Understanding school funding, property taxes, and the facts behind the headlines

As property tax bills arrive in mailboxes across Wisconsin, it is understandable that many taxpayers are frustrated by increases they did not expect. Unfortunately, much of that frustration is being directed at local school districts — often based on misconceptions about how school funding actually works.

On short notice, the Assembly Education Committee is holding a public hearing on several education-related bills, including Assembly Bill 391, which would eliminate the $325 per-pupil adjustment in the school district revenue-limit formula beginning in the 2027–28 school year. Given the timing, this proposal is likely to receive significant public and media attention. It is also an important moment to separate fact from fiction.

Who really controls school spending?

In Wisconsin, school districts do not unilaterally decide how much they can spend. District budgets are governed by state-imposed revenue limits, which strictly control how much revenue a district may raise each year. To exceed those limits, districts must seek voter approval through an operating referendum.

In the 2025-27 state budget, the Legislature allowed a modest increase in revenue limits — but for the 17th consecutive year, that increase was below the rate of inflation. Even more importantly, it was not paired with an increase in state general school aid.

Historically, when the state allowed revenue limits to increase, it also increased state aid to reduce the impact on local property taxpayers. The most recent budget broke from that long-standing practice. The result was a shift of costs away from the state budget and onto local property taxpayers, even though school districts did not significantly change spending decisions.

Special education: A growing pressure

These challenges are compounded by the continued underfunding of special education. Wisconsin uses a “sum certain” appropriation, meaning reimbursement rates fluctuate and routinely fall short of promised levels. Districts are legally required to provide special education services, so when state reimbursement declines, districts must divert general operating dollars to cover those costs. Again, local districts have no choice in this matter.

What this means for property taxes

The outcome of these policy decisions is predictable: higher property taxes, increased frustration in communities, and more frequent referenda just to maintain basic services. If state leaders are serious about property tax relief, they must acknowledge that failing to fund authorized revenue increases with corresponding state aid is a central part of the problem.

Myth vs. fact: school funding and property taxes

Myth — School districts raised property taxes because they chose to spend more than inflation.

Fact — Districts can only raise revenue within state-set limits. The state authorized a per-pupil increase below inflation and did not provide the aid to support it, shifting costs to property taxpayers.

Myth — Schools received “record funding” in the state budget

Fact — While some funding increased, it did not keep pace with inflation or rising fixed costs. Special education aid, in particular, remains significantly underfunded.

Myth — Referenda signal poor local fiscal management

Fact — Referenda are often the only tool districts have to address structural gaps created by state policy. Without them, districts must cut programs and services, or do both.

Myth — Property tax increases would have happened regardless of state action

Fact: Historically, when revenue limit increases were matched with state aid, property tax impacts were significantly reduced. The 2025-27 budget broke that precedent.

Myth — This is a local problem.

Fact — This is a statewide issue. Nearly three-quarters of Wisconsin school districts will receive less general aid than last year, and the number needing stop-gap “hold harmless” aid increased by nearly 30%.

A local example

In Rhinelander, the district’s current school levy is $30.3 million, divided by a total property value of $3.8 billion, resulting in a tax rate of $7.63 per $1,000 of property value.

For context, in 2003 the levy was $17.1 million on a property value of $1.8 billion, for a higher tax rate of $9.49 per $1,000. While property values have more than doubled over the past 20-plus years, the levy has not. The major difference? State aid.

In 2003, the district received $11.3 million in state aid. This year, that amount is $7.3 million — a reduction of roughly $4 million that is passed directly onto local taxpayers under the state funding formula. The district has no control over this shift.

Compounding the issue, the district’s required contribution toward private school vouchers has increased from $30,000 three years ago to more than $213,000 this year.

Property values, assessments, and individual tax bills vary widely by location and municipality — factors that are determined by towns and cities, not school districts. While tax rates per $1,000 of value may continue to decline as property values increase, they would decline even more if state aid were distributed more equitably, particularly in northern Wisconsin.

We are very fortunate to have a community in Rhinelander that supports public education through the passage of operational referendums. The passage of referendums is critical to best support all of our students, staff, and families.

The bottom line

Local school districts are doing their best to manage resources responsibly within a system largely controlled by state policy. Operational referendums are not optional luxuries — they are critical tools for maintaining educational opportunities for students in our region.

If we want honest conversations about property taxes and school funding, we must focus less on myths and more on the realities of how Wisconsin’s funding system works. Understanding those realities is the first step toward meaningful, long-term solutions.