It was a dreary, rainy Thursday morning when the state education department announced some depressing news: According to the final, official numbers, 62% of Wisconsin school districts will receive less money in state general aid this year than they did last year. 

Schools are struggling because, for the third year in a row, the state budget put no new money into general school aid, the Department of Public Instruction pointed out in an Oct. 15 press release. That’s after more than 15 years during which annual adjustments to per-pupil general operating revenue in Wisconsin schools has failed to keep pace with inflation. The latest school funding data arrived from DPI under the header: “Nearly two-thirds of districts will receive less aid due to flat state funding, antiquated funding formula.” 

About an hour later, a press release from Gov. Tony Evers’ office cheerfully announced that Wisconsin has ended the fiscal year with a $3.3 billion budget balance and a record  $2.1 billion in the state’s “rainy day” fund. The top line from the governor’s office message was upbeat: “Despite continued national economic turbulence, Wisconsin maintains strong fiscal position, reaching seven consecutive years of record-high General Fund balances during Gov. Evers’ tenure.”

These two announcements, although dramatically different in mood, are directly connected. The reason Wisconsin has a big budget surplus is largely because the state has abandoned its commitment to fund its public schools. 

A slide presentation by Anne Chapman, research director for the Wisconsin Association of School Business Officials, graphically illustrates the decline in annual adjustments to per-pupil general operating revenue for Wisconsin public school districts since the 2008-2009 school year. Using Legislative Fiscal Bureau data, Chapman shows the steadily widening gap between the annual adjustment in general operating dollars schools would have had each year if revenue had kept pace with inflation and what they actually got. This year the shortfall reached $3,571 per kid. 

At the same time, schools have been carrying about $1.29 billion in special education costs that are not reimbursed by state or federal aid.

Schools have never bounced back from the drastic cuts to education spending during the administration of former Gov. Scott Walker. But the current budget situation is unprecedented 

“The 2025-27 state budget provided no increase to general school aids. This was an extremely unusual policy choice, especially in light of the fact that the state had a $4.3 billion surplus going into the budget process,” she says. “The last instance of flat or negative general aids across both years of a biennial budget was the 2009-11 budget, at which time the state was facing a deficit.”

In other words, in a historic act of stinginess, the Legislature, while staring at a sizeable budget surplus, chose not to add any money to general school aid, the largest form of state support for K-12 schools. That was a deliberate policy choice, not some sort of emergency measure taken under duress. 

Wisconsin’s school funding formula is complicated —  a mix of state and local funds divvied up based on school districts’ property wealth, enrollment numbers and spending patterns. Different districts get different amounts of funding from the state — and some get none at all. When funding is flat, statewide, some districts get more and some get less. This is the “antiquated” system DPI referred to in its press release. It uses outdated metrics, and doesn’t account for the effects of high poverty or large numbers of English language learners. 

State schools superintendent Jill Underly expanded on this in her State of Education speech in September: “The formula places value on the wrong things. It values enrollment, district spending, and property value, rather than student needs. It fails to ask the most essential question: how much does it actually cost to educate the students who live in a district so that they have an equal opportunity to succeed? A student’s opportunity for success should not depend on their zip code. If we are going to improve the academic outcomes for ALL students, then the funding formula must prioritize student need.”

Because of the complexity of school finance, and the patchwork of have and have-not districts, it’s hard to figure the exact amount Wisconsin has underfunded its schools since 2009, when overall per-pupil spending stopped keeping pace with inflation. But you can get a rough, back of the envelope estimate by taking the three-year rolling average for calculating revenue limit and per pupil categorical aid  from 2025-26  — 781,367 students — and multiplying it by a calculation derived from the Legislative Fiscal Bureau’s data on the cumulative shortfall in annual adjustments to per-pupil general operating revenue, which was $3,468.60. The number you get is $2.7 billion in combined state aid and property tax levies. If the state returned to its much-discussed commitment to fund two-thirds of the cost of public schools, that would mean we’d have to allocate $1.8 billion of the current $3.3 billion surplus to make schools whole. Add to that the $1.29 billion in special ed costs the state has sloughed off on the schools, and it reaches $3 billion.

One of the main effects of the state deciding not to fund schools is that the burden has fallen instead on local property taxpayers, who are confronting another surge in referendum requests from their local school districts in the voting booth this fall.   

Gov. Evers has proposed, by his own estimate in an address to the Wisconsin Public Education Network, $7 billion in new funding for schools that was rejected by the state Legislature over his two terms. He was bitterly disappointed when the state Senate rejected a $1.8 billion deal he struck with Republican legislative leaders that included some money for increased special education funding and property tax relief along with income tax cuts. 

But in his latest message, the governor embraces the unspent money sitting in state coffers as “damn good news.” 

“We’ve ended every fiscal year I’ve been governor with a positive balance,” he says. “We’ve shown that state government can work, and work better for the people we serve, and I’m incredibly proud of our efforts.”

Along with the surplus, the governor’s office celebrates the “largest balance in the ‘rainy day’ fund in state history” — at $2.1 billion, it’s six times larger than when Evers took office.

Meanwhile, schools are in worse and worse shape, and all over the state, people are struggling to keep up with the cost of housing as property taxes rise. 

Whatever feeling of satisfaction there is in knowing the state has squirreled away a fat rainy day fund, when you look outside, it’s raining. 

Wisconsin State Superintendent Jill Underly called for the state to overhaul the school funding formula in her sixth State of Education address Thursday, saying that the state “simply cannot afford to wait any longer.” 

Underly delivered the address less than six weeks before the November election, when Wisconsin voters will decide who she will be working with in the governor’s office and in the state Legislature on the next state budget. She will need their support to get the funding for the budget proposals she has begun to formulate.

The Department of Public Instruction so far has only submitted the first part of its budget request, which covered funding for libraries, support for children who are deaf and blind, public libraries, cybersecurity, technology modernization and the investigation of alleged educator misconduct. The agency said last week that it would release the second part of its request, for “categorical aid programs and other critical supports” for Wisconsin’s public schools, in November. The election is scheduled for Nov. 3. 

“The formula used for funding our schools, for years, has failed our children, schools and entire communities,” Underly said during her address. “The reasons are varied and complex, but you don’t need to be familiar with every detail of the funding formula to know that it’s simply not working. The evidence is all around us.” 

More than 75 school referendum requests carrying a total cost of $1.5 billion will go before voters in November. It’s just the latest round in a now-familiar ritual as school districts across the state  seek approval to raise property taxes to make up for a shrinking pool of  state aid. School districts that can’t pass a referendum have had to cut costs including by eliminating programs, staff and in some cases closing or consolidating schools. Districts on a streak of failed referendum requests have faced dissolution. 

Underly noted that the classrooms of the Hustisford School District “sat empty” on the first day of school this year. The district started the dissolution process after its referendum failed in April.

“Every kid felt the impact,” Underly said. “Kindergarteners, who should have been walking through the doors of the school their family chose when they made this beautiful community home, instead traveled to a neighboring town. Meanwhile, seniors who spent the past 12 years as Hustisford Falcons started their last year of school in an unfamiliar building,” Underly continued. “This is what happens when we turn our back on our schools. And when schools close, the impact doesn’t stop with students. It ripples through entire communities.”

Underly said the state funding formula “places value on the wrong things,” including enrollment, district spending and property value, instead of on student needs. 

“It fails to ask the most essential question: How much does it actually cost to educate the students who live in a district so that they have an equal opportunity to succeed? A student’s opportunity for success should not depend on their zip code,” she said. 

School funding will depend on who’s in office. Republican candidate Tom Tiffany and Democratic candidate David Crowley are running to be governor and control of the state Senate and Assembly are up for grabs. 

Some lawmakers have argued that rather than increase funding for schools the state needs to explore more school consolidation given declining enrollment. Asked about when school closure is the appropriate answer to declining enrollment, Underly told reporters she thinks “it deserves some study and conversation to figure out what’s best for kids.”

Underly pointed to the 2019 bipartisan Blue Ribbon Commission while speaking to reporters. The commission, which was created by Assembly Speaker Robin Vos and then-Senate Majority Leader Scott Fitzgerald in 2017, developed a report offering ideas to address school funding issues, as a guiding document for what the state should be doing. She said that the reports showed that there are kids who need additional support including those in poverty and who have special needs. She said money also needs to be invested in career and technical education, mental health supports and speech and language pathology.

“All these things have been in my past budget requests, and that’s what we will be able to expect in the next one, too,” Underly said. The agency’s 2024 state budget request totaled over  $4 billion. 

Urgent, but possibly not very fast

While Underly delivered her message with urgency, the timeline for changes could look vastly different depending on who wins in November.

Senate Minority Leader Dianne Hesselbein (D-Middleton), who could become the Senate Majority leader depending on the results of the November elections, has said Democrats will increase school funding in the next state budget, but changing the state’s school funding formula could be a “multi-year” process. 

“We’re also looking at a long-term goal of seeing what other states are doing and how they are funding their public schools, but that’s going to take probably a multi-year task to try to figure that all out and talking to our friends in Minnesota, Michigan, Illinois,” Hesselbein said. 

Crowley has been supportive of increasing school funding, including moving the state toward reimbursing districts for 90% of the cost of special education, instead of the current rate of 38% , but he has also suggested throughout his campaign for governor that there may need to be another Blue Ribbon Commission to study tax issues including school and local government funding. The last Blue Ribbon Commission on school funding took two years to complete. 

Tiffany has said he wants some increases to school funding, but also promises to freeze property taxes if elected. He hasn’t provided clarity on how much he would invest or how he would balance the two issues. Tiffany has focused on issues of accountability and ensuring “high standards” as opposed to school funding when discussing education issues.

Underly has had a strained relationship with Republicans on the Joint Finance Committee, who have declined to invite her to testify in front of the committee, and it’s unclear whether a working relationship between her and Tiffany would be an improvement. Tiffany recently described the state superintendent’s position as a constitutional office as a “problem” at a Moms For Liberty Town Hall in Richfield. He said he would use the state budget, which determines the state’s spending for a two-year period, to try to steer the superintendent  to make the decisions he wants her to make.

Underly said responding to the comments that independence is positive.  

“When you think about my office, my office is nonpartisan. It’s independent. It is not at the whim of any governor and I think that actually strengthens public education,” Underly said. “I think his comments stand on their own.”

In her speech, Underly called for people to look at the candidates’ records on school issues, not their talking points, when making their decisions at the ballot box this November. 

“We have people running for office who have spent a decade or more in government, in positions to make school funding decisions — or who have left state government for another level and now want to return — whose records include repeatedly voting against investments in Wisconsin’s children,” Underly said, apparently referring to Tiffany, who as a state lawmaker served on the budget committee before he was elected to Congress. “Past actions are the best evidence we have of what someone will do when given power again. Wisconsin does not need more people who tell us they support children while their votes tell a different story. We need people in positions of decision-making power who are pro-public school, pro-child and pro-Wisconsin.”