Badly Designed Programs Will Stymie School Choice

Published December 1, 2003

A new policy study from the Cato Institute provides policymakers with a practical guide for crafting successful school choice programs—ones that are likely to advance the development of a free market in education and avoid the creation of flawed programs that fail to meet expectations and thus check the public’s growing interest in and enthusiasm for choice.

“[B]urdensome regulations may impoverish the existing private school market in terms of diversity, resources, and quality,” warns the study’s author, H. Lillian Omand, former associate program director of the Children’s Scholarship Fund. “If children, present and future, are to receive the maximum benefits of school choice, policies must be carefully crafted to preserve and expand the freedom and independence of private schools.”

Last year’s Supreme Court decision, Zelman v. Simmons-Harris, which upheld the constitutionality of school vouchers, gives lawmakers great latitude in designing parental choice policies: The flow of public funds to private schools—including religious schools—is constitutional as long as the funds reach the schools “wholly as a result of [a parent’s] own genuine and independent private choice.” Lawmakers hoping to expand the market of education options and raise the quality of existing options must weigh the costs and benefits of specific proposals.

Omand’s policy study, “The Struggle for School Choice Policy after Zelman: Regulation vs. the Free Market,” examines various school choice models and uses results from a national survey of private schools to show how state regulation of schools inhibits the market and the success of such programs.

Based on the survey responses and an analysis of existing programs, Omand also offers a set of principles for enacting choice programs that will foster a robust market and provide the greatest numbers of options for families. Lawmakers are encouraged to follow these guidelines when crafting new choice legislation:

  • Make choice universal and not limited by income eligibility.
  • Pose few barriers to school participation and enact safeguards to prevent future legislation from doing so.
  • Target policies to families who switch from public to private and phase in current private school users over time.
  • Set a voucher/tax credit amount according to the cost of non-subsidized schools. Do not cap the amount the school can charge. Price caps limit school participation and reduce the market responsiveness that occurs when parents are responsible for a portion of the cost.
  • Reduce the use of third-party payers—taxpayers or charities—by enacting tax credits parents can use against income and property tax.

Existing Programs

Eleven states currently have tax credit or voucher programs.

  • Three states (Illinois, Iowa, and Minnesota) offer tax credits or deductions to parents who use private schools.
  • Three states (Arizona, Florida, and Pennsylvania) offer individuals or corporations tax credits for donations to scholarship organizations that pay tuition on behalf of poor students.
  • Six states (Colorado, Florida, Maine, Ohio, Vermont, and Wisconsin) have voucher or voucher-like programs.

With the exception of the programs in Maine and Vermont, which apply to rural areas, existing voucher programs are limited to poor or disabled students or to students in low-performing schools. Universal vouchers have been proposed but have not yet been enacted.

While supporters of school choice have in the past focused most of their effort on establishing the constitutionality of school choice and influencing public opinion, Omand argues attention must now be focused on the effects of the programs. She points out the potential for increasing the quality and diversity of the private school market depends on the number of students and schools that participate. However, restrictions on student eligibility, voucher amounts, and private school eligibility constrain the number of participating students and schools, thereby limiting competition and the positive impact of the programs.

For example, poverty thresholds and rules that limit programs to a particular locality limit the number of students who may participate. Regulations and the amount of the voucher limit the number of schools willing to enroll students. Under programs with a low voucher value, only subsidized religious schools—primarily Catholic—are likely to participate.

Regulation of private schools is also likely to reduce participation. The study identifies several regulations common to existing and proposed programs. Such rules include forbidding schools from having admission preferences, not permitting tuition charges beyond the amount of the voucher, and requirements for accreditation, teacher qualifications, and standardized testing.

Private School Survey

To gauge how these regulations would affect private school participation, the author surveyed 5,573 private schools across the country, asking them also for their reaction to a voucher capped at half the per-pupil spending in the local public schools. One thousand of the schools responded. Among the survey findings:

  • Opposition to tuition caps is correlated to the tuition rate of the school. Schools with more expensive tuitions oppose rules that prevent them from charging extra tuition beyond the cost of the proposed voucher.
  • Christian schools oppose policies that forbid them from giving admission preferences to members of their denomination and strongly oppose regulations that allow students to opt out of religious activities.
  • Few schools oppose a prohibition on the teaching of “hatred” of any person or group on the basis of ethnicity, race, national origin, or religion.
  • Most schools want to be able to screen children for admission on the basis of behavioral problems.
  • Opposition to using the state test depended on the state where the school was located. Some state tests were clearly unpopular. There was little opposition by schools in states using the Stanford 9 test.
  • The majority of private school principals (82 percent) support vouchers. Only 3 percent oppose tax credits for parents and .5 percent oppose scholarship tax credits.

These responses suggest a high degree of regulation would limit the number of existing schools willing to participate in school choice programs and inhibit the creation of new schools. Omand recommends new choice programs erect as few barriers to participation as possible, and she provides a set of design dos and don’ts for lawmakers to follow in crafting new choice legislation.

Krista Kafer is senior policy analyst for education at The Heritage Foundation. Her email address is [email protected].

For more information …

H. Lillian Omand’s October 29, 2003, Policy Analysis for the Cato Institute, “The Struggle for School Choice Policy after Zelman: Regulation vs. the Free Market,” is available online at Cato’s Web site at