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The Fiscal Impact of School Choice Programs

The pro-voucher Friedman Foundation recently released a study demonstrating that school choice programs have saved school districts and taxpayers $444 million from 1990 to 2006. Click here to see the report.

Dr. Susan Aud, who prepared the study, wrote "to keep our analysis conservative, we have not only excluded from our analysis all reductions in cost outside the category of current expenditures, but we have excluded all reductions in current expenditure costs other than instructional costs." In other words, when calculating savings, the study does not include capital and debt service costs and non-instructional operating costs such as administration, transportation, and facility maintenance.

Aud also wrote "[w]e make this conservative assumption to ensure that our analysis takes into account the widespread complaints brought by school choice opponents about fixed costs." This is a very conservative approach, especially from a Utah perspective, since Utah's school enrollment is rapidly increasing and nearly all educational costs -- except for district administration and possible some others -- are clearly variable. Even in areas where enrollment is not growing, costs are variable in the long run due to the possibility of consolidating schools.

Friedman's study accounts for the costs of providing vouchers to students who were attending or would have been attending private schools even without vouchers.

If Friedman says that vouchers save money, why did the Legislative Fiscal Analyst say vouchers would cost money in Utah?
When preparing the fiscal note, the fiscal analyst did not even include any savings due to students leaving public schools for private schools due to vouchers, even though he admitted that there clearly would be savings.

Milton Friedman is dead and did not to this study. You should not attribute the study to him but should be careful to note it was done by an institute, just as you might do if there were an Alexander Hamilton Institute.

Yes, Milton Friedman is still dead.

We clearly stated in the first sentence that the report was from the Friedman Foundation. Hit ctrl-F and enter "Milton" and you'll get the message "Text Not Found". That's because we never even mentioned Milton Friedman. We mentioned the study's author -- Dr. Susan Aud -- twice.

"Friedman" is shorthand for Friedman Foundation just like "Cato" is shorthand for Cato Institute and "Heritage" is shorthand for Heritage Foundation.

Your site is where I've found the most effective fiscal arguments in favor of the current voucher proposal so I'm asking my question here.

I've heard all the arguments against vouchers and I've bought into some of them. The one that has me the most irritated at the proposal is the one you briefly mentioned in this post. The number being bantered around by anti-voucher activists for the long term costs of the program is $425 million. Do your estimates of savings that will be generated by the program allow for us to ever break even on vouchers? Do you accept that $425m figure as a possible long term estimate of the costs of the program or do you think it might be innacurate?

My opposition to vouchers is based mainly on the program's total cost to taxpayers...not on whether or not it takes money from public schools (it very clearly doesn't).

Over the past several months I have read most of the posts on this site relating to the voucher plan and I am interested in UTA's perspective. Do you know of a site or webpage where we can see all the projected costs and potential savings of the program all in one place? I don't recall ever seeing the $425 million dollar long term cost estimate being discussed here but I could be wrong...It would sure be nice to hear from a pro-voucher group whether or not this figure is accurate.

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Jeremy,

The worst case scenario is that the only people who use the vouchers are those who would have gone to private schools anyway. Currently, there are about 16,000 to 17,000 private school students in Utah. If all of those students were to be eligible for vouchers right now, and if all of those students were rich -- as people like Marshall like to claim -- then the worst case scenario would be $500/student x 17,000 students = $8.5 million per year.

Again, that assumes that ZERO public school students will switch. However, if 3,000 students switch, then the savings to taxpayers from these switchers would be around $7,500 (total cost to educate public school students in FY08) less the anticipated average voucher amount of $2,000. Therefore, the savings would be 3,000 x ($7,500 - $2,000) = $16.5 million.

Determining an EXACT amount of savings and costs is not possible, but then again proponents of higher taxes and spending for public education are never willing to commit to a guaranteed level of increased student performance if spending is increased..

Marshall,

If you keep bringing up the same false arguments that we've rebutted over and over again, we are going to stop posting your comments. If you bring up a legitimate question or an original point -- like Jeremy did -- then we'll answer it.

However, after rebutting your same arguments over and over and over again, we've come to the decision that you are not willing to listen to other points of view.

Here's a summary of your arguments that we have refuted:

- There is no connection between higher education tuition increases and vouchers. Tuition increases are due to shifts in general funds from general government -- which includes higher education -- to transportation. There is no "voucher connection" here.

- Low income households will be able to afford private schools with a $3,000 voucher. (And if the Legislature wants even more low-income households to switch, the voucher amount can be increased). Many private schools have tuition around $4,000 AND offer financial assistance to low-income families. Additionally, financial aid is available from Children First Utah.

- The vast majority of Utah students live in urban areas so the argument that the participation rate will be low because rural areas don't have private schools is moot. Rural areas don't have a lot of charter schools either, but fortunately people aren't arguing to get rid of charter schools for that reason.

- You've argued repeatedly that private schools won't expand capacity to meet new demand (they'll just increase their prices instead), but you haven't explained why the basic laws of economics will be repealed in the case of private schools. Private schools -- as demonstrated by the rapid growth in charter schools -- are not cost-prohibitive to establish like universities or hospitals. Therefore, the supply will respond to increased demand.

- Private schools will not be able to dramatically increase tuition due to vouchers, unless they want to price out their existing customer base. Since existing private school customers are all rich (your claim) and since these customers will be eligible for a maximum $500 voucher, then the most that private schools could increase their tuition due to vouchers would be $500, not $3,000.

Jeremy,

One other point. When calculating the cost of providing vouchers to those that are already in private schools or would be in private schools if they were old enough to attend school, the Legslative Fiscal Analyst assumed that the household income of those families currently sending their children to private schools mirrors the general population. Nobody actually believes this, which means that the actual cost of paying vouchers to existing private school students will be less than the what the LFA has projected because exising private school families have higher incomes (therefore lower voucher amounts) than the general population.

Jeremy,

Going back to my first response to your post, our guess is that the average voucher amount for would-be-anyway private students will be more than $500, although we used $500 because that's what opponents' logic would dictate ("Private schools are for the rich").

Obviously, some not-so-rich families are currently sending their children to private schools so the average voucher amount for would-be private school students will be higher than $500, but probably not a lot higher.

Thank you for your analysis. I still contend that vouchers have the potential to be too steep a new expense for taxpayers especially with the efforts the law's crafters have included to ameliorate concerns from the public education establishment. That said, your explanations and fiscal analysis in support of the program do provide a lot of food for thought. I agree with you that it is too early to determine any exact long term costs or benefits of the program and that the "bottom line" numbers being thrown around seem to have been pulled from the air.

The important thing is that the fiscal aspects of this program are not being ignored amidst the many other less compelling (in my mind at least) arguments being thrown around both in favor and opposed to the voucher program.

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