"Parental Rights"

Further Financial Questions Raised by the Legislative Audit

The picture of the state voucher program presented by the legislative audit raises several other questions about voucher payments to voucher schools. One question concerns the way in which schools depreciate their costs, a factor that affects the calculation of their per-pupil expenditure (and therefore the size of the voucher payment they receive). The effect of decisions made by some schools on this issue for the 1998-99 school year was to drive up their per-pupil expenditures considerably for that year.

In the 1998-99 school year, religious schools were included in the voucher program for the first time, after a favorable decision by the state supreme court. Upon entering the program, all schools were allowed to decide how much of their capital costs they would depreciate in their first year. With regard to buildings and sites, schools had the option to choose either a one-time only depreciation of 100 percent or a standard 16-year depreciation of 6.25 percent. For lesser expenses, such as books, equipment and educational media, the choice was between 100 percent and a five-year 20 percent depreciation.

Schools that elected a 100 percent depreciation received a large one-time sum of money. This amount is factored into their calculation of total expenses, upon which per-pupil expenditures are based. In other words, the depreciation drove up per-pupil expenditures, in some cases dramatically. For example, a school that normally spends $3,000 per student could have a one-year $5,000 per student average. This in turn increases the voucher amount from $3,000 to $4,894 for that year. While there is nothing illegal about this decision, the effect of this opportunity is that schools can, upon entering the voucher program, inflate their per-pupil expenditure (and therefore voucher amount) as a means of collecting a windfall to use as start-up funds.

The calculation of state aid raises further questions. Unlike state funds that go to public schools in the Milwaukee Public School district, Milwaukee voucher aid is calculated based on the end of the current year school audit (separate from the Legislative Audit Bureau audit) required by law. The unavoidable result is that schools receive payments that are often incorrect, due to changing enrollment, inaccurate school enrollment counts, etc. In fact, last year only 20 of the 82 participating voucher schools received the correct amount based on their enrollment. The rest were either owed money by the state or owed money to the state. At the end of the 1998-99 school year, DPI was owed a net of almost $1 million, which it received from the schools without incident. However, in the interim period, many schools put the surplus in interest-bearing accounts for the entire school year. They are required to return the principal but can keep the interest.

While nothing in this kind of transaction is illegal, it can be argued that private schools should not be allowed to reap a profit from taxpayer money that could otherwise be earning interest that does not go into private coffers, and that this loophole in the voucher legislation should be closed. Further, these surplus payments (37 schools owed DPI as opposed to 25 that were owed) could be used by private schools to cover any cash flow problems, so that a school on shaky ground can use the surplus as long as it replaces it at the end of the year.

Share this page: Facebook Twitter Digg SU Digg Delicious