The Caveats of Private School Vouchers

Vol. 14 No. 4

trustees eletter vol14 no4 voucher

Some private schools today, looking for ways to alleviate budget demands, have turned to government vouchers to supplement tuitions. The Friedman Foundation for Educational Choice found that Florida, Indiana, Ohio, and Wisconsin are currently the top states in which private schools are accepting vouchers; 27 states have some variation of vouchers. Catholic schools serving inner-city and low-income neighborhoods comprise most of private schools participating in voucher programs.

Choice advocates seek to expand further into the private school sector, but also place more emphasis on the charter school movement. Approximately 2.5 million students now attend charter schools, compared with about 300,000 students in voucher programs. Facing competition from charter schools (and other private schools), more and more private schools are tempted to adopt voucher programs

ISM has long advised private-independent schools against accepting government funding—largely because to do so jeopardizes a school’s independence. Research backs our contention. A Cato Institute working paper published in 2010—Do Vouchers and Tax Credits Increase Private School Regulation?—concluded that vouchers “impose a substantial and statistically significant additional regulatory burden on participating private schools.” In short, the money has strings attached.

That aside, accepting vouchers may not actually improve a school’s financial picture. Consider a landmark report by school finance expert Bruce D. Baker, Private Schooling in the U.S.: Expenditures, Supply, and Policy Implications, published in 2009. One of Baker’s observations is that voucher systems, where they have been implemented, have utilized flawed financial premises. That being the case, schools accepting vouchers have at times weakened themselves financially by enrolling students who were bringing with them public-source dollars in amounts well under the average net tuition per pupil.

Government funding is unlikely ever to become the solution to any issue faced by private-independent schools. Even if the support levels of vouchers begin to approximate full-tuition levels, the “strings attached” could prove lethal.

As you develop your strategic financial plan, don’t be tempted to accept vouchers to balance your budget. Accepting government funding could prove to be a fool’s errand.

Additional ISM resources:
Whitepaper: Full Steam Ahead: Part 2 (Cutting-Edge Research and Opinion for Excellent Independent Schools

Additional ISM resources for Gold Consortium members:
I&P Vol. 40 No. 7 The Dynamics of Flattened Tuition Gradients: Endowments and Other Revenue Won’t Help
I&P Vol. 34 No. 16 Baker’s Study of Vouchers: Implications for Private-Independent Schools

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