Heritage Foundation Leadership for America

April 15 of every year usually brings news stories about taxes and fiscal discipline, or the lack thereof, in government. On April 15 of this year, however, the most interesting news story of the day went against the grain: the D.C. Opportunity Scholarship Program’s second annual lottery generated so much interest that it produced two applicants for each available slot.[1] What does that have to do with sound fiscal policy? Consider that Washington’s public schools spend $5,830 more of taxpayers’ money per student, at least, than the private schools that take students with opportunity scholarships.

On April 14, 2005, just the day before the D.C. Opportunity Scholarship Program announced its results, the National Center for Education Statistics (NCES) released its latest report on education spending.[2] According to the NCES rankings, D.C. Public Schools are spending $13,330 per pupil this year, the highest in the continental United States.[3]

Washington’s public schools have little to show for that money, as the most recent National Assessment of Educational Progress test scores illustrate. D.C. consistently has some of the lowest achievement statistics in the nation.[4]

School choice programs, like the D.C. Opportunity Scholarship Program, are a way to increase academic performance, according to several evaluations to date.[5] When public schools don’t make the grade, school choice programs are good social policy.

What is often overlooked, however, is that choice programs are good fiscal policy, as well. Consider the example of Washington, D.C., again. The maximum opportunity scholarship—$7,500—is less than 60 percent of what Washington’s public schools spend on a student.

What if a similar scholarship program were available to just 10 percent of the public school students in the eight states that spend the most money on education, over $9,000 per pupil on average? More specifically,

• How many students would be affected by such a policy?
• How much money would these eight states and districts save?
• Finally, is there sufficient capacity in private schools to absorb the new students?

School Choice and High-Educational Spending States

Table 1 shows the eight states with the highest median per pupil educational spending in the United States. While most of these states are in the relatively high-cost Northeast, not all are. Some of these states have large student bodies, while others are smaller. In total, these eight states educated some 6.2 million students in the 2001-02 academic year.

If only ten percent of these students took advantage of scholarships similar to the ones in the D.C. program, more than 621,000 students would move from public to private schools within their states. This analysis assumes that the scholarships would be worth 60 percent of the median current-year expenditure per pupil—or a bit more expensive than in Washington. The savings per-pupil would be great, 40 percent; in the aggregate, the savings would be greater still.

Connecticut, for example, would save nearly $3,900 per student. While Connecticut’s taxpayers currently spend $9,737 per student in the traditional public schools, the educational scholarship would cost only $5,842. If 10 percent of Connecticut’s student body—a little more than 54,000 students—moved from the state’s public schools to private schools, the state’s taxpayers would save more than $211 million per year.

As Table 1 shows, these eight states could save a total of $2.6 billion by offering students opportunity scholarships similar to those now available in Washington. New York, because of its large student population, could save more than $1.2 billion itself.

Some critics argue that private school capacity will not rise to meet student demand so quickly. In light of the history of long-standing programs such as in Milwaukee and more recent experience in Washington, D.C., this criticism lacks much basis.[6] In Washington, for example, some 50 private schools made space available for students with opportunity scholarships.[7] Experience like this shows that the supply of private school seats rises to meet demand.

Conclusion

Educational choice can improve educational achievement and states’ bottom lines. Not only do choice programs help students from lower-income families attend schools that they otherwise might not be able to attend, but they can also save money in the process. This should come as no great surprise; after all, it was a Nobel-prize winning economist, Milton Friedman, who first advocated such scholarships 50 years ago.[8] A record number of state legislatures have considered school choice legislation this year, indicating that such plans are gaining in popularity.[9] More should follow suit to make similar opportunities standard across the country.

Kirk A. Johnson, Ph.D., is Senior Policy Analyst in the Center for Data Analysis at The Heritage Foundation.