who gains, who loses? the fiscal impact of the Milwaukee Parental Choice Program.

who gains, who loses? the fiscal impact of the Milwaukee Parental Choice Program. Do school vouchers school vouchers,government grants aimed at improving education for the children of low-income families by providing school tuition that can be used at public or private schools. save the taxpayer money, or do they add totaxpayer burdens? Which groups of taxpayers are most affected, and dothey gain or lose? What is the financial impact on public schooldistricts? Usually, these questions are debated in the abstract. Now itis possible to get more concrete answers from the nation'slongest-running school voucher A school voucher, also called an education voucher, is a certificate by which parents are given the ability to pay for the education of their children at a school of their choice, rather than the public school (UK state school) to which they were assigned. initiative, the Milwaukee Milwaukee(mĭlwŏk`ē), city (1990 pop. 628,088), seat of Milwaukee co., SE Wis., at the point where the Milwaukee, Menominee, and Kinnickinnic rivers enter Lake Michigan; inc. 1846. Parental ChoiceProgram (MPCP MPCP Multi-Point Control ProtocolMPCP Miami Project to Cure ParalysisMPCP Master Persona Control Program (Shadowrun)MPCP Maryland Primary Care Physicians LLC (Millersville, MD)) in Wisconsin Wisconsin, state, United StatesWisconsin(wĭskŏn`sən, –sĭn), upper midwestern state of the United States. It is bounded by Lake Superior and the Upper Peninsula of Michigan, from which it is divided by the Menominee . The fiscal impact of that program has been a matter of dispute.According to according toprep.1. As stated or indicated by; on the authority of: according to historians.2. In keeping with: according to instructions.3. school choice supporters, such as Marquette University Marquette Universityat Milwaukee, Wis.; Jesuit; coeducational; chartered 1864, opened 1881. The school achieved university status in 1907. Among its graduate programs are those in business, engineering, and law. professor and former Milwaukee Public Schools Milwaukee Public Schools (MPS) is the largest school district in the state of Wisconsin. As of 2006, it has an enrollment of 97,762 students and employees 6,100 full-time and substitute teachers in 223 schools. (MPS) superintendentHoward Howard,English noble family. Landowners in Norfolk from the 13th cent., the Howards obtained the duchy of Norfolk through the marriage of Sir Robert Howard to Margaret Mowbray, daughter of Thomas Mowbray, 1st duke of Norfolk. Fuller, MPCP saves the taxpayers considerable cash, as thevoucher A receipt or release which provides evidence of payment or other discharge of a debt, often for purposes of reimbursement, or attests to the accuracy of the accounts. is smaller than per-pupil spending by MPS. But Wisconsin statesenator Noun 1. state senator - a member of a state senatesenator - a member of a senate Russ n. sing. & 1. A Russian, or the Russians.2. The language of the Russians.a. 1. Of or pertaining to the Russians. Decker, a leading opponent of vouchers, has argued that theprogram gives money to children who would attend private schools anywayand declared, "You've you've?Contraction of you have.you'veyou haveyou'vehave got a lot of additional money going intothe choice program that we could better use funding public educationstatewide." Wisconsin's Legislative Fiscal Bureau, whichconducts budget-related analyses for state legislators, has providedfodder fodderfeed for herbivorous animals, usually used to describe dried leafy material such as hay. See also forage.fodder beeta root crop grown solely as a source of feed for cattle, possibly sheep. to both sides of the Milvaukee voucher debate with periodicestimates of the financial impact of eliminating the program based on awide range of assumptions regarding changes in public schoolenrollments. The dollar amounts in question have become significant, as thevoucher program continues to grow. MPCP started in fiscal year 1991 as asmall initiative, capped at 1 percent of MPS enrollment, with a fewhundred students from low-income low-in��comeadj.Of or relating to individuals or households supported by an income that is below average. families who chose to attend secularprivate schools. (In the remainder of this paper, "fiscalyear" shall be generally understood.) Starting in 1999, the stateexpanded the program to religious schools and lifted the cap to 15percent of MPS enrollment (about 15,000 students). In 2007 the cap wasraised to 22,500. With these changes in the legal framework, enrollmentshave 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 changedin important ways over the years. Fiscal impacts have varied over timeas a result of those decisions. At the same time, features that wereadopted when the program was small outlived their rationale rationale (rash´nal´),n the fundamental reasons used as the basis for a decision or action. as theprogram grew, and the vestiges that persisted have caused notabledistortions. What has been the net fiscal impact of MPCP? Who has benefited andwho has taken a hit as the program has grown? How has MPCP affectedtaxpayers statewide? Milwaukee taxpayers? In this analysis, I show thatunder most plausible scenarios the program has saved taxpayers moneyannually since 2000, with estimated savings reaching $31.9 million in2008. The beneficiaries have been Wisconsin state taxpayers and propertytaxpayers outside of Milwaukee. Property taxpayers in Milwaukee,however, have seen their taxes go up, the result of legislativedecisions on the MPCP funding formula made in the program'searliest days. Designing a Voucher Program It is important to recognize that any fiscal impact of MPCP onschool districts and taxpayers is not inherent in the concept of avoucher, but the result of specific characteristics of the situation inWisconsin. As a benchmark case, consider a hypothetical Hypothetical is an adjective, meaning of or pertaining to a hypothesis. See: Hypothesis HypotheticalHypothetical (album) voucher programthat has no net impact on taxpayers or on per-pupil district revenues.First, suppose all voucher students would otherwise have gone to apublic school. Second, suppose the amount of the voucher is identical tothe revenues per pupil at the district school. The diversion A turning aside or altering of the natural course or route of a thing. The term is chiefly applied to the unauthorized change or alteration of a water course to the prejudice of a lower riparian, or to the unauthorized use of funds. of voucherfunds from the district to the voucher school would leave per-pupilrevenues unchanged and would also have no net impact on taxpayers. Themoney simply follows the child in the same way that state monies followchildren when they move from one school district to another that hasequal per-pupil revenues. In one important respect, today's MPCP matches thehypothetical program. Although this was not initially the case, since2000 the formulas that determine state and local revenues for MPS havenot counted voucher students. Because the revenues MPS is allowed tospend are calculated on a per-pupil basis, the loss of a voucher studentleaves MPS per-pupil revenues unaffected, as is the case when a studentleaves for another district. The impact on the public purse PURSE. In Turkey the sum of five hundred dollars is called a purse. Merch. Dict. h.t. is a different matter. The amount ofthe voucher is less than the per-pupil revenues allocated to MPS, whichimplies a savings for taxpayers, just as voucher supporters claim. Offsetting such savings, however, are the voucher expenses forthose eligible students who, in the absence of the program, would stillhave attended a private school. Those families would have saved thetaxpayer money by paying their own education bill, but as they areeligible for a voucher, they can attend the private school at publicexpense instead. The taxpayer bears the cost that the low-income familywould otherwise have borne. One might well argue that this is a worthyuse of taxpayer funds, but in the narrow context of determining theprogram's fiscal effects, it counts as a negative impact. The net impact on taxpayers, then, is 1) the savings that come fromthe difference between the voucher and the per-pupil revenue at districtschools, for those who would have attended them in the absence of thevoucher program, minus 2) the voucher costs for students who would haveattended private schools anyway. Let's let's?Contraction of let us. consider the latter factorfirst. Estimating Private School Use According to a federal survey, about 5 percent of low-incomefamilies send their children to private school, less than half the 12percent rate for all families. That figure may underestimate what we arelooking for Looking forIn the context of general equities, this describing a buy interest in which a dealer is asked to offer stock, often involving a capital commitment. Antithesis of in touch with. , which is the percentage of low-income voucher users whowould have attended private schools without them. One can derive abetter estimate from recent research conducted on other urban voucherprograms that serve low-income families. Those studies have collectedinformation on private school usage by voucher-seeking families, boththose who were awarded vouchers (by lottery lottery,scheme for distributing prizes by lot or other method of chance selection to persons who have paid for the opportunity to win. The term is not applicable when lots are drawn without payment by the interested parties to determine some matter, e.g. ) and those who were not.Only a few thousand such students have been studied, so estimates arenot from as large a sample as one would like, and the cities in thesestudies may differ from Milwaukee in some respects, but the data provideas direct an estimate as can be obtained. A midrange midrangeEpidemiology The halfway point or midpoint in a set of observations; for most data, MR is calculated as the sum of the smallest observation and the largest observation, divided by 2; for age data, one is added to the numerator; a midrange is usually estimate derivedfrom this literature is that about 10 percent of voucher-using studentsfrom low-income families in big cities would have attended privateschools anyway (the percentage is higher for one-year adj. 1. completing its life cycle within a year.Adj. 1. one-year - completing its life cycle within a year; "a border of annual flowering plants"annualphytology, botany - the branch of biology that studies plants attendance andlower for more sustained attendance). This 10 percent estimate can be checked for consistency with trendsin private school enrollment before the voucher program began inMilwaukee. 1 have examined long-term Long-termThree or more years. In the context of accounting, more than 1 year.long-term1. Of or relating to a gain or loss in the value of a security that has been held over a specific length of time. Compare short-term. trends for private schoolenrollment using two data sets. University of Wisconsin professor JohnWitte Witte is a surname and may refer to: Alfred Witte (1878-1941), German astrologer Edwin E. Witte (1887-1960), "father of social security" Emanuel de Witte (1617–1691), Dutch perspective painter reports on Milwaukee private school enrollments from 1960 to 1997,while the Wisconsin Department of Public Instruction (DPI (Dots Per Inch) The measurement of the resolution of display and printing systems. A typical CRT screen provides 96 dpi, which provides 9,216 dots per square inch (96x96). Flat panel displays from 110 to 200 dpi have also been developed. ) providesenrollment figures for Milwaukee's private schools from 1993 to2008. These data show a drop of more than 25,000 in private schoolenrollment from the mid- mid-pref.Middle: midbrain.1960s to the beginning of MPCP (interrupted in��ter��rupt?v. in��ter��rupt��ed, in��ter��rupt��ing, in��ter��ruptsv.tr.1. To break the continuity or uniformity of: Rain interrupted our baseball game.2. by atemporary rise from 1977 to 1984). The Catholic schools wereparticularly hard hit, having served an ethnic population that wasmigrating to the suburbs throughout these decades. I have spliced the two data sets together for the period since MPCPbegan and examined the trends that would have obtained without theprogram, under varying assumptions about the percentage of voucherstudents that would have attended private schools anyway. I find thatunder the 10 percent estimate drawn from the lottery literature, theresulting private enrollments are consistent with prior trends. When itis assumed that 30 percent of voucher-using families would have chosenprivate schools, the resulting enrollments imply a noticeable slowdown For articles with similar titles, see Slow Down (disambiguation).A slowdown is an industrial action in which employees perform their duties but seek to reduce productivity or efficiency in their performance of these duties. of the long-term downward trends, a result that seems possible, but notat all compelling. If the rate were assumed to be 50 percent or more,long-term downward trends would have been reversed, which does not seemcredible. To summarize sum��ma��rize?intr. & tr.v. sum��ma��rized, sum��ma��riz��ing, sum��ma��riz��esTo make a summary or make a summary of.sum , data from voucher experiments in other citiesindicate that about 10 percent of low-income voucher users would haveattended private school anyway. This estimate is consistent withlong-term downward trends in Milwaukee private enrollments, while ratesof 30 percent or higher are not consistent with those trends. I provideestimates below of the fiscal impact of MPCP under assumptions rangingup to 30 percent, but 10 percent is probably closer to the correctfigure. Measuring the Gap The other factor needed to calculate MPCP's net fiscal impactis the gap between the voucher and MPS per-pupil revenues. The specificconcept I use for MPS is the "revenue limit," set by Wisconsinstatute, which places a maximum on each district's combinedrevenues from local property taxes and state formula aid. Althoughdistricts are not required to raise local levies up to the amountallowed by the revenue limit, in practice, that is what happens:statewide, approximately 99.8 percent of revenue limit capacity is usedand, in most recent years, Milwaukee has used 100 percent. The revenuelimit does not cover federal revenues, but this can be ignored whenestimating the impact of MPCP on state and local taxpayers. Nor does itinclude categorical That which is unqualified or unconditional.A categorical imperative is a rule, command, or moral obligation that is absolutely and universally binding.Categorical is also used to describe programs limited to or designed for certain classes of people. state aid, primarily for special education andlow-income students, which constitutes about 6 percent of revenues fromstate aid and property taxes in Wisconsin, and 9 percent in Milwaukee.This means my analysis will underestimate the savings from voucherstudents, since some of them would draw on categorical state aid werethey in MPS. Figure 2 depicts the per-pupil revenue limit for MPS, which rosefrom $5,804 in 1994 (the year Wisconsin established revenue limits) to$9,141 in 2008. The graph also depicts the increase in the maximum MPCPvoucher, from $2,446 in 1991 to $6,501 in both 2007 and 2008. (Theaverage voucher is slightly less than the maximum. Since average voucherdata are only available with a lag, I use the maximum voucher in thisanalysis, which slightly underestimates the savings from MPCP.) The gapbetween the MPS revenue limit and the MPCP maximum voucher size wasgenerally around $2,000 from 1997 to 2003, but drifted up to $2,332 in2007 and $2,640 in 2008. [FIGURE 2 OMITTED] Net Fiscal Impact MPCP's impact on taxpayers can be readily calculated from thegap between the voucher and per-pupil MPS revenues, under any givenassumption regarding the percentage of voucher users who would haveotherwise attended private school. Table 1 presents these calculationsfor 2008, with each row representing a different assumption, from 0 to30 percent. My preferred estimate, as explained above, is 10 percent,indicated by the bold figures, and the other rows show how the resultsvary depending on the assumption one makes about private school usage inthe absence of vouchers.The Bottom Line (Table 1)Net Impact of MPCP on Public Funds, FY08 ($ millions)Assumed percentage Expenditure on of MPCP students Savings on voucher users who would have voucher users who would attended private who would have have attended Net savingsschool even if no attended MPS private school (3) = (1) - (2) voucher program (1) (2) 0 $48.8 $0.0 $48.8 10 $44.0 $12.0 $31.9 20 $39.1 $24.1 $15.0 30 $34.2 $36.1 ($1.9)Note: The calculations are based on 18,500 MPCP enrollees, a voucheramount of $6,501, and Milwaukee Public Schools (MPS) revenue per pupilof $9,141.SOURCE: Author's calculations The calculations are based on 18,500 enrollees in MPCP, a voucheramount of $6,501, and MPS revenue limit per pupil of $9,141. Considerthe results under the 10 percent assumption, shown in the second row.Column 1 shows the savings on voucher users who would have attended MPS.At the 10 percent rate, there are 16,650 such students (0.90 x 18,500),each of whom saves $2,640 in public funds See Fund, 3.See also: Public ($9,141 -$6,501), for a totalof $44 million. Column 2 shows the expenditure on voucher users whowould have attended private schools anyway. At the 10 percent rate,1,850 such students each receives $6,501, for a total of $12 million.Column 3 shows the net savings, the difference between columns 1 and 2,which is $31.9 million. As the other rows show, the result is somewhat sensitive to theassumed percentage, but for most of the relevant range the net savingsamount is positive. It does not turn negative unless one assumes closeto 30 percent of MPCP's low-income voucher users would haveattended private schools, an assumption that seems unrealistically high. Figure 3 depicts the net fiscal benefit from MPCP from 1994 to2008, assuming that 10 percent of voucher users would have attendedprivate schools. The net benefit was only about $2 million per yearprior to the program's expansion in 1999. Since then, as MPCPenrollments have grown and as the gap has widened between the voucherand MPS revenues per pupil, the benefit has grown from $7.3 million to$31.9 million in 2008. The remainder of my analysis addresses thequestions of which taxpayers benefited, how the distribution of benefitshas evolved over the life of the program, and why. [FIGURE 3 OMITTED] Wisconsin School-Funding Formulas To understand the distribution of MPCP's fiscal impact, oneneeds first to learn about Wisconsin's regular school-fundingformulas. There are two interlocked formulas: revenue limits andequalization In communications, techniques used to reduce distortion and compensate for signal loss (attenuation) over long distances. aid. The revenue limit formula, underlying Figure 2, takeseach district's per-pupil revenues from the prior year and tacks ona legislatively determined annual increment To add a number to another number. Incrementing a counter means adding 1 to its current value. . The total revenue eachdistrict is allowed to raise from property taxes and general state aidis simply that per-pupil amount, multiplied mul��ti��ply?1?v. mul��ti��plied, mul��ti��ply��ing, mul��ti��pliesv.tr.1. To increase the amount, number, or degree of.2. Mathematics To perform multiplication on. by enrollment (smoothed bythree-year averaging). The equalization aid formula determines the split of eachdistrict's total revenue between state aid and local propertytaxes, with differences across districts based primarily on per-pupilproperty values. Taken as a whole, Wisconsin state aid has generallycomprised two-thirds of the school revenues statewide, leaving one-thirdto be raised from property taxes, an arrangement that was once codified cod��i��fy?tr.v. cod��i��fied, cod��i��fy��ing, cod��i��fies1. To reduce to a code: codify laws.2. To arrange or systematize. in state law and more recently persists by political custom. Together, the two formulas determine the distribution of any costsavings that result from enrollment shifts. Suppose, for example, anumber of students leave Milwaukee for a lower-spending rural district.Total revenues fall for MPS and rise for the rural district, but by alesser amount, for a net saving of public funds. Two-thirds of thesavings accrue To increase; to augment; to come to by way of increase; to be added as an increase, profit, or damage. Acquired; falling due; made or executed; matured; occurred; received; vested; was created; was incurred. to state taxpayers. The other third accrues to localproperty taxpayers across the state. This property tax relief isdistributed across the state in approximate proportion to local propertyvalues. Specifically, Milwaukee property taxpayers would receive about 6percent of the statewide property tax relief, since that isMilwaukee's approximate share of statewide property values. In principle, the funding for the voucher program could beintegrated into the regular funding system a system or scheme of finance or revenue by which provision is made for paying the interest or principal of a public debt.See also: Funding . There is, after all, noinherent fiscal difference between students leaving MPS with lower-costvouchers and students leaving for lower-cost districts. As public fundsare freed up by voucher-using students, the net savings could bedistributed among state taxpayers and property taxpayers across thestate through these formulas. As we shall see, however, a ratherdifferent funding mechanism was adopted for MPCP. Before 2000 In the earliest days of MPCP, when the program was very small, thefunding formula had three key features. First, voucher students werecounted as part of MPS enrollments for the purposes of calculatingrevenue limits and equalization aid. Second, the voucher expenses werededucted de��duct?v. de��duct��ed, de��duct��ing, de��ductsv.tr.1. To take away (a quantity) from another; subtract.2. To derive by deduction; deduce.v.intr. from MPS's equalization aid. Finally, Milwaukee was giventhe option of raising its property taxes beyond that allowed by theordinary revenue limit, to make up for the voucher expenses deductedfrom its state aid. This was not an unreasonable system, for both economic andpolitical reasons, in the earliest days of the program. For one thing,it effectively insulated in��su��late?tr.v. in��su��lat��ed, in��su��lat��ing, in��su��lates1. To cause to be in a detached or isolated position. See Synonyms at isolate.2. the state budget and property taxes outside ofMilwaukee from the program. In addition, the nature of the impact wasleft up to Milwaukee: it could choose to let the voucher money followthe child, accepting a net reduction in total (but not per-pupil) MPSrevenues. Or, it could choose to maintain total MPS revenues, by payingfor the vouchers out of higher property taxes. Milwaukee chose the latter option, for reasons that are perhapsunderstandable. It might be argued, for example, that the decline in MPSenrollment was too small to affect certain indivisible INDIVISIBLE. That which cannot be separated. 2. It is important to ascertain when a consideration or a contract, is or is not indivisible. When a consideration is entire and indivisible, and it is against law, the contract is void in toto. 11 Verm. 592; 2 W. costs, such asthe number of teachers or buildings that comprise the lion's shareof the district's budget. In this view, it would be justified tomaintain total revenues, despite falling enrollments, for a higherrevenue per pupil. In any case, the initial magnitudes were not huge:the impact on Milwaukee property taxes was no more than $2.5 million by1995 and $7 million by 1998. This impact is depicted de��pict?tr.v. de��pict��ed, de��pict��ing, de��picts1. To represent in a picture or sculpture.2. To represent in words; describe. See Synonyms at represent. in Figure 4 by thedark bars in the negative region. The dotted bars in the positive regionfor this period represent the impact on MPS of the rise in per-pupilrevenues. [FIGURE 4 OMITTED] With the program's expansion to religious schools in1999--MPCP enrollment nearly quadrupled that year--the impact onMilwaukee property taxes jumped to $28.3 million, as shown in Figure 4.The fixed-cost rationale for maintaining MPS total revenues became moretenuous tenuousIntensive care adjectiveReferring to a 'touch-and-go,' uncertain, or otherwise 'iffy' clinical situation , as MPCP enrollments approached 6,000, larger than 95 percent ofall school districts in Wisconsin This is a complete listing of school districts in the state of Wisconsin. Alphabetical listingAAbbotsford School District Adams-Friendship Area School District Albany School District Algoma School District . But MPS chose to maintain totalrevenues, collecting $39.5 million more than would have been needed tomaintain the per-pupil amount. The program had clearly outgrown itsinitial fiscal formula. Reform Incomplete Starting in 2000, voucher students were no longer included in thecalculation of MPS revenue limits or equalization aid. This was a majorreform. As a result, MPS was no longer able to maintain total revenuesas it lost MPCP students, but could still maintain per-pupil revenues.Consequently, the dotted bars in Figure 4 disappear starting in 2000.The savings from MPCP were now fully available for taxpayer relief. But the reforms were not complete. Logically, as the revenue limitof MPS fell with the departure of MPCP students, money that was freed upin the state's general fund could have directly funded thevouchers. Funding would have followed the child, much as it does betweenschool districts under the regular funding formulas. Instead, the funding formula continued to deduct de��duct?v. de��duct��ed, de��duct��ing, de��ductsv.tr.1. To take away (a quantity) from another; subtract.2. To derive by deduction; deduce.v.intr. voucher expensesfrom MPS equalization aid, although the deduction deduction,in logic, form of inference such that the conclusion must be true if the premises are true. For example, if we know that all men have two legs and that John is a man, it is then logical to deduce that John has two legs. was cut in half.Specifically, starting in 2000, half the voucher deduction was movedfrom the equalization aid of MPS to the other districts of the state.Later, the draw on other districts' aid was eliminated, replaced bya direct draw on the general fund, and the aid deduction for MPS wasreduced from 50 to 45 percent of voucher expenses. The key point here isthat MPS still loses state aid to cover almost half the voucherexpenses, even though MPS no longer receives any aid for MPCP students.This means MPS stands to lose revenues on a per-pupil basis. To avoid this result, Milwaukee is still allowed to offset the MPCPdeduction by raising property taxes--and it has chosen to do so. Theresulting impact on Milwaukee property taxes can be seen in the darkbars in Figure 4. Starting in 2000, the impact is approximately halved halve?tr.v. halved, halv��ing, halves1. To divide (something) into two equal portions or parts.2. To lessen or reduce by half: halved the recipe to serve two.3. from what the previous system implied, but the rationale for any adverseimpact is gone. These higher property taxes no longer pay for the optionof maintaining total revenues as enrollments decline; instead, they arenecessary to maintain per-pupil revenues. This means the entire net benefits of the MPCP program (and more)now accrue to state taxpayers and property taxpayers outside ofMilwaukee, as depicted in the striped striped?adj.Having lines or bands of different color or texture.Adj. 1. striped - marked or decorated with stripesstripypatterned - having patterns (especially colorful patterns) and light bars in Figure 4. Fiscal Impact 2008 To understand the mechanics reflected in Figure 4, consider thedata for 2008. Milwaukee property taxes were raised to defray de��fray?tr.v. de��frayed, de��fray��ing, de��fraysTo undertake the payment of (costs or expenses); pay.[French d��frayer, from Old French desfrayer : des-, voucherexpenses totaling $54.1 million (0.45 x $6,501 for each of 18,500 MPCPstudents). This was slightly offset by Milwaukee's $3.1 millionshare of statewide property tax relief (discussed below), but stillreached $51 million. Faced with the growing impact, the governor and thecity of Milwaukee pressed for reform. The legislature responded with anad hoc For this purpose. Meaning "to this" in Latin, it refers to dealing with special situations as they occur rather than functions that are repeated on a regular basis. See ad hoc query and ad hoc mode. measure, "high poverty aid," to reduce school propertytaxes, primarily in Milwaukee. This amounted to $7.4 million in 2008, sothe adverse impact on Milwaukee property taxpayers was reduced from $51million to $43.6 million. Meanwhile, the rest of the state continued to benefit from MPCP.Because the 18,500 voucher users do not count in MPS revenue limits,$9,141 each was saved for the 90 percent of voucher students we assumewould have attended MPS, a total of $152.2 million. Of that, one-third,or $50.7 million, went to statewide property tax relief.Milwaukee's share was approximately $3.1 million (proportional proportionalvalues expressed as a proportion of the total number of values in a series.proportional dwarfthe patient is a miniature without disproportionate reductions or enlargements of body parts. totheir share of statewide property values), leaving $47.6 million as thenet benefit to property taxpayers outside of Milwaukee, depicted by thelight bar in Figure 4. The state's general fund gained the other two-thirds of the$152.2 million saved from MPS revenue limits, or $101.5 million.However, the general fund paid 55 percent of the voucher expenses,totaling $66.1 million (0.55 x $6,501 for each of 18,500 MPCP students).In addition, for 2008, the ad hoc property tax relief for Milwaukee cost$7.4 million. So the net benefit to state taxpayers was $101.5 millionminus $66.1 million minus $7.4 million, which equals $27.9 million,depicted by the striped bar in Figure 4. Drawing these all together, we have $27.9 million (state benefit)plus $47.6 million (non-Milwaukee property tax relief) minus $43.6million (adverse impact on Milwaukee), which equals a $31.9 million netimpact. This is the figure shown in Table 1. This net savings of $31.9million from MPCP accrued ac��crue?v. ac��crued, ac��cru��ing, ac��cruesv.intr.1. To come to one as a gain, addition, or increment: interest accruing in my savings account.2. entirely to the state's taxpayers andproperty taxpayers outside of Milwaukee, along with an additionalwindfall windfallAn unexpected profit or gain. An investor holding a stock that increases greatly in price because of an unexpected takeover offer receives a windfall. of $43.6 million, effectively paid by the property taxpayers ofMilwaukee. Conclusion The history of the MPCP illustrates how voucher programs canprovide significant taxpayer savings when students voluntarily choose toattend schools that draw less on public funds than the schools theywould otherwise attend. However, the same history also illustrates thatif the funding formulas are not carefully constructed--and reformed asgrowth requires--some groups of taxpayers may be adversely affected. The initial funding mechanism was designed for a small program, sothe district was allowed to maintain total expenditures as enrollmentsdipped, through modest increases in property taxes. As the program grew,the mechanism was modified to enable the district to maintain per-pupilrevenues, rather than total revenues. However, vestiges of the originalfunding mechanism meant that Milwaukee property taxes had to go up justto maintain per-pupil revenues. The underlying reason is that instead offunding the vouchers out of the savings to the state's generalfund, 45 percent of voucher expenditures are still deducted fromMilwaukee's state aid, even though their aid has not included fundsfor voucher students since 2000. So who gains? State taxpayers and property taxpayers outside ofMilwaukee. Who loses? Milwaukee property taxpayers. And why? We haveseen the mechanics of how this occurred, but ultimately, this is apolitical question. The policymakers of Milwaukee and Wisconsin haveknown for some time about MPCP's "funding flaw" (as it iscalled). It remains to be seen whether, as the program grows, this flawwill undermine it or instead lead legislators to complete the reformsthat would integrate MPCP with the regular funding formulas so thebenefits can be shared by all. Robert M. Costrell is professor of education reform and economicsat the University of Arkansas The University of Arkansas strives to be known as a "nationally competitive, student-centered research university serving Arkansas and the world." The school recently completed its "Campaign for the 21st Century," in which the university raised more than $1 billion for the school, used . The report from which this paper is drawnis part of the comprehensive evaluation of the Milwaukee Parental ChoiceProgram being conducted by the School Choice Demonstration Project atthe University of Arkansas.