Rural areas pay, suburbs gain in voucher funding plan

A voucher program meant to help children in Milwaukee's inner city also ships hundreds of thousands of dollars to the suburbs and sucks cash out of rural areas, a state agency reported Tuesday.

Quirks in funding for the private school choice program let Waukesha rake in $425,000 this year. Wauwatosa netted $282,000. Madison, the biggest beneficiary statewide, gained $1.2 million.

But Oconto and other, mostly rural, districts lost tens of thousands of dollars apiece.

Combine the individual gains and losses, and districts outside Milwaukee gained $5.8 million from the choice program, the Legislative Fiscal Bureau report says. The money would otherwise have reduced property taxes in Milwaukee.

"This is a real and meaningful scandal that city taxpayers are shelling out money in order to build up schools in the suburbs," said Jack Norman, research director at the Institute for Wisconsin's Future, a left-of-center Milwaukee group that wants changes in the school finance system.

Even before Tuesday's report, which people on all sides of the debate described as offering major revelations, choice funding had been at the center of a storm.

Lawmakers from outside Milwaukee, worried that their schools may be bearing the brunt of vouchers, have been trying to rearrange the funding. But Milwaukee officials fear a $30 million tax increase and note that in any event, other districts collectively gain from the choice program's funding.

The fiscal bureau had identified the $5.8 million net gain in a previous report, but Tuesday's figures were the first district-by-district breakdown.

Choice supporters hailed the new report as a political breakthrough because it lays out the financial benefits. Voucher critics, however, interpreted the figures as one more sign of flaws.

The 51-page fiscal bureau report delves into the most obscure details of how Wisconsin funds its schools. At their core, though, the results are surprisingly simple.

The choice program costs $49 million this year. Half of that money comes out of state aid to Milwaukee Public Schools. The other half comes out of aid to other districts, in proportion to the aid they get.

But school districts can raise taxes to make up for those deductions. Then, under state law, the pool of state aid rises by two-thirds of the tax increases.

The bigger aid pool means most districts get more money - in some cases, much more money than is being deducted for the choice program, and in other cases, much less.

Altogether, 187 districts have a net gain; 238, including Milwaukee, have a net loss; and one receives no aid and isn't affected.

The figures compare a district's aid under the current system with what it would have received if the children getting vouchers simply vanished, said Russ Kava, a fiscal bureau analyst who worked on the report. The report shows even bigger total gains if the current system is compared with one in which the children instead attended MPS.

In New Berlin, School Board President Richard O'Connor said it wasn't surprising that some people want to change the funding system for Milwaukee's voucher program, which gave his district a $283,000 infusion this year. O'Connor said he wasn't knowledgeable about all the ins and outs of Wisconsin's school financing system, except that his district seems to lose most of the time.

Because of New Berlin residents' relative property wealth, the district gets only about one-third of its money from state aid, he said.

"I understand that there are people out there organizing to find more ways to take money away from us, and there's just about nothing we can do about it," O'Connor said.

In Oconto, north of Green Bay, Superintendent Jeffrey Dickert said the district's $59,000 net loss to choice is part of a budget crunch he's been fighting for several years.

For example, he said, the district has frozen budgets for paper and other classroom supplies.

He said the district is working with lawmakers but isn't being particularly vocal about the effects of choice.

"For us to complain about money we don't get from the state would be biting the hand that feeds us," he said.

Other than Milwaukee, Oconto had the third-biggest overall loss to choice funding, behind Beloit and Superior. On a per-student basis, Oconto had the largest loss.

Most of the other districts with large net losses are in rural areas. But a few wealthy Milwaukee-area suburban districts, such as Elmbrook, also landed in red ink.

That points to a twist in the interaction between choice funding and school aid: Districts with average property values tend to do better than those that are far above or below average.

The districts with low property values get lots of state aid, so they have big deductions for the choice program. The districts with high property values get little money from the state, meaning they can't benefit from a bigger aid pool. The ones in the middle don't face big deductions, but they still get a boost from the larger aid pool.

Armed with data on the effects for each district, legislators can try to clean things up, voucher supporters and opponents both said.

Milwaukee consultant George Mitchell, a central figure in the choice movement, said the districts shown in the report as losing money shouldn't be considered losers.

"The word 'loser' implies unfairness," he said. "What's unfair is that Milwaukee is now a loser. . . . That $5.8 million ought to be in Milwaukee."

Lawmakers should create a system in which there are no gains or losses for any district outside Milwaukee, he said.

Indeed, the report examines six alternative ways to fund Milwaukee's choice program.

State Rep. Antonio Riley (D-Milwaukee), a choice supporter, said he was reviewing the report, but thought it would help counter proposals to put the entire burden of the program on Milwaukee taxpayers.

"Hopefully, this debate can go forward with some level of intellectual honesty," he said.

Sam Carmen, executive director of the Milwaukee Teachers' Education Association, called the big benefits for suburbs "an odd outcome, especially considering the critical juncture that funding for schools in Milwaukee is at right now."

The city teachers union has long criticized the choice program.

At the Wisconsin Education Association Council, the state's largest teachers union, President Terry Craney said the tangled funding is just one more reason why "it's time to put this program out of its misery."

Norman, with the Institute for Wisconsin's Future, said the funding oddities show the "perversity" of the state's school finance formula.

The system's complexity "makes it impossible to create a program and then fund it in any kind of clear, meaningful, accountable way," he said.

Amy Hetzner of the Journal Sentinel staff contributed to this report.