Voucher Programs Around the World

Although there has been limited success in establishing government-financed school voucher experiments in the K-12 education system in the United States, the use of vouchers and voucher-like programs as mechanisms for enhancing parental choice in the education sector is common in many countries around the world.

While some of the more direct school assistance mechanisms–for example, France’s direct assistance to Catholic schools–would not pass constitutional muster in the United States, the experiences of other countries with different voucher policies and programs provides a rich source of school choice policy options for consideration by U.S. lawmakers.

Governments around the world recognize the importance of education, and in most countries the state is both the major financier and provider of education. However, government efforts to expand schooling have not reached all members of society equally.

While governments may have an interest in promoting and financing the market for education, it does not necessarily follow that the public sector has a role in providing that education. In many countries, there are other providers of education, such as church schools, home schools, and private schools, both for-profit and not-for-profit.

By extending financing to these other education providers through vouchers or grant programs, governments would give all parents, regardless of income, the opportunity to participate more fully in their child’s education by choosing the school that is right for them.

Many countries use vouchers and voucher-like programs such as stipends and capitation grants to enhance school choice. (See table.) The use of these mechanisms in the education sector is common in Europe and member countries of the Organization for Economic Cooperation and Development (OECD). Here are some examples of voucher programs currently operating in different countries.

Sweden

In the early 1980s, less than 1 percent of Swedish children attended private schools, even though half of the private schools did not charge fees and citizens felt the centralized public schooling system was monochrome and unresponsive.

A series of reforms in the early 1990s introduced greater parental influence through the devolution of school funding and management.

New school enrollment rules allowed money to follow students, and municipalities were required to provide capitation grants to each private school equal to 85 percent of the public school cost. This new funding system enabled nearly 90 percent of the private schools to be free from charging fees. As a result, enrollments in private schools continue to grow, more than doubling in recent years to reach almost 3 percent of total enrollments.

The Nacka municipality, outside Stockholm, has created a particularly effective voucher system. Each year, parents are given a catalog profiling all the local schools plus a voucher that is to be handed over to the school of their choice. (Sweden, incidentally, is one of the few countries where an actual physical voucher is used.)

Parents who do not choose a school are contacted by some of the closest schools to encourage an active choice. Active choice also is promoted by requiring parents to present a new voucher before the first, fourth, and seventh grade even if the child is attending the same school. Private and public schools alike follow the national curriculum.

The competition this has caused between schools for pupils has resulted in more efficient allocations of funds and clearer institutional focus.

Denmark

Denmark has a long tradition of private schooling. In 1814, government legislation made seven years of education compulsory. However, “compulsory education” was loosely defined, and people remained free to educate their children as they saw fit as long as children received instruction in the principal subjects. Continuing in this tradition, any group of parents today can claim public funding by declaring themselves a private school if they have at least 28 students.

Most private schools in Denmark are religious institutions. The state preserves their religious freedom by fully funding all schools that meet the following requirements:

• Teachers are licensed;

A core curriculum prescribed by the state is taught; and

Students meet quantified academic standards.

All schools and universities in Denmark receive grants according to the number of students enrolled in the institution. The state allocates grants to private schools corresponding to approximately 80 percent of the total expenditure of the schools. It is assumed centrally that private schools are less costly than public ones, and private schools are mandated to charge at least some fee to parents. This is the Danes’ way of ensuring parental participation, since the Ministry of Education does not have school inspectors.

About 12 percent of all Danish children attend a private school, and this percentage has been increasing in recent years.

New Zealand

Since the late 1980s, the New Zealand education system has undergone sweeping reforms that have fundamentally altered the shape of the public school sector. One of the key reforms shifted the responsibility for governing and managing schools away from central control and towards community control.

The reforms also established a system whereby higher funding levels are provided to schools with students from low-income families. While the bulk of overall funding for schools is related to the number of students enrolled, fully 7 percent of operational funding is income-targeted.

New Zealand also has introduced two different voucher programs targeted at low-income families. The first of these, Targeted Individual Entitlement (TIE), was introduced in 1995. The second, a variant on TIE, was introduced in 1999 and is specifically targeted at New Zealand’s indigenous population, the Maori.

The Netherlands

The Dutch education system has been decentralized and demand-driven since 1917. Almost 70 percent of schools in the Netherlands are administered and governed by private school boards. Public and private schools are funded by the government on an equal footing, and most parents have a choice of several schools near their homes.

Parental choice has spurred some schools to develop a unique profile and to improve the education they offer. While schools are free to determine what is taught and how, the Ministry of Education does impose a number of statutory quality standards. The Education Inspectorate is charged by the Minister of Education with supervising the manner in which schools fulfill their responsibilities.

In recent years, there has been a trend towards greater autonomy and decentralization. Many central government powers have been transferred to the level of the individual school. Central government control is increasingly confined to broad policy-making and to creating the right conditions for the provision of quality education. Institutions are being given greater freedom in the way they allocate their resources and manage their own affairs, although they still answer to government for their performance and policies.

Schools receive extra funds to combat educational disadvantage. Additional funding is provided for schools in districts and regions with high numbers of underprivileged families.

Chile

Chile is the only developing country to have a universal voucher program in place. In 1980, all school property was transferred from the education ministry to the municipalities and teachers became municipal employees. Each month, individualized grants were given to each municipality based on the number of students attending class in the municipality’s schools. The municipal authorities also fund student attendance at subsidized private schools, which parents can choose. There also are private schools operating outside of the voucher system, which do not receive any public funding.

In the short run, the introduction of Chile’s voucher program led to large numbers of schools converting from paid-private to subsidized-private, thereby increasing government-financed education spending. However, as time passed, reductions in the real value of the voucher led to paid-private schools regaining their previous market share.

Subsidized-private schools have proven to be slightly more cost-effective than municipal schools. While test scores are similar in municipal and subsidized-private schools after controlling for socioeconomic status, unit costs are lower in the subsidized-private schools. However, to ensure that central government grants are used as intended, there are severe penalties, including personal liability, for misappropriating government funds.

Harry Anthony Patrinos is senior education economist with the World Bank in Washington, DC. He specializes in the economics of education and has published widely in this field. He is the founder of EdInvest, the global education investment information facility, which has a Web site at www.worldbank.org/edinvest. His email address is [email protected]. The views expressed here are those of the author and should not be attributed to the World Bank Group.

For more information . . .

visit the global education investment information facility at www.worldbank.org/edinvest.