Is Universal Choice Bankrupting States?

Arguing that universal school choice will “bankrupt states” is a bit like looking at your grocery receipt, circling the line for coffee, and declaring you’re headed for foreclosure. Sure, coffee might be getting more expensive, and maybe you’re buying it more often than you used to. But whether your household is in trouble depends on the whole budget: mortgage, childcare, health insurance, car payments, the stuff that actually determines whether the lights stay on.

State budgets work the same way. If a policy is truly “bankrupting” a state or “blowing a hole” in its budget, it shouldn’t just be “a lot of money” in the abstract. It should be large enough, and growing fast enough, to start crowding out everything else the state pays for. So before we get swept up in the rhetoric (from either side), let’s do the boring-but-important thing of putting choice spending in context, next to total state spending, and see whether the “bankruptcy” story holds up.

I’m going to throw a lot of data at you that make three points:

1. In order for choice programs to “bankrupt” states, they would have to take up a significant percentage of state budgets. They do not.

2. If choice programs are “bankrupting” states, we should see choice program spending taking up an ever-larger slice of state budgets, potentially crowding out other spending. We are not seeing that either.

3. Most calculations stack the deck against choice programs anyway, only counting costs while ignoring savings or benefits. Even this totally biased way of looking at the question does not show choice bankrupting states.

To the Data Mobile!

First, given the size of state budgets, choice “bankrupting” states would require a lot of students participating in choice programs.

The chart below shows choice programs and public school enrollments from 1992 to 2026 for ESA, voucher, and tax-credit scholarship programs. Public school enrollment data come from the U.S. Department of Education, and choice participation data is from EdChoice, which we collect from various state and nonprofit agencies that administer the programs.

The orange bars represent the total number of students in public schools in states with choice programs while the blue bars represent the total number of students in choice programs. The points on the green line give the choice market share, depicted as choice enrollment as a percentage of total K-12 school enrollment (public and private schools) in states with choice programs.[1]

Choice enrollment as a percentage of total public and private school enrollment in states with choice programs increased from 0.002% in 1992 to 5.3% in FY 2026 when nearly 1.5 million students were participating in ESA, voucher, and tax-credit scholarship programs. Notably, public school enrollment dipped in choice states by about 650,00 in 2021—this decrease is the Covid pandemic effect. As states expanded choice in the “universal era” post-Covid, however, public school enrollment in states with choice programs decreased slightly.

The chart might as well be depicting skyscrapers and shacks.

Follow the money (and the share).

If opponents are right that universal choice is “bankrupting” states, it shouldn’t just show up as a big number in isolation. It should show up as choice taking a rapidly growing bite out of state budgets overall, meaning state spending on everything (Medicaid, transportation, corrections, higher ed, child welfare, etc.), not just K–12.

That’s why comparing the total cost of choice programs to total state expenditures on all public services is such a useful stress test for the claim. It’s the closest thing we have to a “crowd out” measure: if choice is truly breaking state budgets, we’d expect to see choice costs ballooning into a large (and fast-growing) share of what states spend across the board.

Between 1992 and 2026, choice program costs grew, especially in the post-Covid “universal era.” But state expenditures on all public services grew too, and they remain in a completely different universe.

In FY 2026, total choice program costs are about $10.2 billion, while total state spending on all public services in states with choice programs is nearly $1.45 trillion. Put differently: 

choice programs represent about 0.74% of total state expenditures, or less than one penny of every state dollar.

States with universal eligibility programs

Opponents and skeptics have been pointing to universality as causing budget problems for states. Although these concerns are legitimate, they’re often made without sufficient data to support them. Below is the trend chart with dollars adjusted for inflation for 14 states with universal choice programs. The orange bars depict total state expenditures on all public services and the blue bars give the total cost of choice programs. The green line shows choice spending shares each year as a percentage of total state expenditures.[2]

Between 2020 and 2026, choice’s share of state expenditures in universal states increased from 0.43 percent to 1.3 percent. Does this look like a rapid expansion?

Zooming in on FY 2026 (see chart below) shows $9.0 billion in choice expenditures compared to $688.2 billion in total state expenditures on all public services. 

Put another way, the state invests $1.30 for every $100 it spends on public services.

These facts alone don’t “settle” every fiscal question one could ask about choice. But it’s highly relevant to the specific charge that universal choice is bankrupting states. Bankruptcy narratives require something to be budget-dominant or budget-disruptive. A program that’s around 1% of state spending is limited in its ability to upend state finances in the way critics imply.

One big caveat: price tag is not the same as net cost

Up to this point, I’ve only discussed program costs of ESAs, vouchers, and tax-credit scholarships.

But that’s not the full fiscal picture, because it ignores the offsetting savings that occur when students switch from public schools into choice programs, what researchers often call “switchers.”

When a switcher leaves a public school, taxpayers no longer need to fund that student at the same level through the district system, and districts can reduce costs over time as enrollment declines. Whether savings show up immediately, gradually, or unevenly depends on a state’s funding formula and how “sticky” district costs are in the short run. But the central point is straightforward: 

Gross program spending is not the same thing as net fiscal impact.

This is exactly why EdChoice’s fiscal effects work estimates both costs and savings—because the relevant question for taxpayers and state budgets isn’t “how much did the program spend?” but “what were the net effects after accounting for students who would have been funded in public schools?”

And the long-run effects aren’t just budgetary.

Even a clean net-fiscal estimate still misses something important: choice programs can generate long-run benefits that don’t show up neatly in next year’s appropriations bill.

A large body of research finds private school choice programs are associated with improvements in long-run outcomes like educational attainment (high school graduation, college enrollment, and college completion) that are tied to higher earnings, better health outcomes, and reduced crime. An EdChoice brief on the long-run impacts in Mississippi summarizes that logic and reports a projected positive long-term impact (in that state context) ranging from hundreds of millions to billions per academic year, driven by attainment-related benefits and related social outcomes.

You don’t have to accept every estimate at the top end of the range to recognize the broader point: fiscal cost debates that ignore long-run human capital effects are missing a major part of the ledger.

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[1] NCES reports public school enrollment data through FY 2025. I use the FY 2025 figure for FY 2026 in the chart. The Private School Universe Survey (PSS) data available through the U.S. Department of Education is reported through FY 2022. I use FY 2022 values for subsequent years.

[2] As data on state expenditures are publicly reported by the National Association of State Budget Officers (NASBO) through FY 2024, I use the FY 2024 values for FY 2025 and FY 2026.

This was originally published to our Substack.