What is the REAL Fiscal Impact of Voucher Funding on Public School Districts?

A recent Milwaukee Journal Sentinel article widely reported in Gannett newspapers across the state provided details on how a budget plan proposed by Senate Republicans would increase funding for the state’s three main private school voucher programs by nearly $60 million over the next two years, according to an analysis by the Legislative Fiscal Bureau (LFB).

In that article, a quote attributed to voucher advocate Jim Bender mischaracterized the fiscal impact of the statewide and Racine voucher programs on school districts that have resident pupils participating in those programs.

In the article, Mr. Bender, president of School Choice Wisconsin, called the numbers provided by the LFB misleading. He is quoted as saying, “Because of the way school funding is structured, districts take a hit when a student first enrolls in a private school, but receive additional funds for the student after he or she graduates or leaves.  It balances out over time.”

Let’s set the record straight.  That is simply flat wrong.

Under both the Racine and statewide voucher programs payments to private schools for voucher pupils who first participated in the programs in the 2015-16 school year or later are fully paid for by a reduction in the state general aid that would otherwise be paid to those pupil’s school districts of residence.

To make up for the aid reduction, school districts are allowed to count these voucher pupils for general state aids (on a prior year basis), and receive a revenue limit adjustment for each pupil in the current year.  These voucher pupils are not counted in the resident district’s rolling three-year membership count for purposes of calculating revenue limits so Mr. Bender is wrong in suggesting that these students will continue to generate additional revenues after they leave or graduate.

Instead, the revenue limit adjustment is equal to the amount of the aid reduction.  At best this holds a district harmless. Districts do not have to raise their tax levy by the amount of this adjustment, but may if they choose.  The important point is that the maximum amount they can levy is the amount they have lost through the aid reduction.  Thus, school districts do not gain anything other than incurring higher property taxes.

Whether a district receives any additional state aid as the result of having voucher pupils that reside within the district depends on where the district falls under the equalization formula used to determine general aid. Key factors in determining a district’s general aid include its prior year membership, property value, and eligible expenditures (also known as shared costs).  Districts that receive little or no general aid under the equalization aid formula–including many suburban districts–are highly unlikely to benefit from having voucher pupils residing within their boundaries.

A memo produced by the nonpartisan Legislative Fiscal Bureau (LFB) in December 2016 illustrates why Mr. Bender is flat wrong in his comment about state aid. That memo looks at how the 2016-17 distribution of state general aid was affected by including voucher pupils who first participated in the Racine and statewide voucher program beginning in 2015-16 in the membership of their resident districts.

The memo indicates, for example, that the New Berlin School District, which had 21 voucher pupils who first participated in the statewide voucher program beginning in 2015-16, received no additional state aid as a result. Neither did Menomonee Falls School District, which had 22 voucher pupils who first participated in the statewide voucher program beginning in 2015-16. Taxpayers in these communities are bearing 100 percent of the cost of the vouchers through higher property taxes.

The LFB memo also shows several districts actually lost substantial amounts of state aid as a result of counting these voucher pupils in the aid calculation.  For example, the Madison Metropolitan School District, which had 11 resident pupils who first participated in the statewide voucher program beginning in 2015-16, lost over $950,000 in state aid as the result of these pupils being included in the membership count for state aid purposes.

Similarly, the Middleton-Cross Plains Area School District, with three resident voucher students lost over $226,000 in state aid, while the Muskego-Norway, Port Washington-Saukville, and Grafton school districts, each with one resident voucher student, lost over $128,000, over $59,000, and nearly $58,000, respectively, in state aid as the result of these pupils being included in the membership count for state aid purposes. Another loser was the Oak Creek-Franklin School District with seven resident voucher students, which lost over $83,000 in state aid.

All of these things occurred despite the fact that the state added $108 million more to the general aid appropriation in 2016-17.

It’s high time public school advocates stopped letting the pro-voucher crowd in Madison mislead the public about the impact vouchers have on public schools and property taxes. Any way you look at it, we’re paying for more kids to go to school and using property taxes to do it.  Folks, there is no free money, no matter what voucher proponents may try to tell you.

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Editor’s Note: In the 2016-17 school year, 185 public school districts had resident pupils who first participated in the statewide voucher program beginning in 2015-16 or later attending a private voucher school under the statewide voucher program.  By this coming fall, that number is likely to increase by at least 30 to 40 districts.  If so, more than half of our state’s 422 school districts will have resident pupils attending a private voucher school.  Many of the districts newly impacted will be rural. This issue is not going away, but will only get bigger over time, and will affect more and more districts.