Impact of Expanded Private School Options Bambi Statz, PhD, Emeritus Professor, UW-Whitewater

1. 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

2. 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 115-121 WI Statutes)

3. SUBCHAPTER II GENERAL AID 121.01 Purpose. It is declared to be the policy of this state that education is a state functionand 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.

4. SUBCHAPTER II GENERAL AID 121.01 (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 • Taking away state support from public schools does just the opposite - It RAISES property taxes! • Providing public funds to private schools also RAISES property taxes

5. 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

6. 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 2012-13) 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

7. Choice Program Costs * 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. Includes increased participation and per pupil payments of $6,442 in 2013-14 and $7,050 (K-8) and $7,856 (9-12) in 2014-15

8. Independent Charters Milwaukee/Racine [chapter 118.40 (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 studentfor 7,600 students in 2012-13 • Sum sufficient appropriation of $ 59.8 millionfor 2012-13 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

9. 2012-13 State Aid Cuts Due to Existing Independent Charters

10. 2013-15 State Budget Proposal Expansion of Independent Charter Program • Increases the per pupil payment from $7,775 in 2012-13 to $7,852 in 2013-14 with an estimated 8,600 pupils participating and to $7,931 in 2014-15with 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 2014-15 at total cost of $3,965,500 • Funded through a statewide cut to general aids *Note: the general aid reduction percentage changes annually, depending on the number of students enrolled in independent charters and per pupil aid amounts.

11. 2013-15 State Budget Proposal 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 2013-14] • 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.

12. 2012-13 Local Aid Impact of Expanded Choice & Independent Charters (per LFB/DPI)

13. : • The state has the power to levy a statewide property tax (as it did from 1885 to 1933. • 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 1976, the WI State Supreme Court in Buse v. Smith, determined that:

14. : 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.

15. Categorical Aids • Fluctuates with periodic reductions • At slightly above 2008-09 level • 2008 - 09 = $650,900,000 • 2009 - 10 = $644,200,000 • 2010 - 11 = $653,800,000 • 2011 - 12 = $608,500,000 • 2012 - 13 = $653,875,400 • 2013 – 14 = $612,022,500 Proposed Budget

16. Categorical Aid Many categorical aids are intended to recognize the need for additional resources for these populations in 2012-13 and 2013-14 (Budget):

17. State Reimbursement Rates Source: http://dpi.wi.gov/sfs/speced.html

18. 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 2013-14 and $13,903,500 in 2014-15 Source: LFB Summary of Governor’s Budget Recommendations March, 2013

19. 2013-15 State Budget Proposal 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. *Note: this budget provides no new special education categorical aid for public schools. Source: DPI http://news.dpi.wi.gov/news_2013-15-state-budget-information

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

21. 2013-15 State Budget Proposal Change in Revenue Limit Over Time A historic decline in revenue limit over the last four years Source: DPI http://news.dpi.wi.gov/news_2013-15-state-budget-information

22. 2013-15 State Budget Proposal Per-Pupil Revenue by School Type An issue of fairness: No growth in public school spending * For high school students Source: DPI http://news.dpi.wi.gov/news_2013-15-state-budget-information

23. 2013-15 State Budget Proposal Closing Gaps the Wrong Way $3,781 $1,975 * High school students Source: DPI http://news.dpi.wi.gov/news_2013-15-state-budget-information

24. 2013-15 State Budget Proposal 2013-15 Funding Comparison 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. Source: DPI http://news.dpi.wi.gov/news_2013-15-state-budget-information

25. WI citizens have historically made public education a top priority. The 2013-2015 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 2013-2015 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

26. Other Concerns: • 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 2011-2013 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 2013-2015 budget.