Executive Summary: Can Vouchers Reform Public Schools?

Published July 23, 2008

Policy Study (pdf)

The author distinguishes between “charity vouchers” and universal vouchers and explains why the former are unlikely to cause systemic reform of public schools. However, new data on the Milwaukee Parental Choice Program show that even charity vouchers demonstrate the reforming potential of school choice. Reform advocates shouldn’t give up on vouchers, Clowes concludes.

This paper addresses concerns about the efficacy of school vouchers that have been raised recently because of disillusionment among some school choice advocates over the limited academic improvements that voucher competition has produced in the Milwaukee Public Schools. That has prompted questions about whether vouchers are indeed capable of reforming public schools.

1. Existing programs offer “charity vouchers,” not universal vouchers.

Before writing off universal vouchers, it would seem prudent to try them. Existing voucher programs are mostly what Nobel Laureate Milton Friedman called “charity vouchers,” targeted programs intended to help low-income families. Admirable though the programs may be, their effects are largely limited to program participants. “Charity vouchers help the poor,” Friedman told Reason’s Nick Gillespie, “but they will not produce any real reform of the educational system. And what we need is a real reform.”

Other proponents of market competition in K-12 education such as Andrew Coulson, Myron Lieberman, and John Merrifield have repeatedly warned that the results from voucher programs like Milwaukee’s are not instructive as to what would likely ensue from vouchers in a free-market system of education. For example, Lieberman noted in 2002 that existing programs were “means-tested vouchers that exclude for-profit schools, severely restrict eligibility, are under constant threat of termination, are small scale in economic terms, and are subject to anti-competitive regulations of one kind or another.”

2. Before rejecting universal vouchers, we should try them.

Although existing voucher programs are not universal, their short-comings are often used as evidence that universal vouchers would not work. It would be more appropriate for reform advocates to admit the limitations of charity vouchers and actually try universal vouchers before condemning them for not producing significant improvements in the public schools.

A universal voucher, available to all students, would help the poor much more than a charity voucher does, because it would make possible a revolution in schooling A universal voucher would help the poor much more than a charity voucher does, because it would bring not only more schools but a revolution in schooling.just as competition for telephone service led to a revolution in communications. A universal voucher, said Friedman, should be of reasonable amount, should not impose detailed regulations, and should not prohibit parents from adding to the value of the voucher.

Universal vouchers have not yet been tried and they won’t be tried in the future if education reformers give up on them so easily, or continue to oppose them, as some do. Instead of turning to some other reform strategy, such as instructional reform, reformers should be urging Milwaukee’s school choice leaders to admit the limitations of charity vouchers and if they really do want their public schools to improve to rethink their opposition to universal vouchers.

3. The Milwaukee Parental Choice Program demonstrates that even a charity voucher program can improve public schools.

Even charity vouchers demonstrate the reforming potential of school choice. The Milwaukee Parental Choice Program, for example, has helped bring about a higher graduation rate, a narrowing of the graduation gap between white and minority students, a reduced dropout rate, before- and after-school programs, more Montessori schools, improved teacher selection procedures, decentralization of budgeting authority to local schools, and greater influence of parents in local school councils. It gave school reformers including public school officials considerable clout in their negotiations with public school system interest groups.

A qualitative study by Milwaukee Public Schools Board Member John Gardner in 2002 reported significant systemic improvements in MPS in the late 1990s, when enrollment in voucher schools was increasing most rapidly. A quantitative analysis of this same period by Harvard University economist Caroline Hoxby showed significant improvements in student achievement in lower-scoring MPS schools. A recent extension of Hoxby’s analysis by economist Rajashri Chakrabarti showed an even larger MPS improvement in subsequent years up to 2002.

Critics point to relatively flat test score results for MPS students in recent years, but the system’s high school graduation rate improved from 49 percent in 2002-03 to 58 percent in 2006-07. Black and Hispanic graduation rates increased more than the white graduation rate. During this period, minority and low-income enrollments increased as a share of total MPS enrollment as well. The real story is that MPS grades did not decline despite keeping many black and low-income students in school who would have dropped out in past years, and despite increasing enrollment by students who tend to test poorly.

4. Public schools are most likely to improve when vouchers pose an imminent and specific threat.

Public schools faced with an imminent and specific threat from vouchers respond most strongly to the competitive challenge. Three separate studies of Florida’s A+ vouchers indicate the response of a public school to voucher competition increases as the threat of vouchers becomes more imminent. “The more in danger a school is of having to compete with vouchers, the greater score gains they make on both the FCAT and Stanford-9 [achievement tests],” concluded Jay Greene in a 2003 Manhattan Institute study of the Florida program. Schools already facing vouchers made the greatest gains, with gains dropping off as the threat of vouchers diminished. When the threat of vouchers goes away, he noted, “so does the incentive for failing schools to improve.”

Once again, Milwaukee’s experience with the MPCP is instructive. In the first year of the program, only 341 students were able to attend voucher schools. The loss of so few students, at a time when overall enrollment was rising, had little or no competitive effect on the public schools. The program grew slowly until 1998, when the Wisconsin Supreme Court upheld the constitutionality of the program and the U.S. Supreme Court declined to hear a challenge to the case. The program grew rapidly thereafter, but overall enrollment was also growing, protecting the MPS from any significant reduction in student enrollment. Only since the 2003-2004 school year has the MPS experienced declining enrollment as a result of the MPCP.

The next few years are likely to reveal the reforming power of the Milwaukee Parental Choice Program on public schools, since only now is the success of voucher schools posing a genuine competitive threat to existing public schools. The public schools may begin to improve more rapidly in response to this enhanced competitive environment.

5. Public schools are most likely to improve when voucher values are comparable to public school spending levels.

The voucher amount must be adequate for parents to afford tuition at private secular schools as well as private religious schools.”It is not easy, perhaps not possible, to provide a satisfactory education for $2,500 per student,” wrote Milton Friedman in a 2002 New York Times article about the Cleveland voucher program, which at the time provided a voucher worth only $2,250 per student, with an additional $250 paid by the parents. He suggested raising the value of the Cleveland voucher to the amount Ohio spent per child in the public schools, which at that time was about $7,000. By 2006-07, it was more than $10,000. Such a substantial voucher would not only give students a wider choice of schools, it would also attract new education providers into the market.

Although the maximum value of the Milwaukee voucher is still only half the per-pupil spending in Milwaukee’s public schools, the city’s voucher program has grown steadily for the past decade by an average of 1,500 students a year. By contrast, the voucher program in Cleveland, where the voucher is worth only about a quarter of the per-pupil spending in the city’s public schools, has grown little over the past several years. The voucher amount must be adequate for parents to afford tuition at private secular schools as well as private religious schools.

6. Public schools are most likely to improve if enrollment losses due to competition from voucher schools have financial consequences.

In theory, when a public school student chooses a voucher school, the public school should experience some kind of financial repercussion. However, some voucher programs are designed so that public schools gain funding when they lose students to vouchers. Noting these financial patterns in both Milwaukee and Cleveland as early as 2001, American Enterprise Institute scholar Frederick M. Hess observed wryly that when coupled with increasing enrollment in the public schools, such voucher programs “make competition more of a relief than a threat.”

Making public schools feel the effect of competition is best accomplished by funding public schools in the same way voucher schools are funded based on the number of students who attend the school. Voucher opponents frequently say public schools should not suffer any loss of funding from vouchers, but such a “hold harmless” provision virtually ensures that vouchers will not have a positive effect on the performance of public schools.

7. Recommendations

People genuinely interested in using school choice to improve public schools should consider the following recommendations:

  • Don’t give up on vouchers just because test scores aren’t improving very much. Give the programs time to work and check out all aspects of performance improvement test scores, graduation rates, dropout rates, achievement gap, graduation gap, and changing demographics.
  • Don’t give up on universal vouchers before they have been tried anywhere. Existing voucher programs are hobbled in various ways and do not tell us much about how a truly competitive market in K-12 education would operate.
  • When designing voucher programs, make the competitive effect of vouchers as explicit as possible.
  • The more closely the value of the voucher approaches the per-pupil spending of the public schools, the more secular private schools are likely to participate and thus a greater variety of educational choices is made available for parents.
  • Public schools should suffer some financial consequences when they lose students to voucher schools. The most effective way of doing this is to have “the dollar follow the child” to schools.


About the Author

George Clowes, Ph.D., is senior fellow for education policy at The Heartland Institute. He served as founding managing editor of School Reform News between November 1996 and January 2005. During those eight years he solicited and edited hundreds of articles reporting on the latest developments in curriculum, school choice, school finance, and other aspects of school reform. Dr. Clowes has also written longer pieces such as “Still No Consensus on School Choice” (April 2004) and contributed to “The Heartland Plan for Illinois” (May 2002).

Based on George Clowes, Ph.D., “Can Vouchers Reform Public Schools? Lessons from the Milwaukee Parental Choice Program,” Heartland Policy Study #120 (Chicago, IL: The Heartland Institute, July 2008). Copies of the 45-page study are available for $19.95 each. Permission is granted to reprint or quote from this Executive Summary, provided appropriate credit is given.

© 2008 The Heartland Institute. Nothing in this Heartland Executive Summary should be construed as reflecting the views of The Heartland Institute, nor as an attempt to aid or hinder the passage of legislation. Questions? Contact The Heartland Institute, 3939 N Wilke Road, Arlington Heights, IL 60004; phone 312/377-4000; fax 312/377-5000; email [email protected]; Web http://www.heartland.org.