The School Choice Skim

A large number of school districts appear to be swindling their local property tax payers, and using school choice as an excuse.

More than 100 school districts last year were able to avoid losing any money to the state’s new school choice law. In fact, 115 actually skimmed a profit by levying property taxes higher than what they lost. All the while, many districts were telling the public that school choice would spell doom for their bottom lines, with some even blaming their tax hikes on school choice.

It’s all thanks to an interpretation of the law’s language that’s hard to pin down.

Over at the MacIver Institute, I write:

A questionable interpretation about how much public school districts can raise local property taxes to cover their “losses” from the expansion of the school choice program allowed more than a hundred school districts to net a profit from the program, according to a Jan. 28 memo from the Legislative Fiscal bureau (LFB).

The 115 school districts that raised local property taxes more than the amount they lost to choice schools levied taxes by a total of $19.8 million statewide. According to the memo, requested by Rep. Jeremy Thiesfeldt (R-Fond du Lac), this $19.8 million levy is $3.7 million more than the districts lost in state aid.

I continue:

In the 2015-2016 school year, 142 public school districts were impacted by students choosing to use the Racine or statewide school choice program. Of those 142 districts, 115 raised taxes beyond what they lost to school choice. Of those that raised taxes, 106 districts levied the maximum amount allowed under the revenue limit exemption, the memo states.

The Racine Unified School District (RUSD), one of the 106 to levy the maximum amount, raised local property taxes the most. The Racine school board chose to raise taxes by $5,580,980 in 2015, while its state aid was reduced by only $4,164,500, according to the memo. That netted the district $1,416,480 more than it lost in state aid, by far the most of any district.

The school funding formula is such a mess that few understand it. Suffice to say that some experts believe the law doesn’t allow districts to raise taxes at all. In fact, according to the Legislative Fiscal Bureau’s budget summary, school districts “could not levy to backfill the aid reduction.” Seems like pretty plain language in what’s otherwise a morass of legalese.

Others contend the intent of the law was to allow districts to raise local tax levies by just what they lost, which is tied to the amount of the private school voucher – smaller than state aid that’s provided on a per-student basis.

One thing is certain: this story isn’t going away any time soon.

About the writer: Chris Rochester has worked in communications and finance for a state Senate and congressional campaign, consulted on numerous Assembly and local races, and has held leadership roles in his local Republican Party. He's communications director for the MacIver Institute. Commentary here is strictly his own.