Consolidation Incentives and Issues

Aid, Shared Costs, Valuation, Revenue

The 2009-11 biennial budget bill (2009 Wisconsin Act 28) increased from 10% to 15% the equalization aid formula factors applicable to newly-consolidated districts, starting in the 2009-10 school year.

Scenario:
If district A received $500,000 in equalization aid in the year prior to consolidation and district B received $500,000 in equalization aid in the year prior to consolidation, for the first five years of the consolidation, new district C would never receive less than $1,000,000 in equalization aid, regardless of the current equalization aid formula.

S.121.07(6)(e) 1. Wis. Stats., Shared Cost
"For a school district created by a consolidation under s. 117.08 or 117.09, in the school year in which the consolidation takes effect and in each of the subsequent 4 school years, the amounts under pars. (b) and (d) shall be multiplied by 1.15 and rounded to the next lowest dollar."

S.121.07(7)(e)1. Wis. Stats., Guaranteed Valuation Per Member
"For a school district created by a consolidation under s. 117.08 or 117.09, in the school year in which the consolidation takes effect and in each of the subsequent 4 school years, the amounts under pars. (a) to (bm) shall be multiplied by 1.15 and rounded to the next lower dollar."

S.121.90(2) Wis. Stats., Revenue Limit Definitions (The sum of state equalization aid and the property tax levy.)
"State aid" means aid under ss. 121.08, 121.09 and 121.105 and subch. VI, as calculated for the current school year on October 15 under s. 121.15(4) and including adjustments made under s. 121.15(4), and amounts under s. 79.095(4) for the current school year, except that "state aid" excludes all of the following:

(a) Any additional aid that a school district receives as a result of ss. 121.07(6)(e) 1. and (7)(e) 1. and 121.105(3) for school district consolidations that are effective on or after July 1, 1995, as determined by the department.

S.121.105(3) Wis. Stats., Special Adjustment Aids "In the school year in which a school district consolidation takes effect under s.117.08 or 117.09 and in each of the subsequent 4 school years, the consolidated school district’s state aid shall be an amount that is not less than the aggregate state aid received by the consolidating school districts in the school year prior to the school year in which the consolidation takes effect."

Spendable Revenue Outside State Revenue Controls
On the revenue limit calculation worksheet, for each of the five years after the effective date of the consolidation, the district would enter the equalization aid calculated on the combined district factors without the 1.15 multiplier.

In the five years after the effective date of the consolidation, the aid guarantee, under 121.105(3), for the new consolidated district has already been determined. Each year the newly consolidated district would run the equalization aid calculation with the 1.15 multiplier and then without the 1.15 multiplier (ceilings and guarantees). The difference between the equalization aid calculation without the 1.15 multiplier and the highest amount of either the aid guarantee, under 121.105(3), or the equalization aid calculation with the 1.15 multiplier is spendable outside the revenue limit. It is this additional aid that is excluded from the "state aid" definition under revenue limits. [Wis. Stats. 121.90(2)(a)]

Some factors involved in school finance can be more easily and accurately calculated. For example, the value of the new district would be the combined value of the two consolidating districts and the students of the new district would be the combined students of the consolidating districts. The new value divided by the new number of students will give a new average value per student for the new district.

However, it is not possible to calculate a mill rate or a school tax for a new district after consolidation until it is known what the levy will be for the new district. The levy cannot be determined until many other questions are answered, particularly specifics about the new district’s budget. For example, will the new consolidated district still employ the same number of staff? Will it still maintain the same facilities? What will be the impact of consolidation on the number and variety of programs it offers? In addition, the future of the equalization aid formula is unknown at this time.

For questions about this information, contact Janice S. Zmrazek (608) 266-2803

Last updated on 9/3/2010 3:42:17 PM