Impact of Expanded Private School Options Bambi Statz, PhD, Emeritus Professor, UW-Whitewater Association for Equity in Funding Executive Director Presentation to Committee on Financial Institutions and Rural Issues May 1, 2013

Legal Foundation WI Public Schools  Public education is a function of the state  Article X, section 3 of the WI Constitution (1848) states: “The legislature shall provide by law for the establishment of district schools, which shall be as nearly uniform as practicable and such schools shall be free and without charge to all children between the ages of 4 and 20 years; and no sectarian instruction shall be allowed therein.”  School boards are authorized by the legislature to administer public education within their geographical boundaries (Chapters WI Statutes)

SUBCHAPTER II GENERAL AID Purpose. It is declared to be the policy of this state that education is a state function and that some relief should be afforded from the local general property tax as a source of public school revenue where such tax is excessive, and that other sources of revenue should contribute a larger percentage of the total funds needed. It is further declared that in order to provide reasonable equality of educational opportunity for all the children of this state, the state must guarantee that a basic educational opportunity be available to each pupil, but that the state should be obligated to contribute to the educational program only if the school district provides a program which meets state standards.

SUBCHAPTER II GENERAL AID (Con’t) The purpose of the state aid formula set forth in this subchapter is to cause the state to assume a greater proportion of the costs of public education and to relieve the general property of some of its tax burden. Direct Aid = Property tax relief 1. Taking away state support from public schools does just the opposite - It RAISES property taxes! 2. Providing public funds to private schools also RAISES property taxes

Private School Options include: Milwaukee and Racine Parental Choice Programs (Vouchers) Proposed Voucher School Expansion Independent Charters Special Education Vouchers Source: LFB Summary of Governor’s Budget Recommendations March, 2013

Vouchers Milwaukee and Racine Parental Choice Programs (Vouchers) – Aimed at children living in poverty: 300% of Fed poverty level (originally 175%) = $45,939 for family of 2; $57,870 for family of 3; $69,801 for family of 4 (in ) Adj to $77,000 Proposed Voucher School Expansion -eligible districts based on enrollment over 4,000 pupils and 2 or more “low-performing” schools (Beloit, Fond Du Lac, Green Bay, Kenosha, Madison, Sheboygan, Superior, Waukesha, and West Allis-West Milwaukee) -priority for participation given to low-income pupils (F/R lunch ) Source: LFB Summary of Governor’s Budget Recommendations March, 2013

Choice Program Costs Program Milwaukee Parental Choice Program$150,742,800$164,271,000$173,934,000 State GPR Funded (61.6%)$92,887,600$101,221,000$107,173,400 MPS State Aid reduction* (38.4%)$57,855,200$63,050,000$66,760,600 Racine Parental Choice Program$3,221,000$4,831,500$6,442,000 State GPR Funded (61.6%)$1,984,100$2,976,200$3,968,200 Racine State Aid reduction* (38.4%)$1,236,900$1,855,300$2,473,800 Choice Expansion to other districts$3,221,000$7,195,000 State GPR Funded$1,984,100$4,432,100 Eligible District State Aid reduction*$1,236,900$2,762,900 Includes increased participation and per pupil payments of $6,442 in and $7,050 (K-8) and $7,856 (9-12) in * Reductions in state aid is $ that would have been paid to the district if the choice program did not exist; the state GPR $ comes from income and sales taxes.

Independent Charters Milwaukee/Racine [chapter (2r)]  Authorizing entities  The common council of the city of Milwaukee  The chancellor of the University of Wisconsin – Milwaukee  The chancellor of the University of Wisconsin – Parkside  The Milwaukee area technical college district board  Milwaukee/Racine (2r) charters receive a payment from the state $ 7,775 per student for 7,600 students in  Sum sufficient appropriation of $ 59.8 million for taken from every school district’s general aid eligibility (equal, specadj, integr)  Amounts to a 1.4% aid reduction = average of $140,000 (% changes annually based on participation and per pupil payment amounts)  Aid loss may be backfilled on the local property tax (or, local programs cut).  Not all districts/taxpayers are treated the same – wealthy districts ineligible for general aid do not contribute to the Independent Charter Program Source: LFB Summary of Governor’s Budget Recommendations March, 2013

State Aid Cuts Due to Existing Independent Charters District Aid CutDistrict Aid Cut Madison-$ 818,966Chippewa Falls-$ 383,640 Richland - 103,704Ashland-198,982 Reedsburg-179,842Maple-77,509 Darlington-72,371Rice Lake-144,998 Sheboygan-943,008Superior-385,876 Green Bay- 1,803,875Phillips-35,899 DePere-298,925Rosholt-40,766 Mishicot-61,373Medford-172,891 Wrightstown-105,413Mosinee-167,917 Two Rivers-168,326Elmbrook-37,046 Reedsville-51,371Mequon-16,960 Adams-Friendship-62,967Wisconsin Dells-8,512 Auburndale-80,453Gibraltar.00 Marshfield-295,373Green Lake.00 Stevens Point-509,430Three Lakes.00 Wisconsin Rapids-464,153Sevastopol.00

Expansion of Independent Charter Program  Increases the per pupil payment from $7,775 in to $7,852 in with an estimated 8,600 pupils participating and to $7,931 in with 9,600 pupils  Re-estimate of sum sufficient appropriation needed under current law adds $17,160,000, taken from every school district’s general aid eligibility.  Establishes a State Charter Authorizing Board to approve authorizing entities (non-profits, local governments, etc.) for the expansion of independent charters (defined as LEAs) statewide  Payments of $7,931 per pupil in at total cost of $3,965,500  Funded through a statewide cut to general aids State Budget Proposal *Note: the general aid reduction percentage changes annually, depending on the number of students enrolled in independent charters and per pupil aid amounts.

Impact of Expansions of Both Vouchers (Private School Choice) and Independent Charters on WI Taxpayers  All WI taxpayers would continue to be supporting 61.6% of the cost of vouchers in 11 school districts as opposed to the existing 2 communities through income and sales taxes. [$104.2M est. for Milwaukee and Racine Programs and $1.98M for additional 9 districts in ]  According to 4/15/13 LFB analysis, 324 school districts would receive more state aid due to the redistribution of the $2.7M of aid losses incurred in the 11 voucher school districts. ONLY if 100% of expanded choice pupils would have otherwise attended the public schools – NOT if they would have otherwise attended private schools.  Aid in nine eligible school districts, in addition to Milwaukee and Racine, would be reduced to fund 38.4% of the payments to the Choice Schools.  State aid cuts and property tax increases to fund the Milwaukee and Racine Charter Schools and for the program’s proposed expansion statewide are far greater in almost all cases than the small state aid gains made from the state aid redistribution due to the Vouchers State Budget Proposal

Local Aid Impact of Expanded Choice & Independent Charters (per LFB/DPI) DistrictChoice Expansion Current Ind Charters DistrictChoice Expansion Current Ind Charters Madison- $ 807,135 - $ 818,966Chippewa Falls55,988-$ 383,640 Richland13, ,704Ashland16, ,982 Reedsburg32, ,842Maple22,553-77,509 Darlington7,062-72,371Rice Lake34, ,998 Sheboygan- $ 1,337, ,008Superior- $ 1,296, ,876 Green Bay- $ 1,140,364- 1,803,875Phillips14,633-35,899 DePere45, ,925Rosholt7,763-40,766 Mishicot11,614-61,373Medford18, ,891 Wrightstown12, ,413Mosinee23, ,917 Two Rivers15, ,326Elmbrook.00-37,046 Reedsville9,217-51,371Mequon.00-16,960 Adams-Friendship33,958-62,967Wisconsin Dells602,268-8,512 Auburndale6,626-80,453Gibraltar.00 Marshfield48, ,373Green Lake.00 Stevens Point86, ,430Three Lakes72, Wisconsin Rapids57, ,153Sevastopol.00

: In 1976, the WI State Supreme Court in Buse v. Smith, determined that: 1.The state has the power to levy a statewide property tax (as it did from 1885 to The Court also concluded that, due to the uniformity clause in the constitution, a locally derived tax may only be spent for local taxing jurisdiction purposes. At that time, negative aid tax was determined to be unconstitutional because it mandated a local tax that was not used for local public purposes. How is this different from the current reduction of local school aid (resulting in either increased local property taxes or reduced local services) to support Independent Charter Schools in Milwaukee and Racine and beyond? What about the uniformity clause of our State Constitution?

: In 2000, the WI State Supreme Court established an educational standard which provides that: 1. “Wisconsin students have a fundamental right to an equal opportunity to a sound basic education... that will equip students for their roles as citizens and enable them to succeed economically and personally.” 2. The Court also required that “... districts with disproportionate numbers of disabled students, economically disadvantaged students, and students with limited English language skills...” be taken into consideration. The effect of this decision is to demand that the legislature revise our school finance system to assure that every child has an equal educational opportunity.

Categorical Aids Fluctuates with periodic reductions At slightly above level = $650,900, = $644,200, = $653,800, = $608,500, = $653,875, – 14 = $612,022,500 Proposed Budget

Categorical Aid Many categorical aids are intended to recognize the need for additional resources for these populations in and (Budget): Aid Program Change Special Education$ 368.9M.00 SAGE109.1M.00 Sparsity13.4M.00 High Poverty16.8M.00 Bi-lingual/Bi-cultural8.5M.00

State Reimbursement Rates Categorical Aid Actual Estimate Special Education, SpEd Transp, Psych/SW, Room & Board 35.79%33.66%31.87%30.45%29.95%28.84%28.70%28.82%28.67%27.85%28.08%26.00% Hospital100% % Bilingual/ Bicultural 17.95%16.50%12.80%12.74%11.41%11.49%11.59%11.26%10.79%9.68% Sparsity Aid 45.0%23.0%94.0%80.29% Source:

Special Needs Vouchers Provides a scholarship for a child with disabilities to attend a participating public, private, or charter school Scholarship calculation includes state average property tax levy per pupil and the state average special education aid per pupil or the school of attendance cost. $6,946,000 in and $13,903,500 in Source: LFB Summary of Governor’s Budget Recommendations March, 2013

Statewide Special Needs Vouchers Private Schools Students are not guaranteed services, and Families surrender their legal recourses under IDEA. Public Schools 119,262 (13.7% ) of all Wisconsin students receive special education services State reimbursement has dropped from 44% to 26% in the past two decades. Special Ed vouchers are funded by a deduction in general aid State Budget Proposal *Note: this budget provides no new special education categorical aid for public schools. Source: DPI

The proposed budget calls for freezing the revenue of public schools while simultaneously increasing revenue to “for profit” enterprises.

Change in Revenue Limit Over Time State Budget Proposal A historic decline in revenue limit over the last four years Source: DPI

Per-Pupil Revenue by School Type State Budget Proposal * For high school students An issue of fairness: No growth in public school spending Source: DPI

Closing Gaps the Wrong Way State Budget Proposal * High school students $3,781$1,975 Source: DPI

Funding Comparison Public Schools Independent Charters Voucher Schools Enrollment864,00010, ,500 students over school year 30, ,000 students over school year Revenue (How much schools can spend) Per-Pupil Increase$0/student+ $156/student+ $608/ K-8 student + $1,414/ 9-12 student State School Aid (How much the state pays) Net Increase$39 Million*$23 Million$73 Million Per-Pupil Increase$45/student$2,190/student$2,433/student Because the revenue limit is frozen, the increase in general school aids will reduce local property taxes (not increase student spending). There are no revenue limit restrictions for independent charter and voucher schools, so they can spend whatever is allocated. *Note: All $39 million will go to property tax relief. See DPI’s net state school aid increase calculation. Additionally, only some school districts will be eligible for the $64 million performance funding, which is included in the “net increase” state school aid number State Budget Proposal Source: DPI

WI citizens have historically made public education a top priority. The budget proposals do not reflect that strong Wisconsin tradition. In fact, one could conclude that the proposed budget actually erodes the concept of public education in favor of a move from public funding for public education to public funding of private education. The budget: Freezes revenue for public schools directly following two years of unprecedented cuts to public education funding. Significantly raises revenue for voucher and charter enterprises using taxpayer dollars to fund the increases. Does not result in the legislature providing for district schools, which shall be as nearly uniform as practicable

Freezing the revenue of public schools while simultaneously increasing revenue to “for profit” flies in the face of WI’s top priority of education for all students. Paves the way for national chartering businesses to open schools in WI and receive taxpayer dollars for tuition School aid to public education was cut by $800 million in the budget. The State has the resources to restore the aid to public school before enriching other programs. The expansion of vouchers is significant social re- engineering. As such, it should be debated in public by a standing committee of the legislature and then on the floor of the full legislature. The fate of vouchers should not be buried in the budget. Other Concerns: