Legal attack on school choice threatens Public School Open Enrollment

Over 70,000 Wisconsin students could be impacted

If successful, a lawsuit claiming Wisconsin’s private-school parental choice program and public independent charter schools are illegal will also shut down the Public School Open Enrollment program used by approximately 73,280 children, according to legal experts.

If a court buys the claim that one program’s funding mechanism is impermissible because of the way state aid follows children to another school, the others’ would be too, said Rick Esenberg, head of the Wisconsin Institute for Law & Liberty, which is seeking to join the case.

The Public School Open Enrollment program allowed 73,280 students to attend a traditional public school in a district they did not live in during the 2022-23 school year, according to the Wisconsin Department of Public Instruction.

The number of children who took their state aid to a private school under Wisconsin’s parental choice programs was 52,062, and another 11,138 attended an independent public charter school. Attending traditional public district schools that year: 819,214. That means open enrollment amounted to 9% of district schools’ enrollment.

When children transfer from one public school district to another through the Public School Open Enrollment Program, the state transfers money as well: a total of $585.9 million in 2022-23, according to the DPI.

Of the 419 districts for which the DPI offers figures, 190 were net gainers of aid, while 229 were net losers. 

Districts varied widely in gain and loss. By net flow of students, the biggest gaining districts were:

“Ratio” means the number of students inbound for every outbound student. The three top net-gain districts are also the top three districts by ratio of inbound-to-outbound students.

The three largest-gain districts, and others on the list with names in boldface, all sponsor virtual charter schools — public schools that are mostly or wholly online. Virtual charter schools have been operating in Wisconsin since 2002 and are dependent on open enrollment to permit a child who lives in one district to enroll in a virtual charter school in another.

For the three top net-gain districts, virtual charter schools constitute much of the net gain in enrollment: McFarland, in Madison’s southern suburbs, reported enrollment of about 3,040 students in four virtual charter schools that it hosts, while Grantsburg reported about 900 students enrolled in its iForward virtual charter school.

For each district, inbound enrollment was massive in relation to enrollment of children living in the district: McFarland’s net gain of nearly 5,000 students was more than double the 2,339 resident students in its 2022 “membership” count, while Grantsburg’s net gain of 1,250 students was about one and a half times its 856 resident students.

Another big net-gain district, Medford, which also hosts a virtual charter school, has done well by open enrollment, said school board member Steve Deml. The district, a broad expanse of farm and north woods between Wausau and Chippewa Falls centered on a village of 4,300 people, early on had offered a virtual charter option for resident students. Open enrollment and cooperation with a consortium of other school districts in operating Rural Virtual Academy has allowed the virtual operation to achieve the scale necessary to offer a quality experience, said Deml.

“We’re doing better than a lot of other schools in this part of the state,” he said, with the aid transferring along with children, even those whose presence is virtual, allowing the district to better cover fixed costs.

“Overall,” he said, “I’d say Medford sees a benefit from open enrollment, in the brick-and-mortar school.”

Most open enrollment students are physically going to school in a different district than the one in which they live. Statewide, enrollment in virtual charters in 2022-23 was 12,768, according to the DPI, or about 1 in 6 of students changing from one public school system to another.

The fourth largest net-gain district, Ashwaubenon, neighbors the third-largest net loser, Green Bay, which lost 1,759 students on net. Beloit Turner School District, which has only trivial virtual charter enrollment but was among the largest net gainers, is neighbor to Beloit’s city district, seventh largest net loser. In 2019, Palmyra-Eagle’s district nearly dissolved over financial problems caused by a massive transfer of students into neighboring Mukwonago. While the district remains operating, it remains one of the largest net losers, with about 10 times as many students transferring out as in.

At its core, education funding is driven by enrollment. In general, as enrollment grows in a district, so does revenue.

Under a formula set by the Legislature, districts get a fixed amount of revenue per student.  Some of that comes from local property taxes, while the main form of state aid, called equalization aid, supplements that in a way meant to reduce the gap in available funds between property-poor and property-rich districts. Some property-poorer districts get more state aid; well-off districts get less.

The shifts of funding related to open enrollment and to private school choice come in the context of a long-term drop in school-age children in Wisconsin of about 9% from a peak in 2000. In 2013, traditional public school enrollment peaked at about 873,500 students. This fall, the figure was about 799,000.

The lawsuit seeking to end the choice program is being financed by a political action committee set up by a Minocqua brewpub owner and beer marketer, Kirk Bangstad. One of its chief claims is that because the state partly finances private school choice outside of Milwaukee by reducing state aid to districts that children leave when they go to an independent option, it affects the district’s property tax levy since the jilted district is permitted — but not required — to make up the loss of some state aid by raising property taxes, even though it no longer bears the cost of educating the child who left.

Esenberg points out that it’s unclear a district should make up for a loss of state aid for a child it no longer is educating, but more crucially, the public school open enrollment system also affects districts’ finances. Children who leave still count toward a district’s revenue limit, even though state aid follows them.

Beyond open enrollment, said Esenberg, even the state’s equalization aid scheme of shifting aid to affect a district’s property taxes — meant to replace an early system of district-to-district shifts of property tax revenue that was ruled unconstitutional in a 1976 case —would come into question under the theory of the plaintiffs.

The plaintiffs are asking the Supreme Court to take the case directly, a route usually reserved for cases in which facts are not in dispute. The court hasn’t decided whether or not to make the case go through lower courts first, but the unsettled nature of the effects on school finance suggest that’s a possibility.

If public school open enrollment were to get caught up in a shutdown of choice, it would have broad repercussions. Those would be felt in Medford, for instance. Deml notes that the district attracts not only virtual students but kids from neighboring, and much smaller, districts. He said they’re drawn by Medford’s broader range of classes and activities: “You can’t have everything if you have only 120 to 150 students in your high school,” he said.

Deml says it makes sense to him that funding should in fact follow a student from one school system to another based on a family’s decision. The ability of families to move, especially with the ease provided by virtual options, lends a level of accountability that helps the district improve.

“If the parent satisfaction drops, the number of students would drop just as quickly,” he said.

Patrick McIlheran is the Director of Policy and Jim Bender an Education Consultant to the Badger Institute. Permission to reprint is granted as long as the authors and Badger Institute are properly cited.