Policy Documents

Research & Commentary: School Vouchers Are a Cost-Saver for Taxpayers

James VonderHaar –

The evidence is in: If your goal is efficiency and saving tax dollars, K-12 education voucher programs are an astounding success.

Florida’s voucher program, for example, costs $3,950 per student, compared with a public school system that spends $7,000 per pupil. Surely even the efficiency of the free market can’t make up for a 44 percent funding deficit, right? Wrong: A Northwestern University study found no difference between achievement in students attending schools through voucher programs and those attending public schools.

Similarly, the U.S. Department of Education reports that students in Washington, DC’s high-profile Opportunity Scholarship Program kept up with their peers in public schools despite the voucher programs receiving only 56 percent as much per-pupil funding.

This should scarcely surprise us, as monopolies rarely produce good results. Institutions that don’t have to worry about going out of business tend to become lax and grow bloated, sucking up increasing amounts of cash while delivering substandard products. With numerous states in dire budgetary straits, monopoly prices are the last thing they can afford to pay.

Unfortunately, state governments seem reluctant to reform one of the most widespread and inefficient monopolies since the days of the robber barons: the public schools. Instead they have overwhelmingly sided with entrenched interests within the public school system over parents and citizen advocacy groups who want the biggest bang for their tax buck.

The top spending item in nearly every state is education. California, for example, spends 55 percent of its state budget for that purpose. If California adopted a universal voucher program with funding similar to Washington, DC’s limited program, it could lop off nearly a quarter of its state budget.

In a time of exploding state budget deficits, it makes sense to consider measures proven to cut costs and retain quality. Creating and extending voucher programs can be invaluable in getting state budgets out of crisis while providing children with the best education possible.

The following articles and studies offer considerable proof of the efficiency of voucher programs.

Markets vs. Monopolies in Education: A Global Review of the Evidence
This article from the Cato Institute looks at the evidence regarding school choice across the globe. The authors find the efficiency—student achievement per dollar spent on education—of private provision of education was higher than for public provision of education in 23 of the studies surveying foreign countries, while only three of those studies found greater efficiency in public schools.

How School Choice Programs Can Save Money
This Heritage Foundation study of the fiscal impact of voucher programs notes the Washington, DC vouchers cost only 60 percent of what the District spends on a pupil in the public system. The study estimates if the states with the top eight education expenditures per pupil adopted voucher programs similar to Washington’s, they could save a combined $2.6 billion per year.

Evaluation of Florida’s Corporate Tax Credit Scholarship Program
David Figlio of Northwestern University reports Florida voucher recipients perform roughly in line with a comparable public school student despite a gross disparity in funding, with vouchers costing the state $3,950 per student as opposed to the $7,000 the state’s public schools spend per student.

The Corporate Income Tax Credit Scholarship Program Saves Dollars

This Office of Program Policy Analysis and Government Accountability study finds that for every dollar lost in corporate income tax revenue due to tax credits for scholarship donations in Florida, taxpayers saved $1.49. The report suggests expanding the program when the tax credits claimed approach the cap and waiting lists for the scholarships become excessive.

Potential Effects of the Elimination of the Milwaukee Parental Choice Program on Public K12 School Districts
This open letter published by School Choice Wisconsin notes eliminating the voucher program in Milwaukee would cause the education budget to increase considerably with no beneficial effect on student achievement.

Evaluation of the DC Opportunity Scholarship Program: Impacts After One Year
This U.S. Department of Education study found no primary impact, positive or negative, on student achievement in voucher programs, despite chronic underfunding.

The Role of Government in Education

This essay by Nobel Prize-winning economist Milton Friedman was the genesis of the modern school choice movement. Fifty years later and even after Friedman’s death, his arguments still resonate.

For further information on the subject, visit the Education Issue Suite on The Heartland Institute’s Web site at www.heartland.org.

Nothing in this message is intended to influence the passage of legislation, and it does not necessarily represent the views of The Heartland Institute. If you have any questions about this issue or the Heartland Web site, contact Brian Costin, assistant director of government relations, at 312/3774000 or bcostin@heartland.org.