintendents, click here.

This document was prepared by Russ Allen, WEAC Professional Development Division.

Posted May 1, 1996