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For Milwaukee Public Schools officials, envisioning a potential cut of more than $74 million in next school year's budget is troubling.

But picturing what that cut means alongside the potential expansion of a main district competitor - private schools that attract publicly funded Milwaukee students - adds another level of concern.

That's because at the same time the proposed state budget of Gov. Scott Walker slashes funding for public schools, it leaves unchanged the funding for the private voucher schools, lifts the cap on enrollment and phases out income restrictions. Walker's budget proposal also expands choice to private schools in the Milwaukee County suburbs and leaves per-pupil funding at 2010-'11 levels for independent public charter schools.

If cuts at MPS lead to school closings, layoffs, larger class sizes and the end of specialized programs, what's the draw for Milwaukee families to turn down public money to enroll in choice schools they perceive as better off?

"The incentives to leave MPS are huge," said Mayor Tom Barrett, who lost to Walker in the November election. "The legacy costs of the district spread out over a smaller pool of students and faculty could become a serious problem."

But several elements could hamper an enormous jump in choice enrollment, at least initially. First, capacity is limited at existing charter schools and private schools that now accept voucher students, and many popular schools have waiting lists to get in.

Milwaukee Lutheran High School is reducing the number of seats available to voucher students next year because, leaders say, the per-pupil cost of secondary education has outpaced the voucher payment of $6,442.

"One of the bits of misinformation out there is that lifting income restrictions and the cap will result in massive growth," said Mike Ford, speaking for School Choice Wisconsin, an organization that advocates for voucher schools and has pushed for an expansion of the program.

"Given the difficulty in opening a new school, enrollment growth will certainly be determined by the supply of choice seats," he said.

According to the state Department of Public Instruction, the voucher program has 20,189 "full-time equivalent" students this school year.

The voucher program cap of 22,500 full-time equivalent students - a limit yet to be reached in Milwaukee - would be dropped under Walker's proposal, which projects 21,600 students in the program next year and 22,900 full-time equivalent students in the 2012-'13 school year. Some counter that those are conservative numbers meant to make the proposal look more palatable.

The existing income requirements continue to apply to students currently in voucher schools, so new voucher-school enrollees would initially only be Milwaukee students who switch from public to private school, or students who are starting in kindergarten.

But the proposed changes also appear to indicate that private schools in Milwaukee County could enter the choice program and start accepting a voucher for any Milwaukee-based students whose families currently pay tuition. It's unclear how much that factor could affect voucher-program enrollment.

Walker's plan also allows voucher schools to charge higher-income families a tuition fee on top of the voucher if the family makes more than 325% of the poverty limit, or more than about $73,000 a year.

Vouchers for the wealthy?

For example, consider a hypothetical - albeit extreme - example of a student at the elite University School of Milwaukee.

Say University School, located in River Hills, chooses to join the choice program. A student's wealthy parents who live on N. Lake Drive in Milwaukee could conceivably use the program to get a $6,442 discount on their University School high school tuition of $20,423 per year.

But that could happen only if University School decided to participate; Head of School Ward Ghory said his staff is just collecting information about the proposed changes. New voucher schools could also end up with a majority of lower-income students filling their voucher seats.

Still, the idea of assisting wealthy families doesn't sit well with Mike Langyel, president of the Milwaukee Teachers' Education Association.

"How is he (Walker) going to come up with all the additional state funds to subsidize parents who are already sending their kids to private schools?" Langyel asked.

Historically, Walker's proposals are rooted in ideas about education that economist Milton Friedman espoused in the 1950s. Friedman believed that government should provide a voucher to all parents to subsidize the cost of their children's schooling at any institution they wished to attend.

According to Friedman's theory, government should make sure the schools meet basic standards, and competition for enrollment would decide which schools succeeded or failed.

From a financial standpoint, DPI and MPS officials say it's too early to tell what kind of fiscal impact expanding the voucher program would have on Milwaukee property-tax payers. The latest report from the School Choice Demonstration Project at the University of Arkansas says the program has a net benefit fiscal impact to state taxpayers because the cost of a voucher is less than the per-pupil revenue limit allocated to MPS.

But it also notes that the program has an adverse effect on Milwaukee taxpayers because of how the funding formula is designed.

Test rule lifted

Walker's proposal also repeals a requirement that voucher schools take the annual state achievement test, the Wisconsin Knowledge and Concepts Examination. Because of previous action by the state Legislature to increase oversight on the program, all voucher schools had to administer the test this year.

The results set to be released next month should provide an apples-to-apples achievement test comparison between the two groups of students.

Jeff Pertl, policy initiatives adviser for the DPI, acknowledges that most teachers dislike the state achievement test.

"But if you're going to take public money, there should be public accountability, and all kids should take the test," he said.

Walker has instead proposed that the voucher schools use any nationally normed test to measure student achievement.

Leaders of private schools in Milwaukee County have so far expressed mixed views on Walker's proposals.

Dick Laabs, president of the Lutheran Urban Mission Initiative that oversees four Lutheran voucher schools in Milwaukee, said he thought there might be interest among some Lutheran elementary schools in Milwaukee County.

"I suspect there are private schools in the county fighting declining enrollment battles that might think that participating in choice and getting about $6,400 at the elementary level could be attractive," Laabs said.

Todd Moritz, CEO of the Milwaukee Lutheran High School Association of Greater Milwaukee, didn't think that Martin Luther High School in Greendale would be interested in participating if the voucher rate remained at $6,442. He remained skeptical after learning that the school could potentially charge tuition on top of the voucher for higher-income families.

"That probably hasn't changed our position," Moritz said. "But from the mission standpoint, we're excited about it."

Meanwhile, Todd Sobotka, CEO of St. Thomas More High School, expressed cautious optimism about an expanded choice program. The school sits on the dividing line between Milwaukee and St. Francis and once put great effort into trying to become a part of the city's voucher program.

What that all means for MPS' future is still unclear.

MPS Superintendent Gregory Thornton and Milwaukee School Board President Michael Bonds have been spending hours behind the scenes talking about how to reconfigure the district to operate within the confines of the governor's proposed budget. The work they're discussing will be brought to the board.

Thornton said at a meeting last week that he approached his new job with the district eight months ago with optimism that things could change for the better in MPS.

Given the new set of circumstances, he said, he wasn't so sure that would happen as envisioned.