EDUCATION:
Why Vouchers Will Enrich Public Schools

By Terry M. Moe

Voucher programs would starve public schools of funding. True or false? Hoover fellow Terry M. Moe.

Washington’s public schools got some very good news recently when Congress approved a plan to provide school vouchers to low-income families in the nation’s capital. For critics, however, the fight against vouchers goes on. And they continue to repeat their mantra: Vouchers drain money out of the public schools.

This argument is persuasive because it seems so obviously true. After all, vouchers do allow students and money to flow out of the public schools, and it would seem to follow that schools are worse off with fewer resources. End of story.

But like many obvious arguments, this one is thoroughly misleading. True, when students use vouchers to go to private schools, the vouchers’ costs come out of the government’s education budget. So if the total budget stays the same, there is less money available for the public schools. What the critics don’t say, however, is that the schools also have fewer children to educate and would receive the same money per child as before.

In fact, the public schools should actually come out ahead. In a typical voucher program, the cost of the voucher (say, $4,500) is far lower than the average amount the public schools spend on each student (say, $8,000). This means that when students go private, only part of the money budgeted for their education goes with them. The remainder stays in the government’s pocket. If these savings were put back into the public schools, the schools would actually have more money per child. And the greater the number of students using vouchers, the greater the increase in spending per child could be.

Three cost considerations must be taken into account to complete the picture. First, it will cost the government something to administer the program; with proper design, however, these costs can be kept small. Second, some students would have gone private anyway, at no expense to the government, and their vouchers represent new costs. Few disadvantaged children fit into this category, though, so these costs can be kept low too. Third, and finally, were few children to go private on vouchers, the public schools couldn’t cut back on teachers, buildings, and other expenses—which become “fixed” costs—and they would be unable to realize the anticipated savings. But if hundreds or thousands of students were to leave—the Washington plan is for 2,000 students—the public schools could clearly cut back and save money. Fixed costs are not an issue when the voucher programs are sufficiently large.

So the bigger picture is essentially this. There are savings when students go to private schools. There are costs that subtract from the savings. And a voucher program can be designed to see that the savings more than cover the costs, with the residual put back into the public schools to increase per-child spending and leave schools financially better off.

The argument that vouchers drain money out of the public schools may sound like a high-minded defense of the public system. But in reality it’s simpleminded, it isn’t true, and it provides no justification at all for denying needy children the educational opportunities that vouchers can offer.

Terry M. Moe is a senior fellow at the Hoover Institution, a member of the Institution's Koret Task Force on K–12 education, and the William Bennett Munro Professor of political science at Stanford University.