Wisconsin Governor Jim Doyle is poised to propose a lift of the state's long-standing 3.8 percent cap on annual teacher pay raises. The cap had been part of a deal enacted in 1993 in which the state agreed to fund 66 percent of Wisconsin's public school costs--but only on the condition that the state's portion of teacher pay raises be limited, along with increases in per-pupil spending.

Supporters of the Governor's plan to raise the cap, including the Wisconsin Education Association, contend that the law makes it difficult to recruit and retain teachers. But opponents such as the state's largest business lobby, Wisconsin Manufacturers & Commerce, worry that repealing the pay raise limit will lead to increased property taxes.

The state is in a real catch-22 on how to solve the funding fumble. Spending caps may offer states too little flexibility on spending--as might their opposite, the mandatory funding outlays that have resulted from "adequacy" lawsuits in a number of states.