Bill Seeks Transparency on Property Tax Impact of Voucher Funding

Rep. Dana WachsA recently introduced Assembly Bill—Assembly Bill 267—aims to call attention to the growing impact of Wisconsin voucher programs on school property taxes.

The “Wisconsin Voucher Taxpayer Transparency Bill,” authored by state Rep. Dana Wachs (D-Eau Claire) would require property tax bills to include information from the school district where the property is located regarding the amount of any net reduction in state aid, if any, to the district as a result of pupils enrolled in the statewide voucher program, the Racine voucher program, or the Milwaukee voucher program. (See news release.)

The impact of voucher funding on property taxes varies according to the particular voucher program.

Statewide and Racine Voucher Program Funding: For students in the statewide and Racine voucher programs who began receiving vouchers in the 2015-16 school year or later, voucher payments are funded by transferring state general aid from the public school district in which the voucher student resides and giving it directly to the participating private school in which the voucher student is enrolled.  The amount transferred equals the voucher payment for each student.

To make up for this aid reduction, school districts receive a revenue limit adjustment for each voucher pupil in the current year equal to the aid reduction.  If a district chooses to levy (i.e., raise local property taxes) to the full amount of the aid deducted from it, its total resources are unaffected, because it will have replaced the voucher aid reduction with the increase in local property taxes.

Raising local property taxes to offset the aid reduction used to fund the voucher is optional; a school board is not required to do so.  However, if the board does not raise local property taxes to offset the lost aid, the lost aid represents a cut to the district’s budget.  The increase in statewide property taxes due to boards levying to offset lost aid was about $25.5 million in 2016-17.  The statewide property tax impact is estimated to grow to $37 million in 2017-18 and to $47 million in 2018-19.

School districts also include resident voucher pupils in their membership count for calculating state general aid in the following aid year.

Milwaukee Voucher Program Funding:  Under the Milwaukee voucher program, payments to private schools are made from a sum-sufficient GPR appropriation. To partially offset the cost of the program, the general aid that would otherwise be paid to MPS is reduced in equal to a fixed percentage of the total cost of the program. The aid reduction equals 25.6% in 2016-17, 22.4% in 2017-18, and will continue to decrease by 3.2 percentage points in each year until the program is fully state funded in 2024-25.  MPS can levy property taxes to make up for the aid reduction.

MPS cannot include these voucher pupils in its membership count for the purpose of either calculating state general aid or revenue limits.

Per Pupil Voucher Payment Amounts: The per pupil payments to voucher schools in all three voucher programs—Milwaukee, Racine & Statewide–are identical in 2016-17. Voucher schools currently receive $7,323 for each voucher student in grades K-8 and $7,969 for each voucher student in grades 9-12.

In future years, voucher payments will increase by any per pupil adjustment to the revenue limit, if positive, provided to school districts plus the change in total categorical aid funding per pupil, if positive, from the prior year. Based on the increase in general school aids and categorical aids provided in the governor’s budget bill, the per pupil payment would increase to $7,540 in 2017-18 and $7,757 in 2018-19 for pupils in grades K-8, and to $8,186 in 2017-18 and $8,403 in 2018-19 for pupils in grades 9-12.either