Today’s story in the Milwaukee Journal Sentinel on the Milwaukee Public School’s (MPS) high per-pupil spending level is likely to raise a few eyebrows given the district’s continuing struggle to educate a challenging population.  The most obvious question is why do we hear annually about MPS’ budget struggles when per-pupil spending is so high?  I point you towards a new article in the Wisconsin Interest by yours truly for the answer to that one (in summary, legacy costs are growing at a faster rate than state and local funding, meaning MPS has less resources for the classroom every year despite overall increases in public support).

To the point, why is MPS per-pupil spending so high?  There are two simple explanations.

First, as articulated by Dale Knapp of the Wisconsin Taxpayer’s Alliance in today’s story, MPS per-pupil spending is high because it has always been high.  Since Wisconsin instituted revenue limits in the early 90s the amount of state aid and local tax revenue a district can raise (and correspondingly spend) per-pupil has been indexed to what a district raised in the prior year.  In every state budget legislators specify the statewide allowable per-pupil revenue limit increase amount.  Because MPS had a high base to begin with, the amount of revenue the district raises and spends per-pupil is always on the high side.  Further, because annual increases are indexed off of what a district raised in the prior year, there is a built-in incentive for districts to raise and spend as much as allowed under revenue limits.

Second, categorical funding to MPS has increased dramatically since 2001.  Categorical funds are program specific funds that exist outside of the state aid formula and hence are not capped by revenue limits.  In 2001 MPS received $1,468 in categorical funding per-pupil, in 2012 it received $2,318 per-pupil (A 58% increase).

State and local categorical funding to MPS has gone up since 2001, but the bulk of the increase in per-pupil categorical funding is federal.  Federal categorical funds per-pupil increased 73% since 2001.  Included in this pot of federal money is title funding for low-income pupils, and funding for special needs pupils.  The focal year of the study that spurred the Journal Sentinel article, 2010, also is important because of the impact of federal stimulus funding.

Since MPS’ high level of per-pupil spending is primarily driven by two factors, there are few things that can be done to lower per-pupil spending in the district.  One option is to cut revenue limits, which Governor Walker did by 5.5% last year.  Another is to reduce categorical spending.  This too is happening because of state and federal budget pressures.  Hence, MPS per-pupil spending has actually gone down since 2010.

The overall level of MPS per-pupil spending is headline grabbing, but what the district can actually do with the money it receives is far more important.  It is there where MPS is severely constrained and left with few good options.  It is also there where kids, and the future prospects of Milwaukee, are the biggest losers.