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Shanker Blog: How Do Vouchers Defund Public Schools? Four Warnings and One Big Takeaway

Our guest author is Josh Cowen, Professor of Education Policy at Michigan State University. His new book, The Privateers: How Billionaires Created a Culture War and Sold School Vouchers is forthcoming at Harvard Education Press.

Over the past two years, school voucher systems and other related schemes that divert taxpayer revenue toward private K-12 tuition have passed state legislatures at unprecedented rates. Although these recent bills became law only, for the most part, in red states, their supporters include a handful of Democrats in other parts of the country as well. And all of this comes despite a decade of evidence that vouchers have led to some of the steepest declines in student achievement on record.

Regardless of which side of an otherwise ideological or political divide voucher advocates hail from, a common talking point for both is that voucher-like systems leave public school funding unaffected. 

Such claims rely on a variety of funding strategies that include drawing resources to pay for vouchers from states’ general fund commitments outside of their school aid budgets, and the use of tax credits to make expenditures rather than direct appropriation. 

On a less politically charged question of public policy, it would be uncontroversial to note that an advocacy strategy based on the slogan “fund students, not systems!” literally demands states move money away from public and into private coffers. 

But it turns out that although American voters have some broad complaints about public schools in general, they are deeply supportive of their own public school communities. Which means that passing vouchers, even in conservative parts of the country, requires downplaying the extent to which vouchers threaten public school funding.

Recent reports have addressed specific ways in which vouchers break state education budgetsdivert taxpayer revenue away from public schools, or slow spending on public educational priorities. 

But for the sake of simplicity and of collecting some of the problems in one publicly available post, let’s walk through four main threats vouchers bring to public school funding. 

(1) Paying for Already Private Students—States Can’t Afford Two Education Sectors

All sides agree that the biggest determinant of voucher costs is the extent to which states take on new spending for children who were never in public school. If you believe the rhetoric from the voucher lobby and its research arms like EdChoice, many students are switchers from public to private school, meaning that at least some portion of their cost for private tuition is already taken into account in a state budget. 

The idea is basically that, sure, individual districts that lose those children as pupils will lose state aid, but the hit to the overall state budget will be (in theory) smaller as the proportion of students using vouchers who came from public schools increases.  The main problem with that claim is that it simply does not hold. Researchers have known since at least 2007 that as voucher systems expand, most new users are coming from outside the public school sector—these are new costs to states. 

And like any other major obligation in a budget—as big as a state’s or as small as an individual household’s—new spending on one item means less room for others. The best example of this tradeoff for vouchers is Arizona, where costs have ballooned since the state’s 2002 voucher expansion—mostly due to the fact that up to 75% of new voucher users had been paying tuition costs privately beforehand. 

Even in less extreme cases, where voucher expenditures are steadily growing, states have to slow public education spending to keep up. In the few examples where historically a voucher state has kept public school funding above the national average, those investments relative to those states’ own economies do indeed slow. 

(2) Declining District Enrollment While Fixed Costs Remain

If all public school districts are negatively harmed when states obligate new portions of general fund to vouchers instead of their school aid budgets, some individual districts may be harmed even further. Those are the districts from which individual children transfer to private school, taking with them a per-pupil allotment of state aid even as fixed costs like salaries, benefits, building maintenance, utility costs, and transportation needs remain. This can occur mechanically after earlier hold-harmless policies that initially sent school aid to districts for voucher students who still reside within their boundaries, scale down a full per-pupil allotment to a categorical (i.e. non-discretionary) payment.

And unlike long-term impacts on state budgets like those outlined above, these funding threats can materialize more or less instantly. For example, districts in Iowa and in Arkansas are seeing revenue loss even in their first (as of this writing) voucher spending years. And even when voucher advocates package their bills with short-term public school spending increases or eventually pass small percentage hikes in base spending rates, these increases are well below the cost of many district operational expenses. A nominal 2.5% increase in revenue is better than nothing, for example, but represents a real-dollar cut when costs rise faster than those nominal increases.

There is no mass exodus of students from public to private schools. But individual districts can still fall into financial distress if the few students who do leave on an annual basis are doing so at a faster rate than district legacy and fixed costs can decline. To put the problem differently, voucher advocates rely on average costs per child (total spending divided by enrollment) to make claims about funding neutrality, but the determining factor is whether districts’ marginal cost per child (the cost of keeping one additional child in the public school system) remains steady or even increases. Those marginal costs remain high because districts pay, for example, the same price to keep a school heated in the winter regardless of whether 50 students are enrolled, or whether 10 students have left with a voucher and 40 classmates stay.

(3) Special Needs and Other Ancillary District Costs

None of this discussion even begins to account for small but meaningful costs districts may take on—depending on the state—to provide additional supports to voucher students without receiving state funding for them. The most common example occurs when voucher students may require special needs services and their residential school districts are required under federal Free Appropriate Public Education (FAPE) guidelines to provide assessments. If states have not budgeted compensation for those expensive (in dollar and staff time) assessments in their voucher bills, districts pick up the tab

(4) Opportunity Costs for School Meals, Pre-K, College Access, and More

All three of the above ways that vouchers threaten public school funding are different stories about a declining revenue base (either state or local or both) with fixed or even growing costs to schools. They’re about districts’ ability to pay new and existing bills over time while states have obligated the potential share of new revenue to another sector of K-12 schooling. 

A fourth threat is also about that declining revenue base, but the costs come more as missed opportunities than as missed payments on existing bills. When states are devoting more and more resources to subsidize private K-12 tuition, that leaves less room over time for other investments in education-related programs. Last year for example, my home state of Michigan passed a law to provide universal school meals—becoming the 7th state to do so. The price tag for that law, which economic research has shown can also help lower grocery bills and even local food prices for families, was $160 million—less than one-third of what would have been lost in the state budget had Betsy DeVos’s voucher scheme passed the legislature a year earlier. 

The initial price tag for that voucher scheme in Michigan would have been up to a whopping $500 million in lost revenue, as taxpayers like DeVos had the chance to divert what they owed in state taxes to a voucher fund. But even that price tag had automatic cap triggers that could have jumped the price to $1 billion within 5 years—close to what Arizona taxpayers are paying for their voucher scheme today. And let’s be clear: that cost is so large that it doesn’t just affect public school budgets. Other public services will take a hit too—so enjoy your roads, public safety, natural resources, and human services while you have them.

Pre-K programs. Child care. Investments in the teacher pipeline. Facilities upgrades for new HVAC systems. Eventually: transportation, public safety, investments in environmental quality. These are just some of the opportunities crowded out when states prioritize vouchers that go largely to families who are already in or will be headed to private school anyway.

The Quiet Part Out Loud: “Competitive” Threats are Funding Threats

Rhetoric and in-house fiscal impact claims from the voucher lobby aside, the reality is that voucher advocates actually admit that defunding school districts is part of the underlying theory of change behind voucher systems. They do so by trumpeting so-called “competitive effects” studies—how voucher competition affects the test scores of children who remain behind in public schools. 

Although 17 of the 29 competitive effects studies that groups like EdChoice claim as competitive impact analyses come from EdChoice or other advocacy sources, a handful of reputable scholars have indeed shown that when vouchers were introduced in Louisiana and Florida, for example, public school test scores grew by a tiny amount. I have noted elsewhere that these “competitive effects” are tiny relative to the impacts shown in a much more developed literature on  simply investing in public schools directly. But size of the impact aside, the competitive effects research stresses that it’s precisely the communities that stand to lose the most funding that respond to a voucher threat. 

In other words, promises that vouchers don’t defund public schools are impossible to keep alongside assurances that voucher competition “lifts all boats.”


The main voucher threats to public school funding come from massive and growing new costs at the state level, as states pick up the tab for private tuition previously paid by individual households. At the local level, individual districts lose shares of state aid for all children, however small in number, that do transfer to private school, saddling districts with the costs they leave behind. Voucher systems obligate districts to spend on equity-related requirements like special needs assessments for private school children who leave or never enrolled but live within their borders. And each of these expenditures together foreclose new opportunities like universal school meal plans or investments in teacher quality. 

Perhaps most important of all, these new and emerging threats to school budgets are coming at time when, even without a voucher system to siphon off resources, public school funding remains woeful and inadequate relative to most district needs. Especially with an end looming for COVID-related federal education spending. If vouchers did nothing else but keep states from making any new investments in public education, they’ll by definition be holding back the students who depend on their public schools—still 90% of American children.


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Joshua Cowen

Joshua Cowen is a Professor of Education Policy at Michigan State University. He also was the founding director and co-director of the Education Policy Innovation...