School Choice & Charters

Fight Erupts Over Way Wis. Pays for Vouchers

By Julie Blair — May 23, 2001 5 min read
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The Milwaukee voucher program has drawn fire for many reasons since its inception, and now debate has erupted over charges that the system used to pay for it is unfair.

Taxpayers in Eau Claire, Racine, Madison, and other communities throughout Wisconsin are sharing the burden of financing the program in concert with Milwaukee, sacrificing state aid and raising taxes to help cover 50 percent of the program’s $49 million annual price tag, some critics say.

But, in an unusual twist, researchers add that some school districts are actually making money under the arrangement—thanks to quirks in the state’s school funding system—while others are paying for the voucher effort and receiving no benefit.

To make matters more complicated, some opponents of the system of finance contend that the state is substantially overpaying the private schools that accept the vouchers.

“We have a system which literally contradicts the stated purpose, in that it drains money from the city in order to build up those they are in direct competition with—the suburbs,” said Jack Norman, the research director of the Institute for Wisconsin’s Future, a research and advocacy group based in Milwaukee that opposes the voucher program.

Jack Norman

“And, the state is paying twice what it has to,” he added. “This is not just about offering parents a choice for their kids ... but about building up and nurturing the private schools.”

But some proponents of the Milwaukee vouchers say the recent complaints are merely another tactic employed to end a program that its critics have never supported.

“They’ve tried to muck it up on administrative rules and have tried to take it to court, and they’ve lost on those accounts,” said Tim Sheehy, the president of the Metropolitan Milwaukee Association of Commerce, a membership organization that represents 2,500 area businesses. “The last remaining area is to try to mess with it financially.”

The 11-year-old Milwaukee Parental Choice Program provides taxpayer-financed vouchers to low-income children in grades K-12 for use in private—including religious—schools within the city. This year, some 9,600 children are participating, at a cost of up to $5,326 per pupil.

The state pays for the program by reducing the amount of aid provided to all Wisconsin districts and applying it to the voucher effort, said Russ Kava, a fiscal analyst with the state’s legislative fiscal bureau. The nonpartisan agency released a study this month on the intricacies of the finance system in response to inquiries from legislators.

Under the state’s system, school districts are permitted to raise property taxes to make up for the lost funding. Then, because Wisconsin long ago pledged to fund a majority of all education costs in the state, the state increases funding statewide by two- thirds of the amount of the local levies imposed. That money is distributed across the state according to a complex aid formula.

Milwaukee, for example, received $22 million less from the state than it would have without the voucher program in place, while all other Wisconsin districts combined gained $5.8 million more under the system, Mr. Kava said.

A closer look at the data reveals that property-poor or property-rich districts tend to lose money in the calculation, while those in the middle receive more aid than they would in the absence of the current voucher-funding system, Mr. Kava said. All told, 187 districts had net gains, while 238 had net losses because of the voucher program.

“It was never intended that [the voucher program] would be funded at the expense of school districts around the state,” Sen. Sheila Harsdorf, a Republican who is a member of the Senate education committee, said in a statement.

Sen. Shella Harsdorf

“We must work together to bring fairness to the funding of the choice program so that the program itself is not put in jeopardy.”

Ms. Harsdorf introduced a bill this month that would require the Milwaukee district to pay for the entire cost of the program. As of last week, 28 lawmakers from both the Republican and Democratic sides of the aisle had signed on.

Such a mandate would result in a $30 million tax increase for the citizens of Milwaukee, while raising state aid for all other school districts by $30.3 million, given the state’s pledge to pick up two-thirds of the cost of Wisconsin’s education expenses, said Jason A. Helgerson, a lobbyist for the 100,000-student Milwaukee district.

“In essence, it would be transferring the wealth of the city of Milwaukee to ‘outstate,’ ” Mr. Helgerson said. “We think it is very unfair.”

The current system is a good deal for districts outside the city, even if they have to increase property taxes, he said, because they earn substantially more state aid under the formula.

Before 1998, the state paid for the voucher program by reducing aid to only the Milwaukee district, said Bob Hanle, a budget analyst for the state. But when the legislature expanded the program to include religious schools and participation quadrupled, that policy changed. Lawmakers figured that they could reduce the burden on Milwaukee taxpayers while holding harmless other districts for the costs under Wisconsin’s system of school finance, he said.

Tuition Charges Questioned

Not only is it unfair for taxpayers living outside Milwaukee to foot the bill, but they are paying more for it than they should, critics contend.

A complicated rule in the voucher law allows private schools to charge the state higher tuition rates than those charged to parents who pay their children’s tuition themselves, according to a report released last month by the American Federation of Teachers.

During the 1998-99 school year, the state overpaid private schools by $13.6 million, the study by the 1 million-member union contends. The state spent an average of $4,545 per voucher student that year in comparison to the average published fee of $2,281.

While the authors of the paper acknowledge that churches and others subsidize tuition for students in many private schools, they add that that cost of educating public school students in private facilities is far less than outlined by those schools’ administrators.

“They are overestimating the cost of facilities ... so that they can get more voucher revenue,” said F. Howard Nelson, the senior associate director for the union’s department of research, who helped write the report. “It’s not illegal—they’re just following the rules. It’s the rules that are bad.”

The leaders of private schools helped the state to determine the cost of educating public school students when the program was originally developed, said John A. Huebscher, the executive director of the Wisconsin Catholic Conference, the public-policy arm of the state’s Roman Catholic bishops. Catholic schools serve a majority of Milwaukee’s voucher students.

“Those costs were accurate,” Mr. Huebscher said.

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A version of this article appeared in the May 23, 2001 edition of Education Week as Fight Erupts Over Way Wis. Pays for Vouchers

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