I was having a conversation Friday about school choice in Wisconsin and someone asked me a great question: Why are vouchers in Wisconsin funded the way they are?  So often I (and others interested in school finance) get caught up in explanations of the funding flaw, discussions of what happens when students move around, the effect of school choice on public schools, and other specifics that the question of why the system looks like it does is ignored.  Understanding the broad picture is important because, as many have pointed out recently, the Milwaukee Parental Choice Program currently enrolls more students than all but 3 Wisconsin school districts.  How it is funded matters to policy makers across the state.

To answer my own question, in general funding for vouchers in Wisconsin looks like it does because of a mixture of practical necessity, political reality, and recent history.

First, how are vouchers funded?  In Milwaukee, schools receive the lesser of a school’s actual per-pupil cost or $6,442 per-child.  The $143.8 million dollars in program funding in 2011-2012 came from several sources:

• 55% came from state General Purpose Revenue (GPR).  GPR is the pot of money the state uses to fund just about everything, including school aids.

• 34.4% came from a reduction to MPS school aids, which MPS replaced with taxpayer funding raised outside of revenue limits.  So in reality, 34.4% came from Milwaukee property taxpayers.

• 6.6% came from a payment from DPI to the City of Milwaukee used to offset a portion of the local choice levy.  The actual money came from general school aids.

• 4.0% came in the form of poverty aid specifically earmarked to offset a portion of the local choice levy.  The actual money came from state GPR.

Now the more relevant question, why is choice funding set up like this?  Several specific reasons:

• Choice funding is patterned conceptually off of public school funding.  Just like the funding of traditional school districts, local property taxpayers and the state share the total cost of the program.  Because the MPCP has no taxing authority, the Milwaukee Public Schools (MPS) levy is used to raise the local funds for choice.  This is a practical necessity.

• Choice funding is designed not to reduce revenue to MPS (unless students leave MPS).  That is why MPS is empowered to offset the school aid reduction that pays for part of the MPCP.  This too is a practical necessity.

• Choice funding is designed to minimize the impact on school districts outside of Milwaukee.  This is, I’d argue, largely a political decision.  In the past the funding mechanism for choice and independent charter schools has been a factor in campaigns across the state.  The funding mechanism for choice now prevents the political argument that a political candidate is taking funding from local public schools to fund private schools in Milwaukee.

• Historically the program was supported by some legislators only as long as it saved public money.  Hence the per-pupil payment remains well behind public school funding.  Payments were also cut several years ago, I’d argue for strictly political reasons, by school voucher opponents.

• More recent changes in choice funding are due to piecemeal efforts to lower the voucher property tax burden for in Milwaukee. Both the poverty aid and payment to the City of Milwaukee provisions were designed to offset the MPS tax levy.  Both were done to address the original funding flaw, then described as the discrepancy between the per-pupil local taxpayer contributions to the MPCP and MPS.

The full history of choice funding in Milwaukee contains many more twist and turns; if interested I recommend reading in the Legislative Fiscal Bureau’s information paper on school choice.  But hopefully, this little post will give the reader a basic idea of why voucher funding works how it does.