School Choice Saves Money, Report Shows

Published August 1, 2007

An April 2007 report from the Milton and Rose D. Friedman Foundation estimates the 12 voucher and tuition tax credit programs in operation nationwide before the 2006-07 school year will produce a 15-year cost savings of $444 million.

In the weeks following the release of the report–Education by the Numbers: The Fiscal Effect of School Choice Programs, 1990-2006, prepared by Friedman Foundation Senior Fellow Dr. Susan Aud–critics of private school choice failed to come forward to dispute the findings.

“I think there is a concession of the point, which is why we’re not seeing a lot of push-back on it,” said Robert Enlow, executive director of the Friedman Foundation.

Aud observed that at press time the only criticism had come from some school choice supporters who believe her estimate of savings is too low. Aud used reported instructional expenditures only, rather than the broader category of current expenditures, to compare with the funds provided to students to pay private school tuition.

“I wanted to show the effects directly attributable to the tax credit or voucher program,” Aud said.

Savings Leaders

Of the 12 programs studied, Aud found only Utah’s Carson Smith special-needs voucher program and the 200-year-old practice of “town tuitioning” in Maine and Vermont to be cost-neutral. The remaining programs have reaped savings of at least $1 million each.

The report identifies Pennsylvania’s scholarship tax credit program as generating the greatest savings: $144 million since its inception in 2001. Florida’s McKay Scholarships for disabled children have saved taxpayers $139 million in the program’s first seven years of operation.

“Some of the voucher programs for special-needs students show these students can be instructed for much, much less than the public education system does,” Aud said.

The report revealed other noteworthy savings for the Cleveland Scholarship and Tuitioning Program ($61 million), Florida’s corporate tax credit scholarships ($42 million), and the Milwaukee Parental Choice Program ($28 million).

Enlow said the scope of Education by the Numbers gives it a landmark quality.

“It’s the most comprehensive report,” Enlow said. “It includes every single program out there in the last 15 years.”

More Transparency

Looking ahead, Aud has great expectations for the fiscal impact of Utah’s new universal voucher program, which will give almost all students between $500 and $3,000, based on family size and personal income.

“I think they’re going to save a lot of money. Even for the low-income students, the amount spent is not very high,” Aud said. “I hope it’s going to force Utah to rethink how they fund their schools.”

Aud believes the introduction of more expansive choice programs will give parents and taxpayers a clearer picture of where money goes in school systems.

“In order to figure out how to implement a voucher program, someone has to understand how the system works,” Aud explained. “I think it’s going to be a call for transparency, and if people see a large number of students are simply getting $7,500 and taking it with them, then they’ll wonder, ‘Why can’t schools be funded that way?'”

False Rumor

Ultimately, Aud believes educational choice will improve school funding systems’ efficiency.

“But it’s not going to happen until schools are held accountable for their spending and the number of students they have,” Aud said.

For now, leading school choice advocates are glad to debunk the oft-repeated but unproven assertion that voucher and tax credit programs are a financial burden to state and local governments.

“The fact is, you’ve got to be able to put a myth to rest,” Enlow said. “If you look at the study and the methodology, there’s just no way to dispute anymore that school choice doesn’t take money from public schools.”

Ben DeGrow ([email protected]) is a policy analyst for the Independence Institute, a free-market think tank in Golden, Colorado.

For more information … Education by the Numbers: The Fiscal Effect of School Choice Programs, 1990-2006, written by Dr. Susan Aud and published in April 2007 by the Milton & Rose D. Friedman Foundation, is available through PolicyBot™, The Heartland Institute’s free online research database. Point your Web browser to and search for document #21292.