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LFB: State Could Lose $1.5 Billion in Federal Money for Schools Unless it Maintains Spending Commitment to K-12

By Dee Pettack | May 26, 2021

From WisPolitics.com …

Wisconsin will have to maintain its current funding commitment to K-12 schools to ensure districts qualify for the full $1.5 billion in federal money that’s part of the latest COVID-19 package, according to the Legislative Fiscal Bureau.

And the Legislature won’t know for sure if its K-12 spending plan meets that standard until lawmakers finish their work on the state budget. That’s because the share of general purpose revenue going to K-12 will be impacted by how much the Legislature decides to spend overall with its version of the budget.

The requirement will complicate calls from some Republicans to hold flat state spending for K-12 education because of the federal money flowing to schools as part of the three relief packages. Doing that would require overall spending in the state budget to remain largely unchanged. Otherwise, the state’s commitment to K-12 would fall short of the federal requirement.

Joint Finance Co-chair Mark Born, R-Beaver Dam, said lawmakers only recently became aware of the requirement.

“We question the legality of Governor Evers unilaterally accepting funds that lock the legislative branch into funding criteria without any consultation before accepting the money,” Born said.

Evers spokeswoman Britt Cudaback said GOP lawmakers wouldn’t have to worry about meeting the maintenance of effort requirement standard if they simply passed the guv’s budget as introduced.

The Joint Finance Committee meets tomorrow to take up K-12 funding as well as the Department of Public Instruction’s plan to spend a portion of the latest round of federal COVID relief funds.

Nearly $1.4 billion of the COVID money will be divided up according to a formula that takes into account the number of poor students in each district, while DPI has proposed using $39.4 million of the remaining money to ensure 131 school districts will receive minimum grants of $600,000 each.

The LFB paper on the federal money notes the federal government included a maintenance of effort requirement for states that accept the federal funds. Under that provision, states must maintain the same proportion of spending allocated to K-12 and higher education in 2021-22 and 2022-23 as their average allocation for 2016-17 through 2018-19.

The LFB paper prepared for tomorrow’s hearing doesn’t calculate the state’s average allocation over those years. But a WisPolitics.com check of past LFB documents show the state budgeted 32.7 percent of GPR for general school and categorical aids for K-12 over that period.

Under Evers’ budget as introduced, he called for spending 32.9 percent of GPR on general and categorical aids in the first year of the biennium and 33.6 percent in the second.

The requirements to accept the federal money could complicate the Legislature’s K-12 deliberations in other ways. There is an opportunity for states to apply for a waiver from some of the requirements, but the Biden administration has not yet provided full details.

It’s also unclear what the penalty would be for failing to meet the requirements or how the federal government would recover funds. Under the program, districts don’t receive the funding upfront. Instead, they must submit to DPI claims to be reimbursed for eligible expenditures. DPI has to review and approve each claim before districts can receive the payments.

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