This document discusses defending the fiscal savings of school choice programs. It begins by introducing the founders of a school choice advocacy organization. It then addresses common arguments made against school choice saving money, such as rising overall K-12 spending disproving savings. It argues that savings can still occur even if spending increases elsewhere. It also discusses how school funding formulas can hide true savings. The document provides checklists for estimating the fiscal effects of school choice programs and calculating savings accurately based on average costs and the number of students utilizing vouchers. It emphasizes the need for cautious estimates and that underlying savings can exist despite other policy choices.
2. OUR FOUNDERS
“We have concluded that the
achievement of effective parental
choice requires an ongoing effort to
inform the public about the issues
and possible solutions, an effort that
is not episodic, linked to particular
legislative or ballot initiatives, but
that is educational. This Foundation
is our contribution to that objective.”
Rose D. Friedman
Noted Economist
1910-2009
Milton Friedman
Nobel Laureate
1912-2006
8. …that rhetoric ignores the fact that public schools are
RELIEVED of cost burdens when students leave…
…whether they go to a private school or a different public
school!
9. By not acknowledging any cost
burden relief, opponents implicitly
argue that ALL public school costs
are FIXED.
10. By that logic: Public school costs wouldn’t rise as enrollment
grows!
11. Instead: Opponents are arguing that the relationship
between enrollment and operating costs looks like this.
13. While public schools can (and do)
reduce costs as enrollment
declines…
…it’s often not simple and it’s quite
understandable why they don’t
want to!
14. Schools do have some costs that are FIXED in the
SHORT RUN, but…
…ALL costs are VARIABLE in the LONG RUN!
15. Any cautious fiscal analysis of
school choice will allow for FIXED
costs and focus on VARIABLE cost
savings.
16. Fixed vs Variable Costs
% Breakdown for Tennessee Public Schools
Share Category
67% Variable Costs – Instruction; Instruction Support; Student
Support (e.g. counseling; social service; health; therapy)
24% Semi-Fixed Costs – Administration; Utilities; Maintenance;
Transport; etc.
9% Fixed Costs – Construction & Repair; Capital Equipment;
Debt Obligations
100% Total Costs per Student
Source: National Center for Education Statistics, U.S. Department of Education
17. Fixed vs Variable Costs
for $10,000 Total Costs per Student
Amount Category
$6,700 Variable Costs – Instruction; Instruction Support; Student
Support (e.g. counseling; social service; health; therapy)
$2,400 Semi-Fixed Costs – Administration; Utilities; Maintenance;
Transport; etc.
$900 Fixed Costs – Construction & Repair; Capital Equipment;
Debt Obligations
$10,000 Total Costs per Student
18. If a school’s revenue loss per
departing student is LESS than their
VARIABLE costs per student, then…
…arguments about covering FIXED
costs are baseless!
21. False Premise #1:
Rising K-12 Spending = No Savings
Opponents will argue: If K-12 spending rises AFTER school
choice is implemented, then NO SAVINGS occurred.
Growing overall K-12 enrollment
Rising funding per student
Increasing funding to growing schools while protecting funding of
shrinking schools
Just because savings are re-spent, does
NOT mean the money was never saved!
23. School Funding Formula Effects
Most state school funding formulas PROTECT declining
enrollment schools…which is EXPENSIVE!
• Minimum Guarantees
• Enrollment Funding Phase-out
• Local Funds De-linked from Enrollment
Such provisions are policy choices, not
unavoidable costs!
* Many states could fund a decent voucher program from the
monies spent protecting shrinking public schools.
24. False Premise #2:
Not Enrolled = Not Diverted
Opponents will argue: If a voucher student was NOT
PREVIOUSLY ENROLLED in a public school, then they
were NOT DIVERTED from public school.
Miscategorizes students entering K-12 at the bottom end (e.g.
incoming kindergarten students)
Assumes low-income families can continue to pay private school
tuition if their voucher is eliminated
25. Trigger point is when student accepts
FIRST voucher
* States MUST track this accurately to estimate the fiscal effects
26. Baseline Private School Enrollment Share
National: ≈10%
Tennessee: ≈7.6%
Source: National Center for Education Statistics (NCES), U.S. Department of Education
Whenever someone claims that the share of voucher
students NOT DIVERTED from public schools is higher
than the state’s baseline…
…you need to start asking more questions!
27. Baseline Private School Enrollment Share
Reasons why voucher students not diverted public schools might
be HIGHER than the baseline suggests:
• Families applying for school vouchers are more interested in private
education (selection bias)
• More private school options are available in areas where voucher-eligible
students live (supply differential)
Reasons why voucher students not diverted from public schools
should be LESS than the baseline suggests:
• Income limits on voucher eligibility (a powerful factor)
*You will need to find a cautious consensus for the “private
school propensity” of school choice recipients in your state.
28.
29. School Choice Fiscal Effects Checklist
Average Variable Cost Burden per Student
• Adjusted for programs targeting narrower student populations (e.g. geographic; special needs)
• Setting variable costs may require some compromise
Average Voucher Cost
Number of Voucher Recipients
• Estimating the take-up rate for a new program is difficult…but it’s typically very low
Share of Voucher Recipients Diverted
• The most elusive and controversial data point…so err on the side of caution
From these 4 data sets, the UNDERLYING fiscal effect
of any school voucher program can be approximated.
30. School Choice Fiscal Effects Checklist
To calculate a detailed fiscal impact for any school
choice proposal requires some modeling with the state
school funding formula.
Such calculations will overlay all of the policy choices
“baked in” to your existing K-12 school finance laws.
Remember, these policy choices DO NOT
change the UNDERLYING fiscal effects!
32. Final Thoughts
School choice is NOT
education reform…
…it’s marketplace reform!
School choice is about more
than opening access to
existing choices…
…it’s about EXPANDING the
array of choices!
