who gains, who loses? the fiscal impact of the Milwaukee Parental Choice Program.(research)(Report)

Do school vouchers save the taxpayer money, or do they add to taxpayer burdens? Which groups of taxpayers are most affected, and do they gain or lose? What is the financial impact on public school districts? Usually, these questions are debated in the abstract. Now it is possible to get more concrete answers from the nation's longest-running school voucher initiative, the Milwaukee Parental Choice Program (MPCP) in Wisconsin.

The fiscal impact of that program has been a matter of dispute. According to school choice supporters, such as Marquette University professor and former Milwaukee Public Schools (MPS) superintendent Howard Fuller, MPCP saves the taxpayers considerable cash, as the voucher is smaller than per-pupil spending by MPS. But Wisconsin state senator Russ Decker, a leading opponent of vouchers, has argued that the program gives money to children who would attend private schools anyway and declared, "You've got a lot of additional money going into the choice program that we could better use funding public education statewide." Wisconsin's Legislative Fiscal Bureau, which conducts budget-related analyses for state legislators, has provided fodder to both sides of the Milvaukee voucher debate with periodic estimates of the financial impact of eliminating the program based on a wide range of assumptions regarding changes in public school enrollments.

The dollar amounts in question have become significant, as the voucher program continues to grow. MPCP started in fiscal year 1991 as a small initiative, capped at 1 percent of MPS enrollment, with a few hundred students from low-income families who chose to attend secular private schools. (In the remainder of this paper, "fiscal year" shall be generally understood.) Starting in 1999, the state expanded the program to religious schools and lifted the cap to 15 percent of MPS enrollment (about 15,000 students). In 2007 the cap was raised to 22,500. With these changes in the legal framework, enrollments have grown steadily to about 18,500 students in 2008 (see Figure 1).

[FIGURE 1 OMITTED]

The way in which the legislature funds the program has also changed in important ways over the years. Fiscal impacts have varied over time as a result of those decisions. At the same time, features that were adopted when the program was small outlived their rationale as the program grew, and the vestiges that persisted have caused notable distortions.

What has been the net fiscal impact of MPCP? Who has benefited and who has taken a hit as the program has grown? How has MPCP affected taxpayers statewide? Milwaukee taxpayers? In this analysis, I show that under most plausible scenarios the program has saved taxpayers money annually since 2000, with estimated savings reaching $31.9 million in 2008. The beneficiaries have been Wisconsin state taxpayers and property taxpayers outside of Milwaukee. Property taxpayers in Milwaukee, however, have seen their taxes go up, the result of legislative decisions on the MPCP funding formula made in the program's earliest days.

Designing a Voucher Program