Lifting voucher caps could cost property taxpayers more than $570M next year

Much of the debate in the Assembly Education Committee on Wednesday focused on a controversial proposal by Rep. Robert Wittke (R-Racine) and Sen. Alberta Darling (R-River Hills) to break up the Milwaukee Public Schools into four to eight separate school districts. 

But another measure, Assembly Bill 970, also introduced by Wittke, could have a greater impact on Wisconsin residents statewide.  AB-970 expands school voucher eligibility by eliminating income limits for all three of Wisconsin’s school voucher programs — the Milwaukee Parental Choice Program, Racine Parental Choice Program, and the statewide Wisconsin Parental Choice Program. The bill also lifts the cap on the number of pupils who may participate in the statewide program. 

An estimate of the bill’s fiscal impact prepared by the Wisconsin Department of Public Instruction (DPI) shows that the cost to local property tax payers could be as high as $577 million in 2022-23.

Racine property taxpayers and districts that send students to the statewide program would feel the greatest impact, as private school students suddenly became eligible for a taxpayer-financed tuition subsidy, with a potential property tax increase of $577.3 million next year.

The impact on Milwaukee property taxpayers would be less significant,  at $2.15 million. The state shoulders more of the costs of the Milwaukee voucher program than in the statewide and Racine programs.

When it started three decades ago in Milwaukee, the school voucher program was intended to serve low-income, minority students. But that has changed as the program grew and income caps were raised.

Currently, students from families with household incomes up to 300% of the federal poverty level ($79,500 for a family of four in 2020–21) can qualify for a private school voucher under the Racine Parental Choice Program. For the statewide program the threshold is 220% of poverty. And after the first year of enrollment, family income no longer matters. Continuing students and those who were on a participating private school’s waiting list in the prior year do not have to demonstrate income eligibility. 

Under AB-970, the family income criteria for eligibility would be eliminated altogether. Any family could receive a taxpayer-financed voucher to cover a child’s tuition at a participating private school, including those whose children were already enrolled in private school.

The Racine program has already expanded dramatically, rising from 250 students in 2012 to 4,000 this year.

Current law has set a steadily rising cap on the number of pupils from each school district who can enroll in a private school under the Racine and statewide voucher programs. The cap started at 1% of students per district in 2016-17 and has increased by a percentage point each year. In 2026-27 there will be no limit to the number of pupils who can receive a voucher through either the statewide or Racine programs.

To estimate the cost to property taxpayers of AB-970, DPI worked from the assumption that the total number of additional voucher pupils would be roughly equal to the number of non-voucher pupils currently enrolled in private schools. Some private schools might not elect to participate in the voucher program, however.

In Milwaukee, the state estimated that a projected 3,813 additional private school voucher students would cost the state $31 million and local property taxpayers $2.1 million under the bill next year.

In Racine and in the statewide program, a combined total of 67,868 new students in the estimate would have a fiscal impact of zero on the state, but would cost local property taxpayers $577.3 million.

Correction: an earlier version of this story stated that the property tax impact of $577.3 million would fall on Racine taxpayers — in fact that amount is the projected cost of both the Racine and the statewide program combined.