The Voucher Challenge

“The School Choice Advocate” | January 2004

Those of us who have long worked to promote educational choice have mixed feelings when we observe the current scene. On the one hand, sprouts of educational vouchers keep breaking through the cement of teacher union opposition all over the place — the latest possibly due to sprout in the District of Columbia as we go to press, of which more later. Legal obstacles are being steadily surmounted. Public understanding and support of educational choice soars.

On the other hand, despite years of effort, actual voucher programs are few and far between: in Milwaukee, Florida, Cleveland, now Colorado. In addition, a few states, notably Arizona, Minnesota and Florida provide substantial tax credits to foster parental choice. Equally important, the existing voucher plans are small, limited for the most part to students in low-income families or in failing schools. Effective reform of K-12 schooling requires a lush lawn of parental choice, not token sprouts here and there.

The D.C. Voucher Plan

The voucher plan for the District of Columbia, scheduled to be voted on in the Senate as we go to press, showcases the problem. The District’s spending per pupil in government schools is among the highest in the nation, well over $10,000 per student. The performance of the District schools is among the worst in the nation. Dropouts are high. Scores on standardized tests are low. A small privately funded voucher program has been flooded with many more applications than it can finance. The successful applicants praise highly the private schools they attend. Those schools, like most other private schools, spend much less per-student than government schools. The situation is crying for a major voucher program — a voucher of say $5,000, or less than half of what government schools spend per student, available to all students in the District for use in any private school, including parochial schools, and accompanied by freedom of students to switch among government schools. The total cost of the educational system would plummet and the quality would soar.

What was the actual reaction? By the narrowest of margins, the House of Representatives passed a bill that provided for roughly 2,000 vouchers (the total number of students in the District is 70,000) paying up to $7,500 and available only to low-income students. The whole to be financed, not from the savings to government schools from fewer students, but from an additional appropriation of $14 million so that government schools would receive the same total sum despite the voucher-induced emigration of students. A pretty good deal for the educational establishment — more for less.

But apparently not good enough. The Senate Appropriations Committee, under pressure from the teachers’ unions and the educational establishment, decided that the establishment had to be compensated threefold for accepting vouchers. It voted to appropriate $14 million for vouchers, $13 million in addition for the government schools and $13 million for additional charter schools. These are obviously expensive vouchers: $40 million for 2,000 vouchers or $20,000 per voucher, of which at most $7,500 goes to the school accepting the voucher. The rest goes as compensation to the educational establishment for enrolling fewer students!

Despite their public opposition to the voucher measure, the unions must secretly be delighted with the result. By their opposition, they have forced their opponents to pay a high price for a small program. In compensation, the educational establishment receives $26 million plus the savings from the departed voucher students. We cannot afford many “victories” like this.

Need Vouchers be Costly?

To widen the use of vouchers, we need to counter the major argument that the teacher unions consistently present against vouchers, which is that they “take money from public schools” and will add to the burden on the taxpayer.

The quoted claim is literally correct, yet highly misleading. Vouchers financed out of the regular educational budget do take funds from the government schools, but they also take students. The amount spent per child in government schools has invariably been higher than the amount of the voucher, so vouchers take a smaller percentage of funds than of students. If there were initially no students in private schools, such vouchers would always save the government money.

However, there are students in private schools. Vouchers can initially be limited to students in public schools, but that is not tenable for long, and sooner or later, vouchers will — and should — be extended to students in private schools. This opens up the possibility that universal vouchers could raise costs — but only because they would rectify a current injustice of requiring some parents to pay twice for the education of their children, once in taxes, once in private school tuition. Whether vouchers do save money or add to costs depends on the fraction of students in government schools who use vouchers to attend private schools and on the initial scale of private schools.

Judging from experience to date, the demand for vouchers is sufficiently high to assure that, after a few years at the most, the number of government school students who demand vouchers will more than provide enough of a saving to fund vouchers for the small fraction of students now in private schools.


Another favorite ploy of voucher opponents is, in the name of accountability, to require schools accepting vouchers to follow the same rules as government schools. This would sharply reduce the number of private schools willing to accept vouchers and undermine a main purpose of vouchers — to open the way for innovation and experiment in teaching methods.

Voucher schools do need to be accountable to avoid fraud and misrepresentation. But they need to have the maximum possible freedom with respect to teaching methods, curriculum, and the like. Accountability in that area is best provided by parents by their choice of schools. Customer accountability is how competition produces progress.

Means Testing

As the D.C. case illustrates, the most egregious defects in our government school system are undoubtedly in the inner cities and affect most seriously low-income families. It is therefore not surprising that the first steps away from the present system took the form of educational vouchers for students from low-income families. This has led to vouchers being viewed as a welfare program — as a way to bring badly needed assistance to youngsters who now graduate from school without being able to read or write or figure or, even worse, drop out of school altogether.

Vouchers limited to low-income families are a welfare program. But they are also a way of introducing competition into a system that has been monopolized by the teachers’ unions and the administrators. Reform from within that system has proved nearly impossible. There are some good schools, thanks usually to a few outstanding individuals who are able to exercise effective leadership. But like most monopolies, this system produces a defective product at a high cost. We spend more per-child on elementary and secondary schooling than any other major country, yet our students, and not only those from the inner city, score poorly on international tests.

Experience in Milwaukee has demonstrated that even a means-tested voucher that covers only a small fraction of the student body can exert a significant effect in improving the quality of government schools and attracting new and innovative private schools. But the possible improvement is limited by small scale. If all students in Milwaukee were eligible for vouchers, the situation would be transformed. The larger market would attract more new start-ups, and give fuller reign to innovation and enterprise.

Structure of Education

Government is committed to assuring that all children receive a minimum education. It currently does so by setting up and running schools, assigning students within a designated catchment area to each school. Students are thereby deprived of choice. They go to the designated school or else they do not benefit from the government commitment and their parents must pay twice for their education — once in the form of taxes, again in tuition.

Equally important, government is deprived of the benefits of competition. It is as if the government decided that the automobiles it uses must be built in government factories. What do you think the quality and cost of government cars would be? Or, to take another example, it is as if recipients of food stamps were required to spend them in a specified government run grocery store.

It is only the tyranny of the status quo that leads us to take it for granted that in schooling, government monopoly is the best way for the government to achieve its objective.

A far more effective and equitable way for government to finance education is to finance students, not schools. Assign a specified sum of money to each child and let him or her and his or her parents choose the school that they believe best, perhaps a government school, perhaps a private school, perhaps home schooling. Let the schools in turn, whether government or private, set their own tuition rates, and control their own operating procedures. That would provide real competition for all schools, competition powered by the ultimate beneficiaries of the program, the nation’s children.