MILWAUKEE -- When the Wisconsin Legislature passed a bill to allow about 1,000 children to attend nonsectarian private schools here at state expense this fall, it sparked a court battle that may go all the way to the U.S. Supreme Court over a program that could have far-reaching implications for education in America.

Opponents of the Milwaukee Parental Choice Program have sued seeking to overturn the law. Supporters have sued challenging requirements for participation issued by the state Department of Public Instruction. After hearing oral arguments July 28 in the two cases, Dane County Circuit Judge Susan Steingass was scheduled to rule Monday. Spokesmen for both sides say it is likely they will appeal if the decision goes against them.

Other school districts have contracted with private schools to provide specific services, and 9 states, according to figures provided by the National School Boards Association, allow parents to send their children to school in any district within the state. But Milwaukee's choice program is the first of its kind in the nation.

Those who oppose the program -- school officials, teachers' union representatives, and the president of the Milwaukee Chapter of the NAACP -- who say they fear it is the first step in the destruction of the public school system and the creation of segregated private schools.

Those who support it -- the state representative who sponsored the bill, private school administrators, and the parents who want to send their children to those schools -- say the independent schools do a far better job of educating children than does the Milwaukee Public School system. The parental choice program would include only a few MPS students, but its supporters say the sucesss of the private schools would expose MPS's failure and, perhaps, force change.

Proposed during the Reagan adminstration as a system of tuition vouchers or tax credits, parental choice has been touted as a way of improving American schools. Supporters {see story p. X} say that giving parents the choice of sending their children to public or private schools, without having to worry about the cost of tuition, will force competition. Bad schools, they say, will have to get better or go out of business. Opponents say they fear choice will eventually result in various forms of segregation -- racial, geographic, economic or class -- in direct opposition to the 1954 U.S. Supreme Court Brown vs. the Board of Education decision that mandated desegregated schools.

Under the terms of the bill sponsored by State Rep. Annette Polly Williams (D-Milwaukee), and passed in March by the legislature, the state will pay about $2,500 during the 1990-91 school year for up to 1 percent of MPS students to attend private schools. The $2,500 equals the amount the state gives the school district per pupil. State aid to the Milwaukee school district will be reduced by a corresponding amount.

Specifically aimed at students from low-income families, the choice program requires that eligible families have an income less than 175 percent of the federal poverty level ($18,400 for a family of three). No more than 49 percent of the enrollment at participating schools (10 have expressed an interest), may be made up of students from the program. If more students apply than a school has vacancies for, the school must randomly select students. Most, but not all, of the students in the program are expected to be black.

Whether the program goes into effect, however, depends on the outcome of two suits now before Dane County Circuit Court Judge Susan Steingass.

The state teachers union, the state school district administrators association and others filed suit in May, asking the Wisconsin Supreme Court to invalidate the law, claiming the program violates state requirements that public funds be used for public purposes. They also claim that the law establishing the program provides no way to account for how the private schools spend the state's money and no way to assess the quality of the schools' programs. The state Supreme Court decided the case should be first heard in Circuit Court.

Meanwhile, several parents and several private schools sued to challenge requirements for participation in the program issued by the state Department of Public Instruction. The department, which administers the program, asked the schools to ensure students' rights as guaranteed under several state and federal laws. It also asked that the schools guarantee their ability to provide handicapped students and students with speech or learning disabilities with the services they need. The suit claims that the requirements -- which are not contained in the original legislation -- would make it impossible for the schools to participate.

That case was also sent to Circuit Court, and Steingass was scheduled to hear oral arguments on both matters July 28 and to rule by Aug. 15.

Williams and others who support the choice program say it is necessary because the 97,000-student Milwaukee Public School system has failed its students. The controversy about the program, Williams said, "is not about the 1,000 children leaving. It's about them {MPS} being exposed. And once they are exposed, you'll see where the problems lie. It's not because they are low-income kids. It's not because they are black. It's not because they come from single-parent homes. . . They {school officials} are making excuses for their failure. These parents would not be taking their children out of the public schools if they were being educated."

MPS statistics from 1988-89 show that while the performance of all students is troubling, the lack of black student achievement is of special concern. The system-wide student grade-point-average was 1.62 (4.0 equals an A), but the black GPA was 1.35, as compared to 1.98 for white high school students and 2.56 for Asian students. While 38 percent of the system's 10th grade students scored at or above the national average on the district's standardized achievement test, only 23 percent of black students read at or above the national average, as compared with 61 percent of white students. Thirty-seven percent of the system's 10th-graders scored at or above the national average on the math test, as compared with 22 percent of black students and 59 percent of whites. And, though black students made up less than 50 percent of the student population, they accounted for 71 percent of those suspended.

A June 1989 report from the Wisconsin Policy Research Institute, a non-profit public policy study organization, concluded that Milwaukee's 14-year-old desegregation plan had failed to improve the academic performance of black students, that white student achievement had dropped and that racial segregration in the schools had been replaced by segregation by "economic class." Among the report's findings were that while all Milwaukee public high school students failed 24 percent of their courses in the 1987-88 school year, black students at the city's 10 predominantly black high schools failed from 26 percent to 43 percent of their courses.

MPS Superintendent Robert S. Peterkin does not contest the statistics. He said, however, "Children of all races in this city are doing better than they did five years ago, and than 10 years ago. The problem is that they're still not doing as well as any of us would like, as a total group. And if you look at the statistics, there's still too big a gap between black children and white children . . ., but there's been a gradual improvement in the system for some time." THE BACKGROUND of the Milwaukee choice battle lies in the provisions of the city's 14-year-old court-ordered desegregation plan. Called Chapter 220 after the state law implementing it, the plan mandates levels of integration in Milwaukee's schools and provides for busing of students within the city and to and from suburban school districts. Student assignments are determined by whether they "enhance racial balance," that is, whether the assignments contribute to a black enrollment between 25 percent and 65 percent at a school. According to that criterion, 112 of the city's 138 schools are integrated. (Before Chapter 220, 14 of 158 were considered integrated.)

But while the majority of Milwaukee's schools may meet the law's standards, desegregation did not come easily. In addition to the cost -- $335 million from 1976-89 for busing, special programs and "incentives" to suburban districts, according to the Wisconsin Policy Research Institute -- there was also the fact of the city's pervasive residential segregation. Before 1976, most schools were built in white neighborhoods, but that population has decreased at the same time the black population has increased. As a result, black children are bused twice as often as white children to meet the goals of desegregation, and many cannot attend schools in their own neighborhoods.

"If we stopped desegregation today," Peterkin said, "I would still bus 19,000 elementary school children out of the 22,000 I bus right now. It would be for a different reason, but the overriding reason now is space, as much as it is race. The schools in white neighborhoods would be half empty if black children did not attend them."

For these reasons -- the declining achievement of black children, the burden of busing, and a school system that they perceive as hostile to their children -- many black Milwaukeeans say it is time for a change.

Frieda Curry, a homemaker who has worked with the Milwaukee Hunger Task Force and a welfare rights organization, has applied under the parental choice program for her two younger children to attend the Urban Day School, a small, predominantly black school founded 23 years ago by parents when their neighborhood parochial school closed.

Curry's oldest son, Warren, a 15-year-old junior, attends Nicolet High School in suburban Glendale. Armond, 10, a fifth-grader, attends Hoover Elementary School in West Allis, as does daughter Bria, 9, a fourth-grader. They are among 5,000 MPS students bused to suburban school districts. Some 1,000 students are bused from suburban schools into Milwaukee to attend so-called specialty schools.

Curry says she would have preferred that the two younger children attend Sherman Elementary School, which is seven blocks from their home. But for the Curry children to go to Sherman would violate the mandate for racial balance at the school. Curry said she has tried for three years to enroll her children at Sherman and been turned away. When she took Armond and Bria to Bruce Elementary School, their designated school a half-hour bus ride north of their home, she found it had "no resources and was overcrowded." And she said, "I didn't like the atmosphere -- there was no discipline."

So Curry chose suburban schools for her children, believing they offered educational advantages not available in the Milwaukee schools. She said, however, that despite the advantages, there are real problems.

For one thing, each of her children must ride the bus at least a half an hour each way to get to school. For another, there are few black students in their schools. "My kids have always been the only blacks within their classes, and I have real problems with that," she said. Her children have been called names by other students and, she said, she does not believe they are always treated fairly by white teachers and staff.

"It robs kids of the opportunity to be kids," she explained. "You have to tell them that if a teacher doesn't like you, then you have to be smarter than Mrs. So and So. You have to be a littler wiser. You can't allow them to know it hurts you that they don't like you."

At the Urban Day School, most of Armond's and Bria's teachers would be black. Urban Day Executive Director Zakiya Courtney said that though the school is predominantly black, there are some white, Asian and Hispanic students, and the school tries to acknowledge the cultural heritage of all its students.

The presence of black role models is important to Curry, as is the opportunity for her children to go to a school where black history and culture are an essential part of the curriculum. More important, she said, is the idea of parental involvement and control. At Urban Day, Courtney said, parents are required to meet regularly with teachers, they sit on staff, admissions, maintenance and curriculum committees, and they are required to participate in volunteer and fundraising activities.

"I was extremely impressed with what they {Urban Day School} try to do with their parental involvement program," Curry said. "Of the private schools, I see Urban Day as a school I could certainly work with to see that my kids have a nurturing educational environment." MOST OF THE 10 schools that have applied to participate in the Milwaukee Parental choice program are traditional schools. Some, like Urban Day School and the Harambee (Swahili for "let's work together") Community School, began when the Milwaukee Catholic Archdiocese decided to close neighborhood parochial schools because of declining enrollment. Parents who wanted to keep the schools open formed boards, incorporated and hired teachers, often nuns who had taught in the parochial schools. Tuition is relatively cheap and does not cover all expenses -- at Urban Day, where Courtney said it costs the school about $3,300 a year to educate a child, tuition is $650 a year for the first child from a family, $1,000 for two children from the same family, and $50 for each additional child. To keep the schools running, parents rely on fundraising from foundations and corporations, as well as fruit sales, fashion shows and bingo games.

The participating schools include Lake Shore Montessori School, which has 55 students and expects to enroll seven more under the choice program, and Service-Employment-Redevelopment -- Jobs for Progress, which contracts with Milwaukee County and local businesses to provide education and training for workers. Some 180 people participate in SER programs, said Executive Director Abel R. Ortiz, and about 20 others have applied to SER under the choice program. Those students will be enrolled in a high school program, he said.

What parents get at these schools, adminstrators said, is an educational environment that stresses discipline, achievement and parental involvement. Susan Wing, principal of the Woodlands School, which has about 230 students in preschool to eighth grade, said the school had received 47 choice applications and expected to take as many as 24 students. "Parents sign a statement saying that they too enroll," Wing said of the school, which has a racially and economically mixed population. "They volunteer. They must do fundraising. They must come in for conferences to get their child's report card. They know that the school is open to them all the time."

At Juanita Virgil Academy, which has 100 students in kindergarten through eighth grade, administrator Barbara Grider said she expects to double the enrollment of the school under the choice program. The school's emphasis will not change, however, she said.

"Children get report cards six times a year, instead of the regular four," Grider said. "Once a month, and it's going to be mandatory this year, parents come in for a parent-teacher conference. They must participate in fund-raising. They are encouraged to visit the school unannounced."

Students at the all-black school wear uniforms. "Designer haircuts" are prohibited, as are expensive tennis shoes. All of this, Grider said, makes "a big difference."

"We don't have any drugs in our school at all. We don't have any kids smoking cigarettes -- and I'm talking about the older kids in eighth grade. The parents are completely in charge of discipline. We don't discipline children, though we may take them out of class. But we call the parent, and if the parent is at home, we expect him or her to be down at the school right away. If the parent is at work, we expect the parent, at the least, to have a phone conference with the child." WILLIAMS, whose children attended the Urban Day School, and who remains on the school's board, says the difference between the independent schools and MPS is that parents know they are a "vital part of the school."

"It's just like an extension of a family," she said. "You are asked your opinion. You have the opportunity to make decisions, not just for your children, but for other parents' children."

The parental choice bill as originally passed had a five-year limit, but Wisconsin Gov. Tommy Thompson vetoed that provision because, Williams said, "that's not enough time to show results." She said, however, "You ought to see benefits right away, because of the parental involvement and because of the not holding against them the fact of who they are and where they come from."

Black children, Williams said, can achieve, and it may be that black teachers will make a difference because "we don't accept poverty as an excuse -- we know that poverty is only a stage in your life. You get an education, and you go on to make something of yourself." Education, she said, "is the most important thing we can give your children. As poor people, education is the only legacy we can give your children. That, and goals and the drive to achieve them."

Meanwhile, MPS Superintendent Peterkin says he believes that much of the unhappiness with the school system that resulted in the choice bill stems from the fact that some believe it is time to abandon integration and to target school improvement. "I think it's possible to do both -- to have integrated schools and improve the school district," he said.

Since becoming superintendent two years ago, Peterkin has begun to decentralize the school bureauracy by dividing MPS into six "service delivery areas," each with its own community superintendent and community advisory council made up of parents, school administrators, teachers and representatives of local businesses and community organizations. In addition, almost 40 schools have chosen to participate in some form of site-based management.

"What I'm working on now, and have been, is a way to take all of this comprehensiveness of change -- decentralization, shared decision-making, curriculum development, staff development, parental involvement, changes in school structure, collaborations around families, all this stuff that we're invested in . . . that I see as part of restructuring -- to the public and have them understand what MPS is trying to do."

Choice, Peterkin said, can be part of the change, but it "will barely make a dent in my {school} population."

"If you in fact filled up all the available {private} schools around here, I'm still going to have 80,000 kids. So we need to figure out what to do with the school system," he said.

And, like State Department of Public Instruction Superintendent Herbert J. Grover, Peterkin has deeper reservations about the choice program.

"You can't just yell choice and let people pick schools and think that they are automatically going to get better," he said. "The marketplace concept does not have as much validity in the school structure as it does in other structures . . . It seems to me to be a 50-50 proposition with the whole issue of deregulation and letting the marketplace flow wherever it will flow."

Grover, whose department is charged with overseeing the parental choice program, said his immediate concern is that there is no "fiscal or programmatic accountability" built into the program. Who, he asked, will get the money? And how will the schools show that students are making academic progress?

In addition, Grover said he fears the long-term consequences. If the program is successful, he said, the law could eventually allow the creation of "black, racially isolated public schools." And, because the law does not say who may or may not operate a school, he said it leaves open the possibility that anyone can start a school and receive state funds. "The Black Panthers, Minister {Louis} Farrakhan, the Posse Commitatus could start a school. Where would that lead us?"

But Grover is also concerned that the parental choice program is "the first blow" in an assault that "will allow the wealthy to flee the public school system at the public expense." Eventually, he said, he forsees that sectarian schools will be allowed to participate in the choice program and the result will be "gutting the public schools in America."

"We're going to get the moral leadership for American children from America's businessmen?" he asked. "Give me a break."

And, while Williams sees choice as a means of empowerment for poor people ("The answer to all of our problems is empowerment," she said. "If we can empower people, then we can solve these problems."), Grover considers it "a cheap business leadership response."

"They want to deregulate the common school," he said. "Like they deregulated the savings and loans, like they deregulated the airlines, like they deregulated HUD. That mentality must stop in America."

David Nicholson is editor of The Washington Post Education Review.