DPI calls for ‘fundamental shift’ in school funding and $2.75B in new aid

The Wisconsin Department of Public Instruction is calling for the biggest overhaul of public school funding in decades, along with billions in new aid for districts.

The Details

Budget documents released Friday are calling for a “fundamental shift” in the state’s school funding formula, tying revenue increases to inflation and sending more money toward special education.

The proposal comes at a time when Democrats are preparing to take control of all branches of state government, having won majorities in the state Assembly and Senate, as well as the governor’s office.

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DPI Budget Request asks lawmakers to increase caps on the amount school districts can raise through local property taxes by a total of $1,108 per student in 2028 and another $374 in 2029. Notably, school property tax revenue limits would be tied to inflation for the first time since 2008.

A DPI spokesperson told WPR the levy limit increases contained in the budget request would be in addition to the annual $325 per-pupil levy limit increase authorized by Democratic Gov. Tony Evers’ partial veto of the 2023-25 state budget, known as the “400-year veto.”

District revenue limits were first enacted in 1993 by lawmakers as a brake on local property tax increases. In 2009, as the state budget was reeling from the Great Recession, lawmakers and the governor decoupled the revenue limits from the rate of inflation.

Wisconsin Policy Forum researcher Sara Shaw told WPR that tweaking the revenue limits for school funding is a big deal. She said more information is needed from DPI to see whether increasing the revenue limit would also bring local property tax increases.

“If revenue limits go up but there’s no increase in state aid, then property taxes go up. If revenue limits go up and state aid also goes up by the same amount, then property taxes stay steady,” Shaw said. “But on the revenue limit side, the increases are answering a lot of concerns that districts have been raising over the years, especially related to how their costs have been growing faster than revenue.”

As they’ve grappled with inflationary cost increases, more and more districts have turned to school funding referendums, in which residents authorize property tax increases, to make ends meet. In 2026, there were 125 districts going to referendum to maintain services. A Wisconsin Policy Forum analysis released Friday found voters’ appetite for those referendums appears to be waning.

In a video included with the DPI’s budget release, State Superintendent Jill Underly said Wisconsin lawmakers can “put school referendums out of business” with the agency’s plan.

“We can reduce the pressure on local property taxpayers, give school districts greater stability, and create more opportunities for students,” Underly said. “We don’t need to start from scratch. We don’t need another committee. We don’t need more rounds of studies or a series of proposals. We know what needs to change, and we have the framework to do it.”

The DPI’s budget documents vow that property taxes should remain “relatively flat” in the 2028 and 2029 fiscal years if lawmakers approve big changes in how money flows from the state to school districts.

The agency wants to shift nearly $2 billion worth of existing “categorical aid” through Wisconsin’s equalization aid formula. Right now, that money is set aside for specific programs, like the School Levy Tax Credit, per-pupil aid and other items.

Shaw said those pots of categorical aid are divided up evenly among all districts, while the equalization formula benefits those with lower property wealth, which “changes how the dollars get distributed.”

“I think on the whole, we would be looking at some districts finding themselves with fewer dollars than they did in the past coming through state aid, which could mean them raising property taxes more, whereas districts that benefit from the state aid formula might be able to lower their property taxes,” Shaw said.

She noted the DPI budget documents call for one-time payments in 2028 to districts that lose funding because of the changes.

Budget request calls for big boosts in special education funding Over the past year, special education funding has been hotly contested in the state Capitol, and a promised increase included in the last state budget wound up being smaller than expected.

In February, outgoing Democratic Gov. Tony Evers, outgoing Assembly Speaker Robin Vos, R-Rochester, and outgoing Senate Majority Leader Devin LeMahieu, R-Oostburg, announced a bipartisan deal to spend down the state’s projected budget surplus on a combination of property tax breaks and new school funding. The deal failed to pass in the Senate when all Democrats and a few Republicans objected.

The DPI’s newest special education draft request calls for upping the reimbursement rate from the current 39 percent to 50 percent in 2028 and 60 percent of costs in 2029.

Notably, the DPI wants the reimbursement rate changed from “sum-certain” to “sum-specific.” Shaw said that means the state would be promising to hit the reimbursement rates regardless of whether actual costs exceed budget estimates.

“So it creates more predictability for school districts, but less predictability for the state,” said Shaw.

The DPI’s proposal is a first step in a budget process that will pick up speed in a few months when Democratic Gov.-elect David Crowley presents his first budget proposal to the state Legislature.

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