Fiscal Bureau Estimates the Significant Aid Losses in the New School Choice Districts
Expansion of School Vouchers Causes Odd Ripple Effects in Nearly All Districts
An April 15 memo from the Legislative Fiscal Bureau explains the direct and indirect ways that the Governor’s proposal to expand school vouchers to at least nine new school districts would affect school financing across the state. It includes district–by-district examples of how various scenarios would directly reduce aid for the nine districts, would increase property taxes in those districts, and would actually cause modest increases in aid to the vast majority of districts as the general school aid lost by the nine districts gets redistributed.
As the Wisconsin State Journal noted in a good article about this issue, as much as $8 million could be shifted from the nine new choice districts to 324 districts that would receive additional aid!
Under the Governor’s proposal, up to 500 new vouchers would be provided in 2013-14, followed by 1,000 new vouchers in the second year of the biennial budget. There would be no limit in participation in 2015-16 (which is in the following biennial budget). The total payments for 1,000 vouchers are estimated to be about $7.2 million in 2014-15, and the nine districts would have their aid directly reduced by 38.4% of that amount, or $2.76 million. They will take that hit regardless of whether the new voucher students residing in their district were previously in the public school system or were already in a private school!
But that’s just the beginning of the fiscal impact, which gets more complicated for voucher students who move from the choice district into a private school. That would reduce aid in 2014-15 by roughly $10,000 per voucher student leaving the public school, because of lower pupil counts in those districts and lower spending. And because of the interplay between the aid amounts and the revenue caps for districts, property tax levies would rise by an average of about $2,650 per student leaving the district.
The even more surprising impact is that the secondary reduction in General Aid for the nine districts frees up aid that is redistributed amount all the districts, based on the regular (and rather complicated) aid formula. Milwaukee would get the largest gain, estimated at about $708,000.
The calculations in the LFB memo assume all other variables affecting the aid formula remain the same as in the current school year, because it’s too soon to estimate the normal changes in aid distribution each year. More importantly, the calculations are just for this biennium and don’t project the potential redistribution that could occur in fiscal year 2015-16, when there would be no limit on the number of voucher students. That change is likely to yield far greater cuts in aid for the choice districts and larger ripple effects for other districts.