The cost for the Milwaukee program is $58.4 million for 2001-02 serving an estimated 10,700 students.6 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 since 1990.7 Prior to the 2001-02 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 Wisconsin’s other 425 school districts. If MPS and other districts wanted to recover the lost revenue, they would have needed to raise local property taxes.8 In fiscal year 2001-02, 45% of the Milwaukee voucher program is now funded from a reduction in state general aid to MPS and the remaining 55% is funded through the state’s general purpose revenue.9
From 1998 to 2001, Wisconsin taxpayers paid an average of 46% more per child to send students to Milwaukee voucher schools than a parent pays to send their child to the very same private schools.10 Unlike the Cleveland and Florida voucher programs, Milwaukee’s funding formula is not keyed to tuition, but instead to the private school’s per student expenditure up to an annually prescribed maximum. 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. The subsidy increased to more than $16 million by the 1999-2000 school year. In the 2001-02 school year this surcharge was expected to reach $26 million, nearly half (46%) of the $58.4 budgeted for the Milwaukee program.12
The extent of this taxpayer overcharge may in fact be even greater than 46%. The Financial Information Reports submitted to the Wisconsin Department of Public Instruction (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-student expenditure.14
In 2002, Wisconsin senate democrats passed a state budget adjustment bill that would reduce excessive per-student state spending on the Milwaukee voucher program. The state would save $23 million in the 2002-03 school year by cutting Milwaukee’s voucher subsidies from $5,780 to $2,000 per grade school student and $3,000 per high school student. The bill also proposed that the voucher program be cut in half the following year (2003-04). However, these proposals were omitted from the final version of the bill as negotiated by the conference committee.15
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 charges over 16 years at 6.5% of fair market value, 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 student 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.16
Less than one out of five students enrolled in the voucher program in the 2001-02 school year actually attended Milwaukee Public Schools the previous year—a percentage similar to that of the previous three years.17 In the 1998-99 school year, 60% of students entering the voucher program were already attending private schools.18 In other words, public funds were taken away from public school students to subsidize students already attending private schools.
In the 2001-02 school year, the loss of MPS students, spread out over the district’s approximately 103 district schools, averages out to only about 19 students per school.19 Claims that vouchers will allow public schools to save money on such fixed costs as building maintenance, staff salaries, school supplies and administration simply are not supported by these small numbers.