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School Vouchers: Promise and Pitfalls

By Sarah Reber·March 25
UCLA, Luskin School of Public Affairs

The Issue:

President Trump and Education Secretary Betsy DeVos have expressed strong support for a Federal school voucher program. The President campaigned on an education platform that would devote $20 billion to expanding school choice programs, including vouchers. In its first budget proposal, the administration reiterated this goal, stating it would eventually "ramp up" spending on school choice programs to $20 billion. But, it did not provide any details about how the money would be spent. It is likely that States would have a lot of discretion in how they designed and implemented any new, Federally funded voucher program—and the details of those choices matter for the outcomes students and families can expect.
Voucher students and students who remain in public schools may be helped or harmed academically, depending on the particulars of the voucher program.

The Facts:

  • School vouchers give families money to use for private school tuition. Economist Milton Friedman first proposed universal, publicly funded school vouchers, arguing that giving families the opportunity to choose where to educate their children would create incentives for public and private schools to improve to compete for students. A number of publicly and privately funded voucher programs have operated in the United States and around the world. Currently, 27 states and the District of Columbia offer state-funded school vouchers or other forms of support for private school enrollment to qualifying students, according to the National Conference of State Legislatures. These programs vary tremendously in how they are funded, which families can participate, and how participating schools are regulated (or not). In contrast to other forms of school choice, such as residential mobility or public charter schools, voucher programs may allow families to choose a religious school.
  • To make it easier for families to make informed choices and to ensure accountability, certain regulations of private schools participating in voucher programs may be needed. Voucher programs may regulate aspects of the curriculum and the treatment of special needs students, for example. Schools may be required to make certain information public—about facilities, teacher credentials, students’ educational outcomes, school climate, and other factors—so that parents can make informed choices. Schools may also be required to administer standardized tests to voucher students and be held accountable for the test results and other student outcomes.
  • The direct educational effects for children using vouchers to attend private school depend on the quality of the chosen private school compared to the quality of the public school the child would have otherwise attended. Effects on voucher recipients are therefore expected to be more positive in places where the public schools are lower quality and where reasonably priced, higher quality private schools are more available. Some voucher recipients might have attended private school even without the voucher, in which case the voucher doesn’t affect the education of the child but transfers income from whoever funds the vouchers to the family receiving the voucher. If the goal of the program is to improve educational outcomes by changing where kids go to school, money spent on students who would have attended private school anyway is wasted. In rural areas, small populations and large distances may mean that private schools are not an option.
  • Is there evidence that vouchers improve the education of children who use them to attend private school? Evaluations of U.S. voucher programs show mixed results. Well-designed studies of the earliest U.S. voucher program in Milwaukee found substantial positive effects of voucher participation on test scores. Studies of programs from the 1990s and 2000s found that vouchers had little or no effect on test scores for students overall, but often improved black students’ graduation rates, sometimes substantially. A recent study of Louisiana’s voucher program found that using a voucher to attend private school actually lowered student test scores. It is not clear if this apparent decline in the effectiveness of voucher programs over time is due to improvements in public schools, reduced quality in participating private schools, or simply to idiosyncratic differences in the programs being evaluated. Ultimately, there are too few studies to draw conclusions about why some voucher programs appear to have benefited participating students while others appear to have harmed them. (See here for a comprehensive review of the impact of vouchers.)
  • What impact do voucher programs have on the education of the students who remain in public schools? Some U.S. studies suggest that the competition induced by having voucher programs can improve the quality or efficiency of public schools. They show that public schools exposed to more competition from private schools due to voucher programs improved more than otherwise similar schools in Milwaukee and Florida, though the effects were quite small in Florida. Both programs limited eligibility to low-income students.
  • If, however, private schools compete not on quality and efficiency but by “cream skimming” the highest-achieving and easiest-to-educate students, competition may reduce quality and efficiency of education at public schools. Cream skimming could harm students left behind in public schools if they would have benefited from having high-achieving peers in their schools. This is less likely to happen if private schools enrolling voucher students have to accept students based on a lottery (so that they cannot explicitly screen out the lower-achieving or more-expensive-to-educate).
  • Depending on how they are designed and financed, voucher programs may (or may not) reduce public school funding. For example, some publicly financed programs set the voucher value equal to the average cost of educating students in the public schools. But, if the typical voucher student is less expensive to educate than the average student, the public school would see its resources diminished. Similarly, if having smaller student populations make public schools more expensive to operate per student, schools will have less resources to devote to educating students who remain. On the other hand, programs that set the voucher at a lower level than average spending in the public schools or are financed by new public or private funds could reduce costs in the public schools (due to departing students) more than funding declines. However, large voucher programs may also undermine public support—and willingness to pay for—traditional public schools over time, as fewer families use them.
  • How voucher programs determine which students and private schools are eligible can impact the composition of schools along racial, socioeconomic, religious and other dimensions. Some voucher critics are concerned that the use of vouchers might increase school segregation along several dimensions. Whether or not this is the case depends on how the programs are designed. Voucher programs that require participating private schools to admit students based on a lottery, rather than through a competitive admissions process, will produce less stratification by academic background (and possibly along other dimensions). Programs that limit eligibility to low-income students will likely produce less stratification by income.
  • The size of the voucher and eligibility requirements can interact in complex ways to determine who benefits from vouchers and who actually switches to a private school. Programs that limit eligibility to low-income families and offer vouchers large enough to cover the tuition at a quality private school will benefit low-income families the most. Allowing schools to charge tuition higher than the voucher (what is called "top-up") may allow voucher recipients to attend higher quality schools than in the absence of top-up, but more money will be spent on students who would have gone to private school anyway, or have a preference for religious education, particularly if the program is not targeted to low-income families.
  • The effect of voucher programs on disabled students and others with special needs is of particular concern. If the voucher is not large enough to cover the cost of services these students need, private schools will have incentives to avoid enrolling those students or provide them inadequate services. This is less of a concern if those students are already well-served in the public schools and can continue to do so in the face of the loss of students who do not have special needs. This concern could be mitigated if schools are prohibited from excluding children with special needs and special education or other funding sufficient to provide an appropriate, high quality education could follow eligible children to their chosen private schools so that private schools have resources to provide services and incentives to compete to serve children with special needs.

What this Means:

The effects of any new voucher programs the federal government might fund—who benefits educationally and financially and who may be harmed—will depend critically on how such programs are designed. President Trump and Secretary DeVos have not released any specific plans, but it seems likely States will play a key role in designing and implementing programs. If the goal is to improve education for low-income children, the Administration should consider requiring States to avoid program designs that lack accountability for outcomes or will mostly transfer funding to families already using private schools. And considering the mixed evidence on the effectiveness of voucher programs for participants, they would be wise to proceed with caution.

Topics:

Education Policy / School Choice / Vouchers
Written by The EconoFact Network. To contact with any questions or comments, please email contact@econofact.org.

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