Wisconsin Voucher Program: Exacerbates Inequity by Stealing from Local School District Budgets

A new study for the National Education Policy Center by Ellie Bruecker of the University of Wisconsin warns that Wisconsin’s statewide voucher program, as it grows, will increasingly exacerbate fiscal inequity across the state’s public school districts.

In the 2015-2017 state budget bill, Wisconsin expanded the Wisconsin Parental Choice Program statewide school vouchers by eliminating a 2,000 student statewide cap and sunsetting a district-by-district student participation cap. The new law provides that the participation cap for any district’s students will increase one percent a year until 2026-2027, after which the district cap will disappear altogether.

At the same time Wisconsin changed the way the state funds vouchers. While, before 2015, statewide vouchers were funded by the state through its General Purpose Revenue fund, the 2015 budget bill began counting voucher students as part of the overall enrollment of their local school district and deducting money from the school district’s state’s formula aid to pay for the vouchers:

“The bulk of state aid allocated to public school districts in Wisconsin is derived from a guaranteed tax base formula (equalization aid), which produces higher aid for districts with low property wealth and lower aid for districts with higher property wealth. To fund the Wisconsin Parental Choice Program, this allocation of state equalization aid is reduced by the total cost of the vouchers for participating students in the district.  The bill also specifies that if a district’s voucher costs exceed the total allocation of equalization aid, the remaining payment would be deducted from other state aid—categorical aids, which are allocated for specific purposes such  as transportation costs, special education, or high poverty assistance.”

The expansion of Wisconsin’s statewide voucher program is  less likely to affect districts whose tax base is high and students are wealthy. Currently to qualify for a voucher, a student must live in a family at or below $44,955—185 percent of the federal poverty line. However, according to Bruecker, students with slightly higher income may soon become eligible: “Additionally, as of August 2017, Wisconsin Senate Republicans are considering increasing the income eligibility limit for the Wisconsin Parental Choice Program from 185%… to 220% of the federal poverty level. The Wisconsin Legislative Fiscal Bureau estimates that if this change becomes law, it would reduce state aid to local school districts by an additional $16 million in the first school year in which it takes effect as more students participate in the program.”  Bruecker concludes that the new law will place “a greater burden on local taxpayers, particularly those who are already facing higher local tax rates that generate lower per-pupil spending than that in districts not negatively affected by the Wisconsin Parental Choice Program.”

In Wisconsin the vast majority of students participating in the Wisconsin Parental Choice Program were already enrolled in a private school before they received a voucher: “Nearly three out of every four students who participated in the Wisconsin Parental Choice Program in the 2016-17 school year were already private school students prior to enrolling in the program.”  The state has assumed “financial responsibility for educating additional students without providing a proportionate increase in the financial support it provides for those students… Because the per-pupil equalization aid does not cover the full cost of the voucher in nearly all districts, this funding mechanism decreases the state’s per-pupil investment, forcing local taxpayers to support a private school tuition program that they did not vote for nor that they control through their elected school boards.”

Bruecker recommends that Wisconsin maintain the Wisconsin Parental Choice Program’s income threshold at 185 percent of the federal poverty level, maintain the original district-level cap in any local school district at one percent of the district’s total enrollment, and fully fund the program, as in previous years, through the state’s General Revenue Fund.

She also warns other state’s to examine the inequity built into Wisconsin’s voucher program as a cautionary tale.