Vouchers can improve the fiscal health of school districts

It is a dogma used to criticize school choice so often that it sounds like a broken record: If we allow families to choose whatever school they would like to go to, there will be fiscal Armageddon—Children will leave public schools, and it will drain away funding. So goes the talking point.

There was an excellent study done last month by Ben Scafidi at The Friedman Foundation for Educational Choice that analyzes the fiscal effects of school choice programs on public school districts. Scafidi uses a key question:

“If a significant number of students left a public school district for any reason from one year to the next, then is it feasible for the district to reduce some of its expenditures commensurate with the decrease in its student population?”

Scafidi estimates the average spending per student in the United States was $12,450, of which 36% can be considered fixed costs in the short run. The remaining 64% ($7,967) are costs that change with student enrollment. This means that if a school choice program directs any amount under the variable number (the costs that change with student enrollment) to a parent to choose another school, the fiscal health of the public school district would improve. The district in Douglas County Colorado understood this very well, and created a voucher program that put the district back onto a solvent path. It was going broke before the school choice program was created.

Just to be on the safe side, Scafidi attempts to “make cautious overestimates” of the fixed costs, including expenditures on capital, interest, general administration, school administration, operations and maintenance, transportation and other support services. If there was a significant reduction in student population, spending in some of these areas would inevitably drop, but overestimating the fixed costs, as he has done, allows the design of a school choice program that will actually improve the fiscal health of a district.

But there’s another myth that this study addresses. According to this myth, school performance should drop if school funding drops caused by children leaving to go to another school. He gives two reasons why a decrease in funding (in the context of school choice) could lead to better school performance: First, when there are staffing cuts, you could choose to lay off the least effective teachers, reassigning students to the more effective ones, which would increase student performance.

Second, the data shows that incentives matter…a lot. If a school knows that a child has the option to pick up and leave, they are going to do everything possible to improve their school and not lose the kid. There is an Appendix to the study that explores this question further that is worth reading. Scadifi writes that despite the repeated charge that school choice will skim the best students from the public schools, and academically harm the students that remain,

“No study finds any evidence of academic harm for students who remain in public schools due to enhanced school choice.”

Not even one. Think this will convince the opposition? I doubt it, but the Alaska Policy Forum will continue to raise awareness of the need for an educational fund dividend. Not only would it create the conditions needed for success, it would help those in our state who need it the most: low income and ethnic minorities.