Friday Freakout: Is Federal School Choice Best for Americans?

House Speaker John Boehner spoke this week about a five-step plan to boost economic growth. Part of that plan includes school choice:

“That’s why we created the first federally-funded private school choice initiative in America, the D.C. Opportunity Scholarship Program.

And I’ll tell you what: it is succeeding beyond even our highest expectations. 97 percent graduating from high school.  A 92 percent approval rating among parents.

Why wouldn’t we go ahead and start expanding this initiative to the rest of the country?”

On the surface, more school choice for all American students sounds great, but how that ideal is achieved is another issue entirely. Because that very point likely will be a hot topic of debate, we think it’s important to address it in our first-ever pre-freakout.

First, the United States is already facing a huge and mounting national debt—nearly $18 trillion or about $56,000 for every man, woman, and child. Although this problem is fairly well publicized, folks seem to push it aside every time there is any talk of the possibility of federal funds being made available for a new purpose they support. The fiscal (and political) pressure caused by this huge debt will, most certainly, limit Congress’ options.

Because it is highly unlikely that Congress would ever divert a substantial amount of this funding away from those targeted students populations, about the only way a federal voucher program might be viable would be as a full or partial replacement for these federal programs.

Despite the fact that school vouchers are almost certain money savers at the state and local government levels, the same is not likely to be true for a federal school voucher program.

The difference comes from how public schools are funded. The lion’s share—about 90 percent—comes  from state and local taxes. When school vouchers are funded at the state or local level, as students use the monies to attend private schools, the public treasury is able to offset the additional cost of the vouchers through reduced public school costs.

It would be very hard, though not impossible, for a federal school voucher program to work that way. The Opportunity Scholarship Program (OSP) in Washington, D.C. provides an illustrative example.

Eligible students get a voucher (for up to $8,000) that is paid for by the federal government. Currently, the D.C. Public Schools are spending more than $12,000 per student annually in variable instructional and student support costs. Thus, a clear $4,000 in net savings is realized for every student that uses an OSP voucher to leave the D.C. Public Schools and enroll in a private school. But, here’s the rub: The $12,000 in gross savings per student is all captured by the jurisdiction of the District of Columbia. The D.C. Public Schools are paid with local taxes on D.C. residents. So, when the cost burden on the public schools is reduced, the money saved is all local. Thus, the federally funded OSP vouchers are a pure additional cost to the federal government—about $13 million per year for more than 1,600 kids.

To expand such a program nationwide would carry an astronomical price tag: $8 billion for one million students (which is about only 2 percent of the current public school enrollment). It’s not going to happen. Nor should it.

If there is ever anything to come of this talk of a federal role in school choice, it will likely be something rather limited. Currently, the federal government spends about $40 billion annually on three major, board-based K-12 programs: School Nutrition ($15 billion); Special Education ($12 billion); Title I – Disadvantaged Students ($14 billion). About half of all public school students, approximately 25 million, receive help from those targeted federal monies—about 22 million qualify for the federal Free and Reduced-Price Lunch Program (with this poverty designation also making them the target of the Title I monies) and six million assessed as students in need of special educational support. With a substantial overlap between poverty and special education services, merely summing these two student counts would likely result in some double counting (so we’ve assumed half of the special-needs students are also from low-income households).

Because it is highly unlikely that Congress would ever divert a substantial amount of this funding away from those targeted students populations, about the only way a federal voucher program might be viable would be as a full or partial replacement for these federal programs.

Were that to happen, in its simplest form, the $40 billion from those three programs could be combined and doled out as $1,600 vouchers to 25 million kids, who could then take them to the public or private school of their choice. These monies would then be all of the federal aid any of these eligible students would receive for covering their additional nutritional and educational support needs. Thus, the voucher would still have to be a supplement to the state and local funds used to support the child’s education, just as these federal programs are now.

What’s more likely, yet still a long shot, is that each program might be modified in isolation. The School Nutrition Program would probably remain as is. It’s already effectively a voucher program and it’s run by a separate federal agency, the United States Department of Agriculture (USDA), not the Department of Education. The $14 billion Title I program might be transformed into a $636 voucher for 22 million kids and the $12 billion Special Education program into a $2,000 voucher for six million kids. As cited above, the students with special needs from low-income families would be eligible for both—a total of $2,636.

Again, at best, any type of federal school choice program will be only a supplement to state and local programs. While there is some solid policy logic around a move in this direction, the reality is that it would be quite difficult to accomplish both operationally and politically.