1. The School Voucher Audit
Do Publicly Funded Private School Choice
Programs Save Money?
Presented by Jeff Spalding

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

3. Available at: http://www.edchoice.org/Research/Reports/The-School-Voucher-Audit--Do-Publicly-Funded-Private-School-
Choice-Programs-Save-Money-.aspx

4. What we found:
 10 school voucher programs have saved $1.7 billion over 20 years (cautiously
estimated)
 Over 500,000 student FTEs awarded school vouchers
 Over 470,000 students FTEs diverted from public schools (94%)

5. Behind the overall net savings number:
• Average Public School Variable Cost per Voucher Student - $9,647
Range: $4,958 FL Opportunity Scholar to $22,359 OH Autism
• Average Voucher Cost - $5,637
Range: $2,257 Cleveland to $14,862 OH Autism
• Average Net Savings per Voucher Student - $3,375
Range: $1,018 FL Opportunity Scholar to $7,532 OH Autism
$9,647 - $5,637 = $4,010 not $3,375
WHY?
Some voucher students would have still attended a private school without the voucher’s
financial assistance….so, they are not diverted from public school!
The cost of vouchers for students not diverted is similar to the “free rider” or “deadweight
loss” problems in economics.
If you invested $5,637 each to educate students and 94% of the time you
saved $4,010 while 6% of the time you lost $5,637…what’s your ROI?

6. 20.9%
24.3%
25.8%
27.4%
50.8%
59.9%
78.1%
83.0%
99.5%
111.0%
167.1%
0% 20% 40% 60% 80% 100% 120% 140% 160% 180%
Milwaukee Parental Choice Program
UT - Carson Smith Special Needs Scholarships
FL - A+ Opportunity Scholarships
DC Opportunity Scholarships
Ohio Autsim Scholarships
Cumulative Weighted Average ROI
FL - McKay Scholarships for Students with Disabilties
LA - Student Scholarships for Educational Excellence
OH - Educational Choice Scholarships
Georgia Special Needs Scholarships
Cleveland Scholarship & Tutoring Program
Rate of Return
School Voucher Return on Investment (ROI)
Cumulative ROI from Inception through 2011

7. -15%
0%
15%
30%
45%
60%
75%
90%
105%
120%
135%
150%
165%
180%
195%
210%
225%
1991 1995 1999 2003 2007 2011
RateofReturn
School Year Ending
School Voucher Return on Investment (ROI)
Annual Return from Inception through 2011
LA - Student Scholarships for Educational Excellence Georgia Special Needs Scholarships
OH - Educational Choice Scholarships UT - Carson Smith Special Needs Scholarships
Ohio Autsim Scholarships DC Opportunity Scholarships
FL - A+ Opportunity Scholarships FL - McKay Scholarships for Students with Disabilties
Cleveland Scholarship & Tutoring Program Milwaukee Parental Choice Program
Weighted Average ROI
Recent down trend in ROI has been due primarily to
a tightening of public school spending.

8. Program Design Drives ROI
New school choice programs frequently have participation caps, modest voucher maximums, and
rigid eligibility restrictions to limit fiscal risk…
…and appease school choice agnostics.
• Maximum total student or total voucher payout cap
• Maximum individual voucher award limit (e.g. X% of average public school spending per student)
• Prior public school enrollment requirement
• Income eligibility limit(s)
High ROI is no surprise. Risk mitigation in the program design drives up the ROI by limiting access
to a narrowly targeted population of students.
Trade-off: Tighter limits/restrictions sacrifices larger total savings…to a point!
Savings are MAXIMIZED when eligibility and voucher amounts are raised to the point that the
“deadweight loss” induced by the expansion EQUALS the net savings for the additional students
diverted from public schools.

9. So, how much have school vouchers affected
public schools?

10. About 70,000 students used school vouchers in 2010-11
 About 66,000 were diverted from public schools (94%)
 Thus, only 0.13% of all public school students were diverted (≈ 50 million)
 Granted, the impact is larger where school vouchers are available
For the 10 school voucher programs examined, utilization
rate was only 7% -8%
 Equates to 900,000 eligible students nationwide (850,000 likely public school students)
 Thus, about 1.7% of all public school students were eligible for school vouchers in 2010-11

11. 0.13% 0.22%
99.65%
Impact of Private School Choice on K-12 Public Schools
by Students Diverted for 2010-11
School Vouchers Other Private School Choice Not Diverted from Public School
Note: Ballpark Estimates

12. 5.5%
92.8%
Impact of Private School Choice on K-12 Public Schools
by Eligibility Exposure for 2010-11
School Vouchers Other Private School Choice Not Eligible for Private School Choice
Note: Ballpark Estimates

13. There is still a VERY long way to go before any lasting,
national impact on the K-12 education marketplace will be
felt…
…though noticeable benefits have occurred in isolated
communities where school choice is now more robust!
See my blog post – Less money for public schools makes them better –
about a study of the Milwaukee Parental Choice Program conducted by
the Federal Reserve Bank of New York.

14. So what happened to the $1.7B in net savings?
Most of these savings were passively re-spent…typically rolled back into funding
public schools
• State’s school finance laws often protect public schools from a full funding loss as their enrollment declines
• Political pressure to annually raise per student funding is immense
Since public school spending is rarely cut, this gives credence to opponents’ claims
that no voucher savings actually occurred.
But just because the monies were re-spent…
…does NOT mean the savings never happened!
State’s typically don’t annually track savings from school choice programs
• This needs to change!
• Indiana requires annual tracking and reporting, but its process is seriously flawed

15. Jeff Spalding
Director, Fiscal Policy & Analysis
317-681-0745 | jspalding@edchoice.org