The achievements of Privately Funded Vouchers

These visionaries are among the great conservative heroes of our time: J. Patrick Rooney. James R. Leininger. Michael S. Joyce. John T. Walton. Theodore J. Forstmann. The privately-funded voucher movement they have built is a model of strategic philanthropy. It is also one of this decade’s most dramatic examples of effective political and cultural leadership.

The architects of the private voucher movement realize something that all too many conservatives have inexplicably forgotten in the 1990s: America is a free country. You do not have to wait for the politicians to advance a conservative reform agenda. You can take leadership into your own hands. You can create the institutions that will reshape the political and cultural landscape: the politicians will respond.

The privately-funded voucher movement is building a powerful constituency for school choice—black and Hispanic parents. Despite ferocious criticism of vouchers by the NAACP and most black political leaders, 65 percent of blacks between the ages of 26 and 35 support the use of taxpayer funds to send children to private and religious schools, according to a 1998 poll by the Joint Center for Political and Economic Studies. Privately-funded vouchers have played a key role building this support.

Privately-funded voucher programs are focusing public attention on the merits of Catholic, Baptist, Lutheran, Muslim, Jewish, and other religious schools that, despite shoestring budgets, are giving superior education to poor children in the same neighborhoods as their local dead-end public schools. A decade ago, it was considered politically unthinkable to push for publicly funded vouchers that could be used at religious schools. Today, both Wisconsin and Ohio have enacted such programs, financing vouchers averaging $4,900 for up to 15,000 low-income children in Milwaukee, and $2,250 for up to 4,000 children in Cleveland.

The privately-funded voucher movement is also beginning to change the mindset of parents, showing how they can take responsibility for their children’s education. An important feature of most private voucher programs is that they pay only partial tuition, usually half. Parents have to pay the rest, either in cash, or, if the school agrees, in volunteer services. This may sound harsh for families whose average income is $18,000. But this "hand up, not a handout" strategy, as Patrick Rooney has described it, makes a tremendous difference in opening educational opportunity. When parents have to scrimp and save to pay tuition, they think of education as an investment. They take charge. They pay attention to whether they are getting their money’s worth, to what school will be best for their children. And children take school more seriously when they know their parents are sacrificing for the sake of their future.

J. Patrick Rooney

Rooney was the pioneer in privately-funded vouchers. The chairman of the Golden Rule Insurance Co. set the tone for most of the movement when he established the Educational Choice Charitable Trust in 1991 in Indianapolis. Altogether the Golden Rule program has spent $5.7 million on vouchers for K-8 schools; today it offers half-tuition scholarships to over 1,700 Indianapolis children, awarded by lottery, with another 4,200 on the waiting list.

Rooney limited participation to lower-income families, and for administrative simplicity, to children eligible for free or reduced-price lunches as part of the federal school lunch program. This model, which has been followed by almost all other private programs, has been significant for two reasons. Critics have sometimes accused vouchers of being a subsidy for upper-income and middle-class families who could already afford private schools. The private voucher movement turned this argument upside-down by focusing voucher resources on poor children in inner cities. Private programs also called public attention to the children who could benefit most immediately from vouchers. Universal voucher initiatives have been defeated in state after state in the 1990s, largely because they attracted little support from suburbanites who live in the public school districts of their choice and are reasonably happy with them. Rooney’s policy has kept the choice idea alive by focusing attention on children demonstrably hurt by failing public schools their parents did not choose.

Rooney also protected the freedom of both families and schools. Families that win a voucher can select any private or religious school of their choice. Schools in turn are free to make their own admissions decisions, and to expel students if they misbehave. Most schools that take vouchers admit almost all applicants. Still, one reason private schools outperform public schools is that they can exclude students who aren’t suited for the school’s approach. That is a benefit of a free society; it is nothing to apologize for, and Rooney’s program doesn’t.

James R. Leininger

James Leininger read about Rooney’s program in a Wall Street Journal editorial by John Fund. "Let’s start that in San Antonio," the founder of the medical supply company Kinetic Concepts Inc., told Fritz Steiger, then president of the Texas Public Policy Foundation. In 1992 they started the Children’s Education Opportunity Foundation, offering scholarships to low-income children in San Antonio. And then, with the help of the Walton Family Foundation, Leininger and Steiger spread Rooney’s idea throughout the country. They established CEO America, based in Bentonville, Arkansas, with Steiger as president, to provide matching grants and support services to new voucher programs from Chattanooga to Dayton to Los Angeles. The movement blossomed thanks to their efforts. Through this school year, private programs have spent $61 million; this year privately-funded vouchers enable over 13,000 children in 39 cities to go to the school of their choice.

An important feature of most private voucher programs is that parents have to pay partial tuition.

One of the most impressive new programs is the School Choice Scholarships Foundation of New York City, funded by leading Wall Street investors including Bruce Kovner, Roger Hertog, Thomas Tisch, Richard Gilder, and Peter Flanigan, a long-time benefactor of scholarship funds for Roman Catholic schools. Thanks to its careful experimental design (as Prof. Paul Peterson describes in this issue on p. 10), the SCSF program has offered the best social science evidence of the benefits of vouchers for low-income students.

In 1998, Leininger and CEO America announced a breathtaking experiment for evaluating how vouchers can help poor children. They committed up to $50 million, over 10 years, to give every single low-income child in an entire school district access to any religious, secular private, or public school in the San Antonio area. The students still have to be admitted on their own merit. They chose the overwhelmingly Hispanic Edgewood School District in San Antonio, where 94 percent of the 14,000 students are eligible for the vouchers.

Leininger and Steiger say they were inspired by the bold example of Virginia Gilder. In 1997 the New York philanthropist offered to pay the private school tuition of every one of the 458 students at Giffen Elementary, the worst-performing school in Albany, NY. About 20 percent of the students are now taking advantage of her offer, and as Nina Shokraii Rees reports elsewhere in this magazine, (see p. 16), Giffen is taking some long-overdue steps to improve its discipline and teaching. Over time, the Giffen experiment will shed light on whether competition from vouchers can lead to sustained improvement in a single public school.

With their 10-year commitment to Edgewood students, Leininger and Steiger are taking this experimental approach even further. They want to know whether private schools will expand, and new private schools emerge, once vouchers are offered on a sustained basis. It remains to be seen whether the public school system will improve in response to competition and whether population patterns will change. Leininger notes happily that an Edgewood apartment complex is already advertising to prospective renters that their children would be eligible for vouchers. Should vouchers make the Edgewood district more attractive to live in, urban renewal will be an additional benefit of school choice.

Michael S. Joyce

Michael Joyce, president of the Lynde and Harry Bradley Foundation, has achieved the greatest public policy success of any of the private-voucher philanthropists. The aptly named PAVE (Partners Advancing Values in Education) financed a scholarship program that paved the way for Wisconsin’s publicly-funded voucher program now available to 15,000 low-income children in Milwaukee. Of the $20 million PAVE spent on vouchers from 1992 to 1998, over $8 million was provided by the Bradley Foundation.

PAVE made two great contributions to the cause of publicly-funded vouchers in Milwaukee. In 1990 the Wisconsin legislature enacted a modest parental choice program for low-income students in Milwaukee, but it was available only for the tiny number of private nonsectarian schools in the area, and only for students transferring out of public schools. In sharp contrast, the PAVE voucher program started in 1992 did not exclude the much larger number of private religious schools, and it did not discriminate against low-income families that were already sacrificing to send children to private schools. Parents responded overwhelmingly to the PAVE initiative; in 1992 over 4,000 students applied for PAVE assistance. And parents began to mobilize on behalf of a much larger, less discriminatory, public voucher program.

The Wisconsin legislature listened to these parents and enacted in July 1995 the first publicly-funded voucher program in the United States that included religious schools. In August, however, just days before school was to start, the Wisconsin Supreme Court issued an injunction against the program. Thousands of students who had signed up and secured admission to private school suddenly had no school to go to. PAVE sprang into action again, establishing an Emergency Fund that provided scholarships for most of the children denied publicly-funded vouchers they had been counting on.

A broad multiracial, bipartisan coalition, including Gov. Tommy Thompson, Mayor John Norquist, former Milwaukee school superintendent Howard Fuller, Messmer High School principal Brother Bob Smith, talk show host Charles Sykes, and Milwaukee Community Journal editor Mikel Holt, kept up the drumbeat for school choice.

But the best spokesmen were the low-income parents themselves. Hundreds of them staged rallies in front of the state Supreme Court to fight for their right to direct the education of their children. As Joyce puts it, "The underlying premise of the voucher is recognition by the state of the decision-making authority of the parent. The parent is by nature the primary educator of the child." It was the parents of Milwaukee, energized and empowered by privately-funded vouchers, who convinced the Wisconsin legislature to sustain and expand the voucher program in the face of heated opposition from defenders of the education status quo.

The PAVE-Bradley strategy was finally vindicated in June 1998, when the Wisconsin Supreme Court upheld the constitutionality of the voucher program for Milwaukee children. Today 6,300 Milwaukee schoolchildren are using public vouchers to attend private and religious schools their families have chosen.

Forstmann and Walton

Meanwhile, Ted Forstmann and John Walton are reshaping America’s cultural landscape. In June 1998 Forstmann, the chairman of Gulfstream Aerospace and co-founder of the investment firm Forstmann Little & Co., teamed up with Walton, a Wal-Mart heir who has long been active in education reform, to launch the Children’s Scholarship Fund. Together they pledged $100 million in challenge grants for voucher programs, and announced they would be recruiting local partners to match their contributions. By early December 1998, they had received over $75 million in matching contributions, and established partnerships in 37 cities and three states (many of them with voucher programs nurtured over the years by CEO America). This will be enough to finance scholarships for 35,000 children for four years beginning in September 1999.

The Children’s Scholarship Fund will announce its lottery winners in mid-April 1999. The announcement will accelerate momentum for education reform at the local, state, and national levels. If recent precedent is any indication—20,000 low-income children applied for 1,200 scholarships in New York last year; over 7,500 children applied for 1,000 scholarships in Washington, D.C. earlier this year—it is likely that hundreds of thousands of low-income children will apply for the 35,000 scholarships. That is what people in the marketing business call demand. Those children’s parents have names, addresses, and phone numbers. They are waiting to be mobilized as a pressure group for improving education. Their sheer numbers will refute those who insist that low-income parents simply don’t care about vouchers or improving their children’s education.

One of the most remarkable achievements of the Children’s Scholarship Fund is the way it has reached across ideological lines.

One of the most remarkable achievements of the Children’s Scholarship Fund is the way it has reached across ideological lines. President Clinton vetoed voucher legislation for the District of Columbia, but he enthusiastically endorses the Forstmann-Walton venture, as do the mayors of New York, Chicago, and Los Angeles. The CSF national board of advisors includes Martin Luther King III, Rep. Charles Rangel, Gen. Colin Powell, Univision president Henry Cisneros, and Robert L. Johnson, the CEO of Black Entertainment Television.

Forstmann probably couldn’t have won their support if he hadn’t made it clear that he strongly supports public education and that he isn’t pushing for publicly-funded vouchers. But Forstmann says publicly that the cause of our educational problems "isn’t money, class size, standards, parents or teachers"; it is "a serious absence of competition." This is a message many people joining forces with CSF aren’t used to hearing. And as Forstmann signs up leading Americans across the ideological spectrum, he is going to have a profound influence on our political culture with his message of breaking up the monopolistic structure of education and harnessing "the creative forces of competition to create more excellence in education."

Forstmann’s influence on American business may be more far-reaching. The CSF list of community partners reads like a Who’s Who of cutting-edge entrepreneurship: Hollywood mogul Michael Ovitz; legendary Silicon Valley venture capitalist Arthur Rock; Nathan Myhrvold, chief technology officer for Microsoft; James Kimsey, the founding CEO of America Online; Dick DeVos, president of Amway; Stanley Druckenmiller, chief investment strategist for George Soros; Peter Lynch, the vice chairman of Fidelity mutual funds. Most of these pacesetters have shied away from conservative political ventures, yet Forstmann has intrigued them with his message of using business principles to help children and radically improve education. Perhaps most important, Forstmann is planting seeds in their imaginations, inviting some of the best minds in Hollywood and Silicon Valley and Seattle and Wall Street to think creatively about how they can help education, and maybe make some money in the process.

A Study in Achievement

Forstmann likes to say that there is no downside to his great experiment. "The worst that can happen is we help 35,000 kids." The potential upside is that it will encourage a new mindset about education. This could take the form of publicly-funded vouchers, of tax credits, of a vast expansion of charter schools, of much more competition between public schools. It could involve eliminating the bureaucratic constraints on public schools, so they have more freedom to compete against private and charter schools. It could involve an explosion of new technologies and for-profit educational enterprises.

A new mindset could also involve a vast outpouring of new charitable resources for private schools and scholarship programs. Charity probably can’t be expected to pick up the tab of private education for every low-income child. It would cost $30 billion a year to finance vouchers of $1,500 each for the 20 million children who have signed up for free or reduced-price lunches. But most parents will still prefer to send their children to public school. Ten percent of all low-income children could go to the private schools of their choice at a cost of $3 billion a year. An investment of this magnitude is hardly unimaginable in a country with $150 billion in annual charitable giving.

Most of the architects of the private voucher movement see public policy reform, not charity, as the answer. "Our goal is to put ourselves out of business," says Steiger. Most private voucher providers argue that government has a responsibility to finance educational opportunity, and they insist that this opportunity is best provided by offering parents a choice of private and religious as well as public schools.

Whatever form the new mindset takes, it’s likely that K-12 education will enter an extraordinary period of reform and ferment over the next five years. This wouldn’t have been possible without the pacesetting leadership of the visionaries of the private voucher movement. Conservatives who want to leave their mark on America should study their achievements again and again.

Choice Through Charity

Nearly 40 cities have private voucher programs in operation this year, serving over 13,000 chlidren, with more than 44,000 others on waiting lists. CEO America and the Children’s Scholarship Fund (CSF) are clearinghouses for scholarship information and funding with affiliates across the nation. Starting in September of 1999, 35,000 new scholarships will be offered by CSF. New Orleans, Los Angeles, Kansas City, Philadelphia, Dallas, Chicago, Minneapolis/St. Paul, Miami, New York, and the states of Michigan and Arkansas, each will be receiving 1,250 new scholarships or more. Below is a partial list of existing charitable funds opening opportunity for low-income children.

National Offices:

CEO America, (501) 273-6957,

Children’s Scholarship Fund, (800) 805-5437,

Local Offices:

Albany, N.Y.: A Brighter Choice Scholarships, (518) 383-2977; Hope through Education, (518) 672-5606

Atlanta, Ga.: Georgia Community Foundation, (770) 521-0523

Battle Creek, Mich.: The Educational Choice Project, (616) 962-2181

Birmingham, Ala.: Students First, (205) 592-3773

Buffalo, N.Y.: The BISON Fund, (716) 858-5460

Chicago, Ill.: The FOCUS Fund, (847) 256-8476

Dallas, Tex.: Children’s Educational Fund, (972) 298-1811

Dayton, Ohio: Parents Advancing Choice in Education, (937) 229-4771

Indianapolis, Ind.: Educational CHOICE Charitable Trust, (317) 297-4123

Jersey City, N.J.: Jersey City Scholarship Fund, (973) 497-4282

Louisville, Ky.: School CHOICE Scholarships, Inc., (502) 254-7274

Memphis Tenn.: Memphis Opportunity Scholarship Trust, (901) 767-7005

Miami, Fla.: Miami Inner City Angels, (305) 275-1493

Milwaukee, Wis.: Partners Advancing Values in Education, (414) 342-1505

Minneapolis, Minn.: KidsFirst Scholarship Fund, (612) 573-2020

New York, N.Y.: School Choice Scholarships Foundation, (212) 333-8711

Philadelphia, Pa.: Partnership for Educational Choice, (215) 731-4132

San Antonio, Tex.: CEO San Antonio, (210) 614-5730; CEO Horizon (210) 614-0037

St. Louis, Mo.: Gateway Educational Trust, (314) 721-1375

Washington, D.C.: The Washington Scholarship Fund, (202) 842-1355

Sources: CEO America, Washington Scholarship Fund, and Children’s Scholarship Fund

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