By: Will Flanders, PhD.
Wisconsin already has the 9th highest property taxes in the country. Adding insult to injury, Wisconsin homeowners were greeted with a further 7.8% average increase last month. With so much political finger pointing happening about who is to blame, we thought we’d set the record straight.
Some on the left have attempted to place blame at the feet of Republicans in the legislature for failing to add more state aid to the funding formula in the most recent budget cycle. But this is a deflection from reality: while a flat pot of state aid does lead to some redistribution of funds between districts, exactly how that redistribution happens is primarily the result of referenda, property values, and the Governor’s 400-year veto.
How the Funding Formula Distributes State Aid
In Wisconsin, state aid is distributed primarily through the general school aid formula, which is designed to equalize districts’ ability to raise revenue given wide differences in local property wealth. The formula compares a district’s spending authority under revenue limits to its property value per pupil.
Districts that appear relatively “poorer” in property wealth receive a larger share of state aid, while districts that appear “richer” receive less. When the pot of money stays the same size—as it did from the 2023-25 budget to the 2025-27 budget, money can be reallocated between districts based on changing enrollment or property wealth and (critically as we will see below) referenda. When districts receive less state aid, property taxes go up.
Declining Enrollment & State Aid
Wisconsin is a state that faces declining K-12 enrollment. Since the 2020 school year, enrollment across the state has declined by more than 25,000 students, or about 2.9%.
This decline in enrollment means that when the state puts the same amount of funding into the system over time, there is actually more money per student. In the previous budget cycle for 2025, $5.58 billion was allocated for general aid 827,419 students. This represents $6,745 per student. For 2026, the same amount of money was allocated for 823,246 students representing $6,799 per student.
It is also the case that districts that saw a net decline in general aid lost more students than those that saw a net increase. On average, districts that lost general aid saw a decline of about 18 students from 2024 to 2025 compared with an average increase of 10 students in districts that saw an increase in state aid. This is depicted in Figure 1 above.
Of course, this is only a partial explanation for the shifts in state aid. So, what else contributes?
Property Values
Because property value per student plays a big role in the amount of state aid a district receives, increases in the overall property value of a school district can decrease state aid to a district significantly. This can be the result of reassessments occurring in some communities but not others, or due to large-scale new construction in a particular area. This does appear to be a partial driver of what’s happening this year. The figure below compares the average increase in property values from 2024 to 2025 in districts that saw an increase in state aid and those that saw a decrease.
On average in districts that saw a decrease in state aid, property values per student increased by about 11% compared to 7% in districts that saw an increase in state aid. This is a meaningful difference that likely shifts state aid substantially. While increased property values are often seen as something of a wash when combined with lower mill rates, municipalities should be cognizant of the effects on the distribution to state aid that can result when values shoot up.
More Than Half Of Property Tax Shift Goes to MPS
As mentioned in the introduction, state aid is a fixed pot that is redistributed based on the nuances of the funding formula. As was highlighted by the Legislative Fiscal Bureau , additional debt service and operational costs from a referendum like the one MPS passed are incorporated into the funding formula. One nuance of the funding formula is that, when extremely property-poor districts go to referendum, those costs are not contained entirely by the school district that held the referendum, but instead are paid by other districts across the state as well. At about $641,000 of property value per student, MPS ranks as the 28th lowest in the state and thus gets some referendum costs reimbursed.
Figure 4 below depicts the share of the total aid shift that went to MPS versus other sources. In total according to DPI General Aid worksheets, about $182 million was redistributed away from school districts between 2024 and 2025. At the same time, MPS saw a staggering $97 million increase. This represents 53.51% of the total positive cost shift. And it’s not as if MPS is a growing district: the district lost 1,265 students in the membership count between 2024 and 2025.
Racine is another huge recipient of increased aid distribution, with an increase of $20,471,705 in state aid between 2024 and 2025. This constitutes 11.2% of the total redistributed aid despite an increase of only 17 students. The district also passed a massive $190 million referendum last year that put state taxpayers on the hook, though to a lesser extent than Milwaukee due primarily to the smaller price tag and slightly higher property wealth.
There is no way to describe this but taxation without representation: voters in other districts had no say in the passage of the MPS referendum, but are on the hook for a huge amount of the overall cost of it.
Conclusion
Ultimately, Wisconsin’s property tax increases stem primarily from absurd local referenda and Governors Evers’ creative 400-year veto. So the result: a school district with declining enrollment with 8.1% of Wisconsin’s public school population is getting over 50% of the property tax revenue shift.
