Vouchers and School Finance: Saving the Statehouse $?

Happy New Year 2013!

I have often posted on school vouchers over the past few months. Why? There are factions inTexas, Louisiana and elsewhere that still argue they are efficacious educational policy and are pressing them into law. They are not. See CI’s thread on vouchers here. IUPRA will soon release a brief entitled Do Vouchers Create More Inequality?: Lessons from Universal Implementation in Chile based on excerpts that I have already published here on CI (1,2,3,4,5). I will start a new voucher series this week based on a new policy brief entitled Are Vouchers a Panacea?: Lessons from U.S. Implementation that will be released by IUPRA in January.

I will begin today with an introduction to the new series and discuss vouchers and school finance. These posts are written in conjunction with Anthony LeClair, Melinda A. Lemke and Allen McMurrey. Some of the data is Texas-centric, but could be analyzed in a similar manner for your state. Let it begin.

Vouchers, an old idea, are once again gaining prominence in U.S. education policy discourse. Historically, localities in the U.S. have implemented small-scale and low-regulation voucher plans targeting low-income students and/or students attending low-performing schools. Numerous states have experimented with vouchers as there currently are two dozen privately funded voucher programs (Kaufman & Kaufman, 2009). The most highly profiled and studied programs were implemented in Florida, Ohio, New York City, and Washington, DC (Ladd, 2002).

Publically funded voucher programs gained momentum after the U.S. Supreme Court decided vouchers were allowable under the U.S. Constitution in Zelman v. Simmons-Harris (2002).Zelman concerned Ohio’s Pilot Project Scholarship Program, which provided vouchers to low-income students in the Cleveland City School District to attend public, private, and/or parochial schools chosen by the parent. However, the legal debate continues on a state-by-state basis.  In 2012 for example, Louisiana entered the voucher discussion by a state court decision that found Governor Jindal’s school-voucher program violated Louisiana’s State Constitution.

Voucher policy proponents claim vouchers will increase parent choice and control over tax dollars, as well as create a competitive marketplace for students, especially those who are most disadvantaged (NEA, 2012). This simple rhetoric purporting the benefits of student and parental choice propels the discourse surrounding vouchers. To advance the policy discussion, this brief offers a compendium of data and research on the U.S. domestic implementation of vouchers to inform policymakers regarding real-world outcomes and their implications for students and families.

School Finance

Considering that Texas cut $5.4 billion from education for the last biennium and was ranked 45^th in the nation in per pupil funding for 2011-12 (Vasquez Heilig, Jez, & Reddick, 2012) it is clear that the legislature ranks education spending very low on their priority list. Some proponents frame vouchers as a productive and useful alternative to increasing education spending by the State. Although reduction in the cost of education is put forth as a potential benefit of voucher programs that benefit often accrues at the statehouse and not the community level. Dependent upon the level of funding sent to districts for example, the State derives large cost savings from vouchers. Given per pupil funding averages $9,000 in Texas, a State “savings” of approximately $4,000 would be achieved with a voucher of just $5,000. The actual cost of educating students in parochial/private schools therefore, is offloaded by the State to Catholics, Baptist, Seventh-Day Adventists, and other congregations (I also discussed this on NBCLatino here).

What is the impact on local school districts? If Texas funds school districts based on average daily attendance, then districts that lose students to private schools will see a decrease in revenue from the State that will not necessarily be accompanied by a decrease in district costs. In order for districts to realize costs savings, students who exit the district need to come from the same schools and grade levels in order for the district to reduce personnel costs— by far the largest portion of a district’s budget. Otherwise districts would have to employ the same amount of teachers, counselors, librarians, and support staff to serve less students per school. Not only would this disallow for decreased costs, but it would cause an increase in costs per pupil. In rural schools this would increase the already problematic diseconomies of scale. According to TEA (2011) small districts, which often tend to be more rural districts, get about $14,000 in State and local revenue per pupil because of their smaller size.

How are vouchers likely to be less cost-efficient for rural schools? If you separate Texas public school districts into quintiles by size, for the 2010-2011 school year the largest 20% averaged 19,252 students and received $9,054 in State and local revenue per pupil (TEA, 2011). However, the smallest 20% of districts averaged 168 students and received $14,256 per pupil in State and local revenue (2011).  Thus the difference between the largest quintile and the smallest is $5,202 per pupil in State and local revenue.  The larger districts also average 19,711 more students per district than the smallest 20% of State districts. Clearly these data indicate that the diseconomies of scale are working against small districts. This specifically is evidenced by sparsity and the mid and small-size adjustments made to their basic allotments under the current public school finance system (2011).  If the State offers vouchers at or below the State average of revenue per pupil or per weighted average daily attendance, then rural districts will not  simply lose $7,340 per weighted attendance or $10,890 per pupil, but they also lose the economic efficiency of a larger pupil count. Rural districts would become even more inefficient with less students in an already low denominator while not being able to reduce costs in the numerator because the losses of students would affect classrooms and schools in a haphazard manner. Therefore, vouchers would ultimately prevent a decrease in education costs.

CI’s next post on vouchers will delve into how vouchers impact rural schools and districts.

References for New Voucher Series 

Barrow, L. & Rouse, C. E. (2009). School vouchers and student achievement: Recent evidence, remaining questions. Annual Review of Economics, 1, 17-42.

Belfield, C. & Levin, H. M. (2005). Vouchers and public policy: When ideology trumps evidence.American Journal of Education, 111(4), 548-567.

Carnoy, M. (1998). National voucher plans in Chile and Sweden: Did privatization reforms make for better education? Comparative Education Review, 42(3), 309-337.

Education Week. (2011). Vouchers. Education Week. Bethesda, MD: Editorial Projects in Education.

Elacqua, G. (2012). The impact of school choice and public policy on segregation: Evidence from Chile. International Journal of Educational Development, 32(3), 444-453.

Elliot, S. (2012). Indiana’s voucher program makes huge gains. Retrieved fromhttp://blogs.indystar.com/education/2012/11/20/indianas-voucher-program-makes-huge-gains/.

Etscheidt, S. (2005). Vouchers and students with disabilities: A multidimensional analysis.Journal of Disability and Policy Studies, 16(3), 156-168.

Friedman Foundation for Educational Choice. (2002). The effects of town tuitioning in Maine and Vermont. Retrieved from http://www.edchoice.org/Research/Reports/The-Effects-of-Town-Tuitioning-in-Maine-and-Vermont.aspx.

Kaufman, M. J. & Kaufman, S. R. (2009). Education, law, policy, and practice: Cases and materials (2^nd ed.). New York: Aspen Publishers.

Lacireno-Pacquet, N., Holyoke, T. T., Moser, M., Henig, J. R. (2002). Creaming vs Cropping: Charter school enrollment practices in response to market incentives. Educational Evaluation and Policy Analysis, 24(2), 145-158.

Ladd, H. F. (2003). School vouchers and student achievement: What we know so far. Education Reform, 3(1), 1-4.

McEwan, P. J. (2004). The potential impact of vouchers. Peabody Journal of Education, 79(3), 57-80.

Miron, G. (1996). Free choice and vouchers transform schools in Sweden. Educational Leadership, 54(2), 77.

National Education Association (2012). Five talking points on vouchers. Retrieved fromhttp://www.nea.org/home/17011.htm.

Parry, T. R. (1996). Will pursuit of higher quality sacrifice equal opportunity in education? An analysis of the education voucher system in Santiago. Social Science Quarterly, University of Texas Press, 77(4), 821-841.

Saul, S. (2011). Profits and questions at online charter schools.  Retrieved fromhttp://www.nytimes.com/2011/12/13/education/online-schools-score-better-on-wall-street-than-in-classrooms.html?pagewanted=all&_r=1&.

Texas Education Agency Office of School Finance. (2011). School finance 101: Funding of Texas public schools. Retrieved from http://www.tea.state.tx.us/WorkArea/DownloadAsset.aspx?id=2147509970.

United States Census Bureau, Office of Management and Budget Bulletins. (2009). OMB Bulletin No. 10-02. Retrieved fromhttp://www.whitehouse.gov/sites/default/files/omb/assets/bulletins/b10-02.pdf.

Vasquez Heilig, J., Jez, S. & Reddick, R. (2012). Is Texas leading its peers and the nation?: A Decadal Analysis of Educational Data. The Institute for Urban Policy Research and Analysis. University of Texas at Austin.

Weaver, H. L. (2011). School vouchers inflict more harm than good. Retrieved from http://www.aclu.org/blog/religion-belief/school-vouchers-inflict-more-harm-good.

Zelman v. Simmons-Harris, 536 U.S. 639 (2002).

I will begin today with an introduction to the new series and discuss vouchers and school finance. These posts are written in conjunction with Anthony LeClair, Melinda A. Lemke and Allen McMurrey. Some of the data is Texas-centric, but could be analyzed in a similar manner for your state. Let it begin.

Vouchers, an old idea, are once again gaining prominence in U.S. education policy discourse. Historically, localities in the U.S. have implemented small-scale and low-regulation voucher plans targeting low-income students and/or students attending low-performing schools. Numerous states have experimented with vouchers as there currently are two dozen privately funded voucher programs (Kaufman & Kaufman, 2009). The most highly profiled and studied programs were implemented in Florida, Ohio, New York City, and Washington, DC (Ladd, 2002).

Publically funded voucher programs gained momentum after the U.S. Supreme Court decided vouchers were allowable under the U.S. Constitution in Zelman v. Simmons-Harris (2002). Zelman concerned Ohio’s Pilot Project Scholarship Program, which provided vouchers to low-income students in the Cleveland City School District to attend public, private, and/or parochial schools chosen by the parent. However, the legal debate continues on a state-by-state basis.  In 2012 for example, Louisiana entered the voucher discussion by a state court decision that found Governor Jindal’s school-voucher program violated Louisiana’s State Constitution.

Voucher policy proponents claim vouchers will increase parent choice and control over tax dollars, as well as create a competitive marketplace for students, especially those who are most disadvantaged (NEA, 2012). This simple rhetoric purporting the benefits of student and parental choice propels the discourse surrounding vouchers. To advance the policy discussion, this brief offers a compendium of data and research on the U.S. domestic implementation of vouchers to inform policymakers regarding real-world outcomes and their implications for students and families.

School Finance

Considering that Texas cut $5.4 billion from education for the last biennium and was ranked 45^th in the nation in per pupil funding for 2011-12 (Vasquez Heilig, Jez, & Reddick, 2012) it is clear that the legislature ranks education spending very low on their priority list. Some proponents frame vouchers as a productive and useful alternative to increasing education spending by the State. Although reduction in the cost of education is put forth as a potential benefit of voucher programs that benefit often accrues at the statehouse and not the community level. Dependent upon the level of funding sent to districts for example, the State derives large cost savings from vouchers. Given per pupil funding averages $9,000 in Texas, a State “savings” of approximately $4,000 would be achieved with a voucher of just $5,000. The actual cost of educating students in parochial/private schools therefore, is offloaded by the State to Catholics, Baptist, Seventh-Day Adventists, and other congregations (I also discussed this on NBCLatino here).

What is the impact on local school districts? If Texas funds school districts based on average daily attendance, then districts that lose students to private schools will see a decrease in revenue from the State that will not necessarily be accompanied by a decrease in district costs. In order for districts to realize costs savings, students who exit the district need to come from the same schools and grade levels in order for the district to reduce personnel costs— by far the largest portion of a district’s budget. Otherwise districts would have to employ the same amount of teachers, counselors, librarians, and support staff to serve less students per school. Not only would this disallow for decreased costs, but it would cause an increase in costs per pupil. In rural schools this would increase the already problematic diseconomies of scale. According to TEA (2011) small districts, which often tend to be more rural districts, get about $14,000 in State and local revenue per pupil because of their smaller size.

How are vouchers likely to be less cost-efficient for rural schools? If you separate Texas public school districts into quintiles by size, for the 2010-2011 school year the largest 20% averaged 19,252 students and received $9,054 in State and local revenue per pupil (TEA, 2011). However, the smallest 20% of districts averaged 168 students and received $14,256 per pupil in State and local revenue (2011).  Thus the difference between the largest quintile and the smallest is $5,202 per pupil in State and local revenue.  The larger districts also average 19,711 more students per district than the smallest 20% of State districts. Clearly these data indicate that the diseconomies of scale are working against small districts. This specifically is evidenced by sparsity and the mid and small-size adjustments made to their basic allotments under the current public school finance system (2011).  If the State offers vouchers at or below the State average of revenue per pupil or per weighted average daily attendance, then rural districts will not  simply lose $7,340 per weighted attendance or $10,890 per pupil, but they also lose the economic efficiency of a larger pupil count. Rural districts would become even more inefficient with less students in an already low denominator while not being able to reduce costs in the numerator because the losses of students would affect classrooms and schools in a haphazard manner. Therefore, vouchers would ultimately prevent a decrease in education costs.

CI’s next post on vouchers will delve into how vouchers impact rural schools and districts.

References for New Voucher Series 

Barrow, L. & Rouse, C. E. (2009). School vouchers and student achievement: Recent evidence, remaining questions. Annual Review of Economics, 1, 17-42.

Belfield, C. & Levin, H. M. (2005). Vouchers and public policy: When ideology trumps evidence.American Journal of Education, 111(4), 548-567.

Carnoy, M. (1998). National voucher plans in Chile and Sweden: Did privatization reforms make for better education? Comparative Education Review, 42(3), 309-337.

Education Week. (2011). Vouchers. Education Week. Bethesda, MD: Editorial Projects in Education.

Elacqua, G. (2012). The impact of school choice and public policy on segregation: Evidence from Chile. International Journal of Educational Development, 32(3), 444-453.

Elliot, S. (2012). Indiana’s voucher program makes huge gains. Retrieved fromhttp://blogs.indystar.com/education/2012/11/20/indianas-voucher-program-makes-huge-gains/.

Etscheidt, S. (2005). Vouchers and students with disabilities: A multidimensional analysis.Journal of Disability and Policy Studies, 16(3), 156-168.

Friedman Foundation for Educational Choice. (2002). The effects of town tuitioning in Maine and Vermont. Retrieved from http://www.edchoice.org/Research/Reports/The-Effects-of-Town-Tuitioning-in-Maine-and-Vermont.aspx.

Kaufman, M. J. & Kaufman, S. R. (2009). Education, law, policy, and practice: Cases and materials (2^nd ed.). New York: Aspen Publishers.

Lacireno-Pacquet, N., Holyoke, T. T., Moser, M., Henig, J. R. (2002). Creaming vs Cropping: Charter school enrollment practices in response to market incentives. Educational Evaluation and Policy Analysis, 24(2), 145-158.

Ladd, H. F. (2003). School vouchers and student achievement: What we know so far. Education Reform, 3(1), 1-4.

McEwan, P. J. (2004). The potential impact of vouchers. Peabody Journal of Education, 79(3), 57-80.

Miron, G. (1996). Free choice and vouchers transform schools in Sweden. Educational Leadership, 54(2), 77.

National Education Association (2012). Five talking points on vouchers. Retrieved fromhttp://www.nea.org/home/17011.htm.

Parry, T. R. (1996). Will pursuit of higher quality sacrifice equal opportunity in education? An analysis of the education voucher system in Santiago. Social Science Quarterly, University of Texas Press, 77(4), 821-841.

Saul, S. (2011). Profits and questions at online charter schools.  Retrieved fromhttp://www.nytimes.com/2011/12/13/education/online-schools-score-better-on-wall-street-than-in-classrooms.html?pagewanted=all&_r=1&.

Texas Education Agency Office of School Finance. (2011). School finance 101: Funding of Texas public schools. Retrieved from http://www.tea.state.tx.us/WorkArea/DownloadAsset.aspx?id=2147509970.

United States Census Bureau, Office of Management and Budget Bulletins. (2009). OMB Bulletin No. 10-02. Retrieved fromhttp://www.whitehouse.gov/sites/default/files/omb/assets/bulletins/b10-02.pdf.

Vasquez Heilig, J., Jez, S. & Reddick, R. (2012). Is Texas leading its peers and the nation?: A Decadal Analysis of Educational Data. The Institute for Urban Policy Research and Analysis. University of Texas at Austin.

Weaver, H. L. (2011). School vouchers inflict more harm than good. Retrieved from http://www.aclu.org/blog/religion-belief/school-vouchers-inflict-more-harm-good.

Zelman v. Simmons-Harris, 536 U.S. 639 (2002).