Tuition is "the price of or payment for instruction." It is payment for any contracted instructional service, from a weekly half hour of speech therapy to full-time enrollment outside the resident school district. State statutes do not provide a specific definition of tuition but it is described more broadly than full-time enrollment out of one school district into another.
The information below pertains to voluntary tuition agreements by Wisconsin school districts for their resident students.
Other enrollments outside a resident district's own public schools have their own legal and financial requirements:
DPI has specific guidance for tuition charged by Wisconsin LEAs to serve students with disabilities:
State law authorizes several commonly-used types of agreements that Wisconsin school districts may enter into for their resident students:
Tuition Agreements for Individual Students
Agreements for individual students are authorized by s. 121.78 (1) (a), which was updated by the 2015-17 biennial budget bill. This type of agreement is for one school year and must include two components:
- The specific amount of tuition to be paid in the school year of attendance, determined with one of the three DPI-approved methods described in the following section on "Determining Tuition."
- A specific estimate of the maximum amount of state aid, if any, to be received by the enrolling district in the following year and paid to the resident district as a transit of aid. If the actual aid received is greater than the estimate, the enrolling district retains the difference.
Cooperative Program Agreements
Agreements for cooperative programs are authorized by s. 66.0301. These types of agreements involve multiple LEAs sharing the cost of a program, with one serving as fiscal agent. Programs may serve one or more students. The term of the agreement is specified in the contract and may cover multiple years. The agreement must be based upon the program’s actual costs, describing how those costs will be shared or prorated among program participants.
Any state or federal aids received by the agency of service for serving the resident district’s students must be paid to the resident district as a transit of aid. More details on s. 66.0301 agreements are available at Package and Cooperative Funds.
IEP Placements for Students with Disabilities
Agreements to place students with disabilities with non-Wisconsin or non-public schools--as required by their IEPs--may be made under IDEA (the federal Individuals with Disabilities Education Act) and ch. 115, subch. V, Wis. Stats.
Agreements under s. 121.78 (1) (b) may be made to enroll individual students in out-of-state public schools.
Note: Beginning with the 2015-16 school year, agreements adopted by school boards must specify the type of agreement, either by description or statutory authority, and any additional provisions required by law for that type of agreement.
In general, tuition must include the unusual costs of serving a student, exclude amounts not funded by tuition and property taxes, cover the actual period of service and not impose a financial burden on the service provider (s. 121.75). Tuition charges must be based on a statutory formula or other methods approved by DPI (s. 121.76 (2) (a)).
Shared Service and Cooperative Agreements
Shared services and cooperative agreements are useful tools for districts to increase efficiency and realize cost savings. However, they are subject to legal requirements on how costs are shared.
In addition to the law on tuition, the law on cooperative agreements specifies that when an agreement includes a plan for administering shared services, that plan is structured in terms of "proration of the expenses involved" (s. 66.0301 (3)). DPI interprets these laws to mean that a district may not sell instructional services to other districts for the purpose of generating revenue above and beyond its cost of providing those services.
Approved Tuition Methods
Tuition must be determined under one of three methods. The first method is defined in statute, while the other two are specified by DPI under its authority to approve alternatives to the statutory method (s. 121.76(2)(a)).
Note: District placements and parent-paid tuition may not use the higher Open Enrollment transfer rate for students with disabilities ($12,000 in 2016-17). Open Enrollment payments are treated as tuition for accounting purposes only.
Method 1: Standard (or Statutory) Tuition
A formula for calculating a daily tuition rate is specified in state law (s. 121.83). DPI form PI-1524, an Excel workbook, is used to compute that rate. An updated version that divides standard tuition into Fund 10 and Fund 27 components was posted in spring 2014 and is required for all districts using the standard tuition method in 2014-15 and onward.
Method 2: "Base Transfer Plus"
The base Open Enrollment transfer rate for students without disabilities may be used to determine tuition outside of that program and is charged to Fund 10. If this method is used for a student with a disability, only the actual, additional costs of special education specific to that student may be added to the base rate, which are charged to Fund 27. Tuition for students with disabilities under this method must be agreed and billed with DPI form PI-1524-BT.
Method 3: Actual Cost
Tuition may be set to reimburse a district for its actual costs of providing a service. The amount should include direct costs, such as salary and benefits or employee travel, and may also include administrative costs supported by appropriate documentation. For students with disabilities, tuition under this method must be divided into a Fund 27 portion that reflects the cost of special education and related services and, when applicable, a Fund 10 portion reflecting any non-special education instructional, overhead or administrative costs.
The cost of a shared service or cooperative agreement may be split between participating districts, based on the services provided to each district or student, or allocated in another manner consistent with the general requirements for tuition. A flat daily or unit rate determined under this method should include a mechanism to resolve significant surpluses or deficits that may accumulate over the course of the year.
Which Method to Use?
When deciding upon a tuition method and rate, districts should consider the potential impacts of any variance between what is charged and the costs being offset. Tuition revenue is a deductible receipt in the calculation of shared cost for equalization aid. When received for special education instruction, tuition is subtracted from expenditures in all four IDEA Maintenance of Effort tests. It is in the interests of both the district providing a service and the district receiving it that tuition be determined as accurately as possible.
A district may charge a parent tuition for a student it is not legally obligated to educate (e.g. out-of-state residents, students who have "aged out"). By law (s. 121.81) the payment uses the base transfer amount for Open Enrollment. If the student has a disability then the district would use a "Base Transfer Plus" tuition agreement as described above.