Geographic, Demographic, and Fiscal Factors
Affecting School Districts Across the State

Jack Norman
February 2004

TABLE OF CONTENTS

EXECUTIVE SUMMARY

INTRODUCTION

Part I. OVERVIEW OF KEY CONCEPTS

A. Wisconsin School Districts: Urban, Suburban, and Rural
B. Breakdown of Wisconsin School Districts by Type
C. How to Read a Boxplot

Part II. CHARACTERISTICS OF STUDENTS BY DISTRICT TYPE

A. Family Income Across Types of Districts
B. Poverty Rates by District Type
C. Distribution of Minority Students
D. Distribution of Special Education Enrollment by District Type
E. Distribution of Students with Limited English by District Type
F. Student Performance Varies by Type of District
G. Student Poverty and School Performance

Part III. SCHOOL FINANCE FACTORS IN URBAN, RURAL, AND SUBURBAN DISTRICTS

A. Declining Enrollment by District Type
B. Per-Pupil Revenue/Spending by District Type
C. Student-Teacher Ratios by District Type
D. Transportation Costs by District Type
E. Facilities Costs by District Type
F. Property Wealth by District Type
G. Property Value of Owner-Occupied Homes by District Type
H. State Aid by District Type
I. Property Taxes by District Type

Part IV. A LOOK AT STUDENT DENSITY AND THE LAKE EFFECT

A. Student Density
B. The Lake Effect in Northern Wisconsin

Part V. SUMMARY

Part VI. CONCLUSIONS

APPENDIX ON METHODOLOGY

EXECUTIVE SUMMARY

With most Wisconsin school districts in financial crises, state leaders are poised to overhaul the K-12 funding system to meet the needs of the state’s 426 diverse districts. This atlas illustrates how urban, rural, and suburban districts compare in terms of their students, economic conditions, and tax and spending responsibilities. In addition, since there has been minimal information on rural school districts, this report also focuses on the condition of rural districts, particularly those in northern lake country.

Key findings:

• Low family income and high poverty rates are prevalent in both rural Wisconsin and the state's biggest cities. Youth poverty rates in both urban and rural areas are nearly triple that of suburbs.
• Student performance on state proficiency exams varies by geography. Urban and rural students score significantly below suburban pupils.
• Suburban districts do not generally outspend urban and rural districts. Suburban residents do, however, tend to pay higher school property taxes.
• Sparse populations in rural districts result in larger transportation needs and smaller classes. These factors drive up the cost of education.
• A belt of northern districts, spanning east-west across the state, has large pockets of poverty and sharply falling enrollment. However, they receive minimal state aid because expensive vacation lake homes push the property wealth to an artificially high average.

Urban and rural districts often outspend suburban districts but these dollars do not yield the same benefits, as their basic operation costs are higher. Urban districts have large numbers of students with special needs, requiring more trained staff. Rural districts have diseconomies of scale, long transportation routes, and substantial poverty. Suburban residents often raise more dollars per pupil from local sources than other districts but receive less state aid.

The atlas data has several implications for the future structure of state aid to schools:

• State aid levels will need to be flexible, adjusted to the particular cost factors in each district.
• The achievement gap is a statewide issue but more serious in urban and rural districts.
• Basing state aid on property wealth is inappropriate where property is expensive but residents have low incomes.
• Rural districts with diseconomies of scale and high transport costs need special aid for their higher cost of schooling.
• Suburbanites pay the highest local taxes. They should not be punished for this commitment to good schooling.
• Redistributing existing funds will not solve the fiscal problems of urban, rural, and suburban districts. School districts require a new infusion of funding to close achievement gaps, help rural schools, and provide property tax relief. If Wisconsin schools are going to meet state and federal mandates, all districts must have adequate resources to provide a quality education.

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INTRODUCTION

What is an “atlas” of school finance?

This atlas is a collection of data on how three major geographic types of districts – urban, rural, and suburban – compare in the population of students they serve, the economic factors they confront, and the tax and spending responsibilities they face in Wisconsin’s current school-finance system. In addition, the atlas includes a section on the special factors affecting rural districts and, particularly, those districts in the northern lake region of the state.

Why produce an atlas?

Wisconsin is poised to redesign its state school-funding structure. Various alternative systems have been offered, and a governor’s task force is working on a set of reform proposals. Efforts to improve the school-funding system in recent years, however, have been hampered by conflict among different types of school districts and various regions of the state. Some districts view others as competitors and fear a reform in which “winners” benefit by taking aid from “losers.”

Public schools are often viewed purely from a local perspective. This is not surprising, because a school is the foundation of a local community, whether it is a neighborhood school in a crowded city, a suburban school that gives coherence to sprawling subdivisions, or a rural school that unites families living tens of miles apart.

But most Wisconsin school districts now face significant financial crises. Increasingly, the problems caused by financial shortfalls lead to internal conflicts among school boards, parents, teachers, voters, and administrators.

However, the system for funding schools is fundamentally a state system, not a local (nor a federal) system. State law says that “education is a state function.” (Wisconsin Statutes 121.01) The Wisconsin Supreme Court has ruled repeatedly that the right to education is fundamental under the state Constitution: “Wisconsin students have a fundamental right to an equal opportunity for a sound basic education.” (Vincent v. Voight, 2000)

Funds for public schools come from four sources, as shown in this chart: state taxes (mainly income and sales taxes), local school property taxes, federal aid, and other local revenue such as fees and income from invested funds. State aid provided 53% of total funding in 2002, compared with 36% from local property taxes and 11% from federal and other local sources.

But local property taxes are collected under a system created by the Legislature and enforced by state agencies. Local taxes are restricted under state rules. The reality is that state aid and local property taxes are part of one state system, which combined accounts for 89% of all school revenue. The true picture is more like this second pie chart:

From Kenosha to Superior, Niagara to Potosi, the solution to financial woes is not at home but in the state Capitol in Madison. The residents of any one school district will find solutions not by debating among themselves, but by working with people from communities across Wisconsin to implement a statewide school-funding system that is win-win for all.

Wisconsin is a large and diverse state, and too often geographical misconceptions and stereotypes get in the way of recognizing common statewide interests. Northerners and southerners are often suspicious of each other; suburbanites may be fearful of cities and citydwellers scornful of suburbanites; many in the state feel Milwaukee receives too great a share of funding, and vice versa. But an effective school-finance system must work as well for tiny Butternut as for giant Milwaukee, as well for suburban Oregon as for urban Wausau, and as well for growing Waunakee as for shrinking Platteville.

Wisconsin spends about $9 billion annually on public schools, from four-year-old kindergarten through 12th grade. A new finance system is likely to be in place for a decade or more. During that time, we will spend over $100 billion on public schools. The immensity of that investment requires that we review the data from various kinds of districts and the unique impact of various geographic factors, so all stakeholders fully understand the effects and implications of any proposed new system.

Public education is the foundation of all communities’ future prosperity. Far more state and local tax dollars are spent on public schools than on any other activity, and decisions about how to spend that money must be as fully informed as possible. This report is intended as a step in that direction.

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Part I. OVERVIEW OF KEY CONCEPTS

A. Wisconsin School Districts: Urban, Suburban, and Rural

The U.S. Census Bureau groups school districts into eight different geographical classifications. For this atlas, these have been combined into three school district groupings: urban, suburban/exurban, and rural. Exurbs are the farthest suburbs of cities, areas that until recently were rural, but are growing fast as urban areas reach out to them. Exurbs are more similar to traditional suburbs than to rural areas and therefore are grouped with suburban districts in this analysis. (For more details on classifications, see Appendices A and B.)

Wisconsin has 426 school districts. Norris School District has been eliminated from this study because it is a very small, state-operated residential facility for youth with no property base. Of the other 425 districts, over half (59%) are rural, many are suburban (37%), and few (4%) are urban. The state’s 872,000-plus students, however, are almost equally divided among the three types of districts. Thirty-one percent (31%) attend rural schools, 34% are enrolled in suburban districts, and 35% are educated in urban districts.

Number of school districts Number of students Source: Membership data, Wis. Dept. Public Instruction. http://www.dpi.state.wi.us/dpi/dfm/sfms/membdata.html

Geographic differences among districts correlate with a variety of important characteristics. Understanding how the types of school districts differ is an important step in designing school-finance reform models. This document analyzes how the types of districts vary in student composition and achievement, district operations, and finances, and how the current funding system impacts urban, rural, and suburban districts. Data are the latest available, mostly from the 2001-’02 school year.

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B. Breakdown of Wisconsin School Districts by Type

Urban districts

Suburban districts (exurban marked with *)

Rural districts

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C. How to Read a Boxplot

This analysis uses several graphic elements to present data, but relies heavily on “boxplots” as a statistical and visual tool. Since the boxplot is less commonly used than some other statistical displays, a brief explanation may be helpful. The example below deals with the percentage of students who achieve proficiency in each of the state’s school districts, categorized as either urban, rural, or suburban.

A boxplot is a graphing tool that displays the center, spread, and distribution of data. It provides a fi ve-point summary of the data:

• The box represents the middle 50% of the data. This is the middle half, the ‘typical’ districts.
• The top line of the boxed area represents the 75th percentile. Only the top 25% of districts are above this point. The bottom line shows the 25th percentile. Only the bottom 25% of districts are below this point.
• The dark horizontal line in the box shows the median for the group, or the point where half of the districts fall above and half fall below.
• The vertical lines, or “whiskers,” extending above and below the box show the range within 1.5 box lengths from the end of the box. These represent the general range, from high to low.
• The circles represent outliers, or rare cases well away from the normal.

The example at right shows at a glance that suburban districts outperform rural districts, which in turn outperform urban districts. The entire box for urban districts – the middle half of urban scores – falls below the suburban box. Even the top of the range for urban districts (the top whisker) is below the median suburban district (the horizontal line in the suburban box). Rural districts have the widest spread, but their 75th percentile (the top of the box) is below the suburban median.

In more detail: The rural box shows the median rate of district proficiency is 83%. Half of rural districts scored between 79% and 86% (the bottom and top of the box). The fuller range of rural scores extends from whisker to whisker, or from 69% to 97%. A handful of districts comprise the extreme cases (the outliers in circles), as high as 100% or as low as 53%.

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Part II. CHARACTERISTICS OF STUDENTS BY DISTRICT TYPE

A. Family Income Across Types of Districts

Suburban school districts have significantly higher household incomes

Families living in suburban districts generally have much higher household incomes (a median of $53,929) than those in urban and rural districts. Rural districts have the lowest median household income at $37,960, with the urban median income at $41,892. Data are from the 2000 U.S. Census.

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B. Poverty Rates by District Type

Poverty is concentrated in urban and rural areas

The median youth poverty rate in rural school districts is 10.2%, more than twice the 4.3% median in suburban districts. In Milwaukee as well as other urban areas, core city districts have significantly higher youth poverty rates than their respective suburbs. Milwaukee’s poverty rate of 32.0% is almost ten times higher than the 3.5% median among its 41 suburban districts (though a few suburbs, such as Cudahy and West Allis, have rates around 10%). In the 17 other cities, the median poverty rate is 11.1%, compared with their suburbs’ median of 4.6%.

The poverty rates used are from the 2000 Census and measure the percentage of youth ages 5-17 living in households with income below the official poverty line. These are much more reliable estimates of youth poverty than the figures usually used, which are based on the number of students signing up for free or reduced-price lunch. See Appendix H for details

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C. Distribution of Minority Students

Minority students live in many parts of the state

Districts with high percentages of minority students are located in all parts of the state. In southeastern Wisconsin, most students of color are African-American and Latino. In central and northern Wisconsin, minority students are primarily Asian-American and Native American.

Cities have more minority students than their suburbs. In Milwaukee, minority students are 82% of enrollment. In Milwaukee’s suburbs, minorities are 11% of enrollment, and the median rate is 9%. In other Wisconsin cities, minority enrollment is 24%, with a median of 16%. In suburbs of cities other than Milwaukee, minorities are 6% of total enrollment, with a median minority enrollment rate of 3%.

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D. Distribution of Special Education Enrollment by District Type

Students with disabilities are not concentrated in one kind of district

In urban, rural, and suburban districts, between 12% and 13% of students have physical, cognitive, learning, or emotional disabilities. There is no concentration in districts of one particular type, or in any particular geographic region. In 10 small and moderately-sized districts, at least 20% of the students have disabilities (2002 data). In Milwaukee, 17.4% of students are in special education.

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E. Distribution of Students with Limited English by District Type

English-language learners reside mostly in urban areas

Forty-three percent of the state’s districts have at least one student with limited-English proficiency (LEP). The concentration of LEP students is in the state’s urban areas, in school districts in large and small cities across the state. Wausau, with a large Hmong population, and Sheboygan have the highest proportion of English-language learners, at 17.5% of their student populations. Among cities, Green Bay, Madison, Appleton, and LaCrosse follow in the proportion of students requiring second-language services. Milwaukee has the largest number of LEP students, 7,509, but its 7.5% proportion of LEP students is only seventh largest among urban areas.

Suburban districts have significantly fewer LEP students. In Milwaukee’s suburbs, 1.6% of students are English-language learners; among other suburbs, the proportion is 1.2%. Significant numbers of LEP students also attend schools in smaller, rural districts in the state, especially in southeastern and central Wisconsin. In 11 rural districts, more than 5% of students are LEP.

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F. Student Performance Varies by Type of District

Suburban students have highest proficiency rates

Wisconsin’s standardized test, the Wisconsin Knowledge and Concepts Examinations, is given to all 4th, 8th and 10th graders in five areas: reading, language arts, mathematics, science, and social studies. Based on scores, students are placed in one of four groups: minimal, basic, proficient, or advanced. The goal of state and federal standards, including the federal No Child Left Behind Act (NCLB), is for all students to achieve at the “proficient” or “advanced” level.

Suburban districts have the highest proportion of students scoring proficient or better on these tests, with a median of 86.5%. Urban districts have the lowest scores, a median of 77.2%, and rural districts fall in-between at 83.0%.

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G. Student Poverty and School Performance

It is widely acknowledged that the single strongest predictor of student performance is the economic status of the student’s family. Put simply: Children from poorer households tend to do worse than do students from affluent households. This is as true in Wisconsin as elsewhere.

Youth poverty and student proficiency, all districts

This graph shows that districts with higher levels of youth poverty tend to have a smaller proportion of students who are proficient. Each circle is a school district, and the straight line is the trend line showing the strong influence of poverty on performance. Statistically speaking, the poverty level accounts for 20% of the variation in proficiency statewide.

Youth poverty and student proficiency, urban districts

This is especially true in urban districts, where the relationship between poverty and performance is extraordinarily strong. Statistically speaking, the degree of youth poverty accounts for 90% of the variation in proficiency results among Wisconsin’s 18 urban districts.

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Part III. SCHOOL FINANCE FACTORS IN URBAN, RURAL, AND SUBURBAN DISTRICTS

A. Declining Enrollment by District Type

The decline in student enrollment is most serious in rural areas

Since state aid to school districts is linked to student enrollment, trends towards flattening or declining enrollment can have major impact on the financial health of districts. In the five-year period between 1997 and 2002, 56% of Wisconsin’s school districts experienced falling enrollment. The decline was most prevalent in rural areas, where 68% of the districts lost students, and in urban districts, where 56% experienced a decline. Thirty-eight percent of the suburbs also declined in the five-year period. The suburbs of cities other than Milwaukee are the only group of districts to experience significant enrollment increases.

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B. Per-Pupil Revenue/Spending by District Type

Per-pupil revenue/spending is similar for urban, rural, and suburban districts

Per pupil spending for direct educational costs does not differ significantly by district type, though urban districts had the highest costs and suburban the lowest. The 2002 median expenditures are $8,260 for urban districts, $7,859 for suburban, and $7,996 for rural. These are what the Wisconsin Department of Public Instruction calls “total current educational costs,” which exclude the cost of construction debt, transportation, food, and community services.

Figures for total revenue (including revenue for the functions excluded above) show similar patterns. Median total revenue figures are $9,435 in urban districts, $9,273 in suburban, and $9,399 in rural districts. In both cases, rural districts have the greatest range.

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C. Student-Teacher Ratios by District Type

Rural schools have fewer teachers per student, while urban have the highest

Rural schools typically have smaller class sizes than urban or suburban schools. However, while small classes in suburban districts reflect educational preference, the lower ratio in small rural schools is necessitated by lower enrollments in individual schools. Very small schools face diseconomies of scale, higher costs due simply to their small size. The cost of a rural principal, for example, is distributed among fewer students than the cost of an urban principal. This is a major financial factor, considering that staffing costs are over three-quarters of the average district’s budget. The median ratio of students to teaching staff is 15.3 in urban districts, 14.7 in suburban, and 13.6 in rural. Milwaukee has a student-teacher ratio of 17.3; the Milwaukee suburban median is 15.1. These figures – taken from U.S. Census Bureau data – include all members of the teaching staff, including counselors and librarians. Thus while they correlate strongly with actual class sizes, they are not an exact estimate of the average number of students in a class.

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D. Transportation Costs by District Type

Rural districts face higher transportation costs

Predictably, geography has a major impact on transportation expenses. The number of students per square mile varies greatly by district type. Urban districts have a median of 163 students per square mile. Suburban districts have 22. Rural students are more scattered across large areas; the median number of students per square mile is only 6.

As a result, per-pupil busing costs in rural districts (a median of $454 per student) are almost double that of urban districts ($238). The suburban median transportation cost is in-between, at $354.

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E. Facilities Costs by District Type

Rural and suburban schools have higher debt costs than urban districts

The annual cost of long-term debt for construction projects is lowest among urban districts, where the median is $612 per student. The median is $792 for suburban schools and $755 for rural schools. In 118 districts – more than one district in four – the per-pupil annual debt cost exceeded $1,000.

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F. Property Wealth by District Type

Property wealth is highest in suburban districts and lowest in rural districts

The amount of state aid a district receives is based largely on local property wealth. The local property tax base is divided by the number of students in a district to derive per-pupil property value. The higher the property value per pupil, the less state aid a district receives. This is done to give districts with less property wealth a better chance to compete with wealthier districts in the resources it can provide its students.

Property values per pupil are highest in the suburbs, with a median of $350,169. The median for rural districts is the lowest at $288,596, with urban districts in the middle at $318,726 per pupil. The boxplot on the left eliminates most extreme cases to show greater detail; the one on the right has all outliers, including the very high values in a few rural districts.

The map shows concentrations of high property value per student in southeastern Wisconsin, in the northern lake country, and in Door County. Low property value extends throughout the southwestern part of the state.

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G. Property Value of Owner-Occupied Homes by District Type

Suburban homes generally have the highest value

One major determinant of total property value in an area is the value of its owner-occupied housing stock. There is a significant difference in this regard among district types. Suburban areas show the highest median home value at $135,400 and also have the biggest range in values. For urban areas the distribution band is much narrower, with a median of $96,600 in value. Rural owner-occupied housing stock has the lowest value, at $86,700.

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H. State Aid by District Type

Suburban districts generally receive the least state aid per student

State aid is designed to equalize the spending capacity of low property wealth districts and high-wealth districts. As a result, districts with higher property wealth per student receive less state aid than low-wealth districts. This places a greater responsibility on local property taxpayers to generate funding for local education. The median for suburban districts was $4,911, below the $5,461 for urban districts and $5,644 for rural districts.

The map shows higher levels of per-pupil state aid in western Wisconsin and urban areas of southeastern Wisconsin. Lower aid levels are in suburban areas and the northern lake belt.

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I. Property Taxes by District Type

Suburban school districts have higher property tax rates than urban or rural districts

The median local property tax rate for suburban schools is the highest (10.44 mills), as is the amount of property taxes raised per student ($3,453). Each mill translates into $1 of tax for each $1,000 of property value. Median tax rates and total property tax revenues per student are similar for urban ($2,891 per child at 9.40 mills) and rural districts ($2,908 per child at 9.61 mills). To make statewide comparisons possible, tax rates in K-8 districts have been combined with the rate for the appropriate UHS district.

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Part IV. A LOOK AT STUDENT DENSITY AND THE "LAKE EFFECT"

A. Student Density

Student density is a defining geographic feature, the number of students per square mile. Rural districts have in common low student density because rural districts cover large territories but have relatively few students.

To show how density as a structural feature affects the make-up and operation of rural school districts, the following charts divide the state’s 368 K-12 districts into 10 parts or deciles, based on student density. Each decile includes 10% of the state’s K-12 districts.

The first decile – at the far left of charts – includes the 10% of districts with the lowest density, the fewest students per square mile. These are extremely rural.

The tenth decile – at the far right – includes the 10% of districts with the highest density, the most students per square mile. These are urban districts or suburban districts very close to larger cities.

1. Districts with the lowest density have the lowest incomes

Median income in the first decile – the least-dense rural districts – is $33,017, compared with $45,176 in the most-dense districts. In the 109 districts in the three lowest deciles of density, median household incomes are less than $37,500. In three of the four most-dense districts, median incomes exceed $45,000.

2. Districts with the lowest density have much higher poverty

In rural Wisconsin – the least-dense deciles – the lower the student density is, the greater the youth poverty. The densest districts – urban districts and close-in suburbs – have median poverty rates of about 7%.

3. The least-dense districts have highest transportation costs

Because students in low-density districts are distributed around large areas, busing costs to school and for other activities are extremely high. Median per-pupil transportation costs in the two least-dense deciles are over $480, compared with under $330 in the three most-dense districts.

4. Lower density districts have severe enrollment declines

In the three lowest-density deciles, median enrollment declines were about 5% or more from 1997 to 2002. Districts faring the best in enrollment were in the middle deciles: suburban/exurban districts not immediately bordering on high-density cities.

5. Low-density districts have higher per-pupil revenue/spending

In low-density rural districts, class size may be small because school enrollment is low. However, teaching staff requirements and overhead costs are as high as they would be with larger numbers of students. A rural high school must still have a chemistry teacher and laboratory, even with only a dozen students. These diseconomies of scale result in higher per-pupil costs. The three least-dense districts have per-student total revenues of more than $9,500, compared with less than $9,250 for the five most-dense deciles. Higher per-pupil spending in rural districts does not reflect greater educational resources for students. Rather, it is a function of the higher per-pupil cost of providing basic services.

6. Low-density districts have the least expensive owner-occupied homes

The median value of homes in the low-density districts is $84,000 or below, compared with over $100,000 in the five most-dense deciles.

7. In least-dense districts, vacation properties drive up total property values

In the lowest-density decile, total per-pupil property value of $371,015 is far higher than even among the highest-priced cities and suburbs. In these rural areas, the gap between the value of owner-occupied homes (see above) and overall property value is by far the largest.

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B. The "Lake Effect" in Northern Wisconsin

The northern lake belt is a group of 48 rural districts with relatively low incomes for all-year residents and declining enrollments. At the same time, they have high (and rapidly rising) property values because of demand for vacation lake properties. The districts identified here have both low incomes (below the state median) and low state aid (either per-pupil state aid or state aid as a percent of revenue is below the state median).

1. Northern lake belt districts have the lowest incomes in the state

The median household income in the northern lake belt is only $33,391. This is well below the median for suburban districts ($53,921) and urban ($41,892). It is even well below the $39,971 median for the other rural districts.

2. Northern lake area districts have a higher rate of student poverty

Youth poverty in the northern lake country is very high, with a median of 12.7% compared with 7.1% for the rest of the state. The median poverty in other rural districts is 9.6%.

3. The value of owner-occupied homes is lower in the northern lake region

The homes of year-round residents in the northern lake districts have a median value of $82,650, compared with $101,400 in the rest of the state. The remaining rural districts have a median of $87,750.

The presence of lake property, however, gives these districts higher overall property values per student. In the lake belt districts, median per-pupil property values are $523,759, far above the $295,819 for the rest of the state. The other rural districts have a median of $269,665.

4. Education costs are higher in the northern lake districts

Median per-pupil revenue and spending is much higher in the northern lake belt, $10,130, compared with $9,279 in the rest of the state and $9,289 in other rural districts. This is due to diseconomies of scale in school operations and high transportation costs. Median transportation costs are $560 per pupil in the lake belt, higher than the $437 in other rural districts and $354 and $238 in suburban and urban districts respectively.

5. State aid to the northern districts is lower than other districts

The lake effect on property wealth results in lower state aid. State aid to northern lake districts is $4,217 per pupil, well below even the $4,911 for suburban districts. The remaining rural districts have a median state aid of $5,802 per pupil, even higher than the urban median of $5,461.

The Lake Effect

The presence of recreational lakes with vacation homes in Northern Wisconsin often leads to a situation where low-income year-round residents are living in high property value districts. Due to high property wealth, these districts receive relatively little state aid. They rely heavily on local property taxes for schools, which have higher per pupil costs than the state average. This is the result of applying a property-wealth based state aid system onto a state geography in which low-income year-round residents live in low density rural areas with substantial tourism investment. The map shows areas which have both low income (below the state median) and high per-pupil property value (above the state median). These low-income, high-property-value regions include the northern lake belt, a cluster in central Wisconsin around the Wisconsin River and nearby lakes, and Door County.

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Part V. SUMMARY

What have we learned about Wisconsin school districts that should inform the shape of future school-finance reform? A summary of the key facts shows:

Student Demographics

• The median suburban household income is more than $12,000 higher than the median income of families in urban and rural districts. Poverty rates among students in urban and rural districts are almost three times higher (11%) than among suburban students (4%).
• Minority students and English-language learners are mainly concentrated in urban school districts, but live in all sections of the state.
• Students with disabilities are not concentrated in one region or type of district.
• The percentage of students reaching proficiency or better is highest in the suburbs (86%), lowest in urban areas (77%) and in-between in rural districts (83%). This outcome is not surprising since the proficiency gaps between low-income and middle-income students and between proficient English speakers and English learners is over 33 percentage points.

School Finance

• Rural schools have a significantly larger percentage (68%) of districts with declining enrollment than urban (56%) or suburban (38%) districts.
• Per pupil revenue/spending does not differ significantly among districts. All raised and spent about $9,300 in 2001-’02.
• The ratio of students to teaching staff is highest in urban districts (15.3 to 1), lowest in rural districts (13.7 to 1), with suburbs (14.7 to 1) in the middle.
• Rural districts have the highest transportation costs, $454 per pupil compared to $238 per pupil in cities and $354 in suburbs.
• Median construction debt costs per pupil are lowest in urban districts ($612), with suburban and rural costs exceeding $750. One in four districts has facility costs over $1,000 per pupil.
• Median property wealth, as well as the value of owner-occupied homes, is highest in suburban districts. Property wealth is generally lowest in rural districts, except in the rural areas with substantial numbers of second or vacation homes. This is particularly a factor in the northern region of the state, where owner-occupied homes are of lower value than the rest of the state, but property value is higher due to high-valued vacation homes. Property wealth and home values in urban districts are comparable to those in rural districts.
• Because suburban districts have higher property wealth, they receive less state aid than cities or rural districts. For the same reason, suburban districts have higher tax rates and revenue raised per pupil than urban or rural districts.

The Density Factor

• Districts with the lowest density of students per square mile have the lowest household incomes and the highest student poverty levels in the state.
• Low-density districts have far higher transportation costs than other districts and the most severe decline in student enrollment.
• Low-density districts have the highest revenue and spending levels per pupil in the state due to severe diseconomies of scale.
• Low-density districts have owner-occupied homes with the least value in the state, but ironically, the highest property wealth as well as the lowest levels of state aid for schools.

The Northern Lake Effect

• Rural districts in northern Wisconsin, where vacation properties are numerous, have the lowest household incomes and the highest poverty rates.
• Northern lake districts have lower valued homes and higher property wealth than the rest of the state.
• Northern lake districts have higher per pupil revenue/spending and the lowest levels of state aid in Wisconsin.

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Part VI. CONCLUSIONS

What are the school finance policy implications?

1. Funding flexibility. State aid levels must be adjusted to adapt to the particular cost factors impacting each district. All districts are not created equal, and a one-size-fits-all funding formula will not meet needs.

2. The achievement gap is a statewide issue. Students with the greatest barriers to proficiency are concentrated especially in urban areas, where there are larger proportions of students in poverty and students with limited English. But rural districts also have high poverty rates, and students with disabilities are found in all districts.

3. Property wealth should not be as influential in dictating state aid levels. Expensive homes in recreational areas distort the property-value measures in small rural communities, particularly in the north. There must be a mechanism to determine state aid that focuses on the funding capacity of residents, not the abstract wealth that would exist if families sold their homes.

4. Higher-spending rural districts are not living in luxury. The diseconomies of scale, high transportation costs, and concentration of students with low incomes requires higher per pupil spending in small rural districts. Many of these districts are unable to provide a range of course offerings comparable with those in suburban and urban districts. Consolidation is not possible where children are now traveling many miles to school. State aid to small rural districts must reflect the actual costs of rural education and ensure that students are not losing opportunities because of geography. Special aid is necessary for the lowest-density rural districts, particularly those in the northernmost part of the state.

5. Suburban districts are paying their fair share. Suburban residents are often paying higher property tax rates and raising more dollars per pupil from local sources than other districts and receiving far less state aid. Suburbs should not be punished for a commitment to quality schools.

6. All types of districts have fiscal problems to grapple with. School-finance reform must address problems of all districts. A new formula for school aid should not merely redistribute existing funds as a way of improving education. That would not solve any real problem. To close achievement gaps, protect and improve rural school districts, and provide property tax relief for homeowners, there must be an infusion of new dollars into the state aid system. To meet the state standards and constitutional mandates and federal requirements, the state must ensure adequate funding so each district, with its unique blend of students and geographic circumstances, can afford to provide each child a real opportunity for a quality education.

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APPENDIX ON METHODOLOGY

A. Geographical categories

Placing school districts in geographical categories is an inexact science, and various methods have been used by researchers. This report uses as its starting point the classification system used by the U.S. Census Bureau, which assigns every school district a “locale code.” There are eight locale codes:

1. A large-city school district – the main city of a metropolitan area, with at least 250,000 residents. Milwaukee is the only Wisconsin district with locale code 1.

2. A mid-sized-city district – the main city of a metro area, but with less than 250,000 population. Wisconsin has 15 such districts, ranging in size from Madison to Superior.

3. A suburb of a large city – a community of at least 2,500 people within the metropolitan region of a large city. Wisconsin has 46 such districts, including 41 in suburban Milwaukee and 5 that are suburbs of the Twin Cities.

4. A suburb of a mid-sized city – a community of at least 2,500 people within the metro region of a mid-sized city. Wisconsin has 37 such districts.

5. A small city with at least 25,000 residents but not located within a designated metro area. There are two: Fond du Lac and Manitowoc.

6. Towns, outside any metro area but with a municipality with a population of 2,500 or more. Wisconsin has 74 such districts.

7. Purely rural areas, outside metro areas and without a municipality with at least 2,500 residents. Wisconsin has 176 such districts.

8. Rural in not having a town of at least 2,500 residents, but located within the boundaries of a Census-designated metro area. Wisconsin has 74 such districts.

In this report, these Census Bureau locale codes have been combined to create three geographical types:

• Urban districts include locale codes 1, 2, and 5: big cities, mid-sized cities, and small cities.
• Suburban districts include locale codes 3 and 4: suburbs of big cities and suburbs of smaller cities. Districts with locale code 8 – rural districts within metro areas – are best seen as exurban districts and classed with other suburban districts, because they are much more similar to suburbs than to rural areas. See Appendix B below for more details.
• Rural districts include locale codes 6 and 7.

For a fuller discussion of locale codes and geographical classification of school districts, see the discussion on “Urban/Rural Classification Systems” at the National Center for Education Statistics: http://nces.ed.gov/surveys/ruraled/Definitions.asp. See also the Census Bureau’s discussion of “Census 2000 Urban and Rural Classification” at: http://www.census.gov/geo/www/ua/ua_2k.html.

B. Exurbs and suburbs

Districts classified by the Census Bureau as locale code 8 are sometimes considered rural districts, but are much better viewed as suburban. Their fundamental demographics are much more like suburban districts than like more purely rural districts, as is clear from this table:

C. School districts: K-12, K-8, UHS

Most of Wisconsin’s 426 school districts include students from kindergarten through high school. These are the K-12 districts. But in some communities, there is a division between high school and the early grades. In these areas, K-8 districts take students from kindergarten through 8th grade, and multiple K-8 districts combine into a single Union High School (UHS) district. There are 10 UHS districts involving 47 K-8 districts.

It is not straightforward to compare K-12 districts with K-8/UHS combinations, especially on financial matters. For example, tax rates are much lower for K-8 districts than K-12 districts, because funds are not needed to educate high school students.

For this report, K-8 districts were used as the basic unit of analysis in locations without K- 12 districts. This was done to generate finer detail, since one UHS district is composed of numerous K-8 districts. For calculating tax rates, the rate in a K-8 district was added to the rate for the appropriate UHS district.

D. Sources of data

Most data are from the Wisconsin Department of Public Instruction (DPI). The entrance to DPI data is: http://www.dpi.state.wi.us/dpi/dfm/sfms/index.html. Much DPI data can be obtained at the School Finance Data Warehouse: http://www2.dpi.state.wi.us/sfsdw/. Almost all DPI data used are from the 2001-’02 school year, the most recent year for which complete audited data are available. Data on students with limited-English proficiency are from 2001.

A second source of Wisconsin school data is the Legislative Reference Bureau (LFB), especially its annual reports on school aids. The entrance to LFB data is: http://www.legis.state.wi.us/lfb/LFBPublications_ButtonPages/Publications_Main.htm.

A third source is the U.S. Census Bureau, which organized some of the data from Census 2000 by school districts. Especially important data collected by the Census Bureau for school districts include median household income, median value of owner-occupied real estate, and youth poverty rates. The Census Bureau school-district information is best accessed through the National Center for Education Statistics. Tables can be found at: http://nces.ed.gov/surveys/sdds/c2000.asp.

E. Use of medians

For almost all charts and maps, medians were used, rather than averages or some other statistical measure. Medians rather than averages were used because the intent was to get an approximation of the typical school district in each category, and medians are a better reflection than averages.

F. School districts as the units of analysis

School districts are the units of analysis, rather than counties, municipalities, or students. As a result, a very large urban district such as Milwaukee counts the same as a small urban district, even though Milwaukee has many more students. Among urban districts, for example, Milwaukee’s numbers are just one out of a set of 18. Had data been organized around students rather than school districts, data from Milwaukee would have swamped the smaller districts.

G. Students and “members”

Wisconsin school finance uses “membership” rather than enrollment as a basis for counting students. The difference is technical, involving such things as on what dates students were enrolled and how to count summer school and kindergarten students. Membership numbers have been used throughout, but data were described using words such as “pupils” or “students” to avoid confusing readers.

H. Poverty

It is not easy to get reliable data on poverty rates within districts. The most common measure of poverty is the number of students eligible for subsidized lunch. But it is widely recognized that this number is subject to large errors. For one thing, eligibility is based primarily on a written request submitted by a parent or guardian, with no independent verification of income. Second, a large number of eligible students simply don’t apply, especially in older grades.

Fortunately, much more accurate estimates are available from Census 2000. The census provides estimates by school district of the number of youth living in households where income is below the official poverty line. Because the data are from 1999, it is still relevant as a guide to comparing poverty levels. In this report, census estimates of poverty have been used. In particular, the percentage of youth poverty in a given district is the percentage of youth ages 5-17 living in a household with income below the poverty line. This number will generally be lower than the percentage on subsidized lunch, because the eligibility ceiling for the lunch program is much higher than the poverty line.

I. Proficiency

Measuring student proficiency is notoriously complicated and controversial. For this report, the statewide 2003 Wisconsin Knowledge and Concepts Examination (WKCE) was used. The WKCE is administered annually to 4th, 8th, and 10th graders. Students are tested in reading, language arts, mathematics, science, and social studies. Based on test results, student performance is classified as minimal, basic, proficient, advanced, or none of the above. For each school district, the percentage of students in each classification is calculated by the Department of Public Instruction. Data can be found at: http://www.dpi.state.wi.us/dpi/oea/spr_kce.html.

For this report, the idea was to combine WKCE results to yield a single measure of district-wide proficiency. One complication is the presence of K-8/UHS districts, which makes it more difficult to compare districts statewide, since some districts lack 10th graders and some lack 4th and 8th graders. Because K-8 districts were used as the basis for most financial data (see discussion above), the 10th grade WKCE scores were dropped and the 4th and 8th grade scores were used. For each district, the median percentage of students at proficiency or advanced levels, at each of the two grades, was used. This yielded two numbers for each district: a median for each of 4th and 8th grades. The average of these two was used to provide a single measure of the proficiency results for districts.

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Norman, J. (2004, February). Wisconsin atlas of school finance: Geographic, demographic, and fiscal factors affecting school districts across the state. Milwaukee, WI: Institute for Wisconsin's Future.

For a printable online version of this report (PDF*, 3.58 MB), click here.

For the summary version of this report (PDF*, 1.65 MB), click here.

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To obtain a printed copy of the full report or the summary version, order online or contact IWF at 414-384-9094 or iwf@wisconsinsfuture.org.

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