Fact Sheets: The Truth About Vouchers
Milwaukee, WI Voucher Program
The projected cost for the Milwaukee program is $58.6 million in 2001-02 alone.7 By the end of the 2001-02 school year, the voucher program will have spent more than $200 million in taxpayer funds for private school tuition.8 Prior to the 2001-2002 school year, when the legislature essentially created a separate line item in the general budget for the voucher program, half these costs were subtracted from state equalization aid to the Milwaukee Public Schools (MPS), and the other half was taken away from the aid for the other 425 school districts. If MPS and other districts wanted to recover the lost revenue, they would had to have raised local property taxes.9
Wisconsin taxpayers pay an average of 40% more per child to send students to Milwaukee voucher schools than a parent pays to send their child to the very same private schools. Unlike Cleveland and Florida's voucher programs, Milwaukee's funding formula is not keyed to tuition, but instead to the private school's per pupil expenditure up to a maximum prescribed each year.10 For example, a private school may charge $2,000 in tuition but spend $5,000 to educate each child. In the absence of a voucher program, that $3,000 budget gap is subsidized through fundraising, private donors, foundations and in large part through subsidies from the church or parish. In Milwaukee, this gap is subsidized by taxpayers throughout Wisconsin.11 In the 1998-99 school year, this subsidy amounted to more than $11 million. In the 2001-02 school year alone, this surcharge could reach $23 million of the $58.4 budgeted cost; this overpayment could reach approximately $50 million for the biennium.12
The extent of this taxpayer overcharge may in fact be even greater than forty percent. The Financial Information Reports submitted to DPI by all voucher schools-upon which their voucher payment is determined-reveal that the average per-student revenue actually received from tuition-paying students was often lower than the school's reported tuition.13 Actual tuition, in other words, is often substantially lower than reported tuition. While there is nothing illegal about a school charging less than its stated tuition, this increases the actual gap between tuition and per-pupil expenditure. To use the example above, actual tuition may be closer to $1,000, increasing the per-student gap to $4,000.14
Some voucher schools reap substantial benefits from a loophole in the voucher law. Private schools can depreciate their buildings as a means of "charging" voucher students for facilities use. While standard accounting procedure for use of pre-existing facilities would spread out charges over 16 years at 6.5% of fair market value, however, the voucher law allows private schools to elect either a 6.5% depreciation or a one-time depreciation of 100% the year they enter the program. This provides an incentive for schools whose per pupil expenditure is substantially lower than the maximum voucher amount to depreciate their facilities at 100%, generating income of hundreds of thousands of dollars. For example, one voucher school had per-student operating costs of just under $2,600 in the 1998-99 school year, which would qualify it for a voucher of that amount. But by taking advantage of the capital funding loophole, it qualified for the maximum voucher of $4,894 (a $2,300 difference). With 62% voucher enrollment, this school took in an extra quarter of a million dollars ($251,000), nearly half of its total $535,000 voucher payment in 1998-99, as a result of this loophole.15
Less than one-fourth of the students enrolled in the voucher program in the 2000-01 school year came from the Milwaukee Public Schools the previous year-a percentage similar to that of the past two years. 16 In the 1998-99 year, 60% had attended private schools before entering the voucher program-the majority without voucher aid.17 In other words, public funds were taken away from public school students to subsidize students already attending private schools.
The loss of MPS pupils, spread out over the district's approximately 160 schools, averages out to about 12 students per school.18 This small number repudiates claims that vouchers will allow public schools to save money on such fixed costs as building maintenance, staff salaries, school supplies and administration.