Financial Impact of Vouchers
Rep. Sheryl Allen and I spoke on vouchers at the annual meeting of the National Conference of State Legislatures in Boston. It was a fun exchange. However, based on some of the commentary, I sense that the financial aspects of the voucher program seem particularly difficult for some people to understand.
One attendee gave me the business on the “cost” of vouchers – repeatedly challenging whether Utah could afford vouchers. The cost he cited was over $300 million. “Can Utah afford that?” I explained that the other side of the balance sheet – the savings – was $1.4 billion. To understand the financial impact, the costs AND the savings have to be considered. Thus, if Utah does spend $300 million on vouchers, the savings would be $1.4 billion – thus, a net gain of $1.1 billion, to be spent on students remaining in the system.
Vouchers will make education dollars go further. It’s not magic. It’s basic accounting.
Legislators and union leaders understand these numbers. I wish they, at least, would not perpetuate the myth of costs with no savings. It plays well to the choir, but it misinforms the dialogue. But, people in politics seem to be as honest as constituencies require them to be – and that’s not very much, as long as their heart is in the right place.
One attendee gave me the business on the “cost” of vouchers – repeatedly challenging whether Utah could afford vouchers. The cost he cited was over $300 million. “Can Utah afford that?” I explained that the other side of the balance sheet – the savings – was $1.4 billion. To understand the financial impact, the costs AND the savings have to be considered. Thus, if Utah does spend $300 million on vouchers, the savings would be $1.4 billion – thus, a net gain of $1.1 billion, to be spent on students remaining in the system.
Vouchers will make education dollars go further. It’s not magic. It’s basic accounting.
Legislators and union leaders understand these numbers. I wish they, at least, would not perpetuate the myth of costs with no savings. It plays well to the choir, but it misinforms the dialogue. But, people in politics seem to be as honest as constituencies require them to be – and that’s not very much, as long as their heart is in the right place.
posted by steve u. at 8/13/2007
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46 Comments:
But what if all 300 million is used to buy Hershey Bars? Will we have saved the 1.1 billion or would we just have to spend it later? Of course you would never know because the private schools have no financial accountability. Oh wait, I forgot, the parents are the great accountability factor. Here's to tougher math standards for public ed!
Steve,
This voucher program includes mitigation money to schools to compensate them for 5 years for the loss of a student who takes a voucher. That means that we're not only saving nothing on that student for 5 years but we're losing the voucher cost as well. In order for money to be saved voucher students need to switch to a voucher before 7th grade and they'll have to stay switched. Students who take a voucher for elementary school then switch back to public for Jr. High or High School cost the state way more than someone who had never switched in the first place.
It is also important to point out (as the Utah Taxpayer Association has grudgingly admitted) that voucher amounts may have to be increased in order to tempt enough students to take vouchers. The current amounts are far short of what will be helpful to most families. When the legislature increases voucher amounts voters will have a program that costs significantly more than the one they thought they voted on. It probably won't surprise anyone because this is typical of any government entitlement program...but it still represents a bait and switch.
My mistake...I was wrong when I argued we are double paying for students who take vouchers. The voucher amount is deducted from the mitigation money...sorry about that.
We still aren't saving any money for the first 5 years a student takes a voucher and students who take vouchers after 7th grade don't save us anything. The legislature is still going to have to raise voucher amounts and thus the actual cost of the program in order to get enough participants.
I was mostly right :-)
"[P]eople in politics seem to be as honest as constituencies require them to be – and that’s not very much, as long as their heart is in the right place."
Well said.
I am in favor of vouchers in principle, but why are we paying the schools for students that switch?
Is that the result of "We're paying $7500 per student now so if they take a $3000 voucher the school still has $4500 that can be spread to their other students." (forgive me if I'm making up the numbers)
If so then I don't understand why voucher opponents are complaining unless they want it to be perpetual rather than limited to 5 years.
If I'm reading that right then it doesn't matter if the level of the vouchers goes up so long as it doesn't exceed the present cost of what we are spending on students - it's a zero sum system. If I'm reading Jeremy wrong then what am I missing?
Jeremy,
Even in the first 5 years, the money is "saved" -- meaning it is there to be spread among the students remaining in the system. However, (and this is to your point, Dave) the districts were worried that they would have adjustment pains if students left their district schools. Therefore, the savings have already been allocated for the first 5 years -- to the districts that lose students to the voucher program.
Curt,
??. But I do admit that I love Hershey bars.
Can someone help me understand figures used to arrive at the $1.4 Billion in savings.
Thanks!
Even if voucher amounts are raised (and personally I don't think they need to be raised), it would still be less than what we are paying right now for students in public schools.
Jeremy is wrong to say the program would be "more costly" if voucher amounts were raised since the proposed program has net savings and increasing the voucher would still result in savings so long as the voucher amount is less than what we are paying.
People dismiss vouchers as an entitlement when our existing public education system is an even more expensive entitlement.
Mmmmmmmm Hershey bars.
Anonymous voucher dude argues that the program represents a net savings while Steve U. claims the savings are being spent on public schools before they've even been saved.
The problem is that there may not be any actual savings but only increased spending on public schools* because of the likely possibility that not enough families with students in public schools will be able to afford to use these vouchers to send their kids to private schools. Lack of interest among public school families wouldn’t be a problem if it weren’t for the many families who would never have considered public schools for their kids who are planning to snatch up this new entitlement. Taxpayers lose out on the $500-$3000/kid subsidies the state gives these people who don’t represent any savings whatsoever.
*I have no problem with the increased public education funding but I think it should be provided directly, not as part of a scheme to make vouchers more palatable to voters.
Yes, Jeremy, that is the risk -- that there won't be enough switchers -- that it will just be a subsidy for people who would have attended private schools in any event. That is a real factor to be considered.
However, the number attached to that scenario (no switchers) comes nowhere near the huge figures that voucher opponents are throwing around. Because of the two sides of the balance sheet, when people throw around the big numbers (the "costs"), they should also attach the bigger amount of savings -- if they care about appearing honest and/or somewhat intelligent about accounting.
To address your real concern, I believe there will be a good number of switchers. I base that on the Carson Smith Special Needs Scholarship. In that case, there truly seemed to be insufficient schools to accept the voucher and the voucher didn't seem to come close to covering the tuition. However, incentives being what they are, 40 schools now accept the CSSNS. (That also refutes the "creaming" argument -- which is that private schools only want the best and brightest).
I seriously doubt we'll ever have more than 10% of our eligible population leave the public system. Utahns love it. But I do think there are another 2 or 3% out there who struggle in our great public system and would like to try a private school if they got a boost with the cost.
As always, thank you for your good commentary. As you consistently prove, policy disagreements can and should be civil.
Mmmmmmm strawman
Anon and Steve U. are saying the same thing.
If the voucher amount is less than the cost to educate students in public schools and that difference multiplied by the number of switchers is greater than the vouchers that would be paid to those who would be going to private schools even if they had no voucher, that results in a savings.
No one can honestly dispute that.
Curt,
Read the bill before deciding what it does and doesn't do. Any school receiving voucher dollars must have an independent, certified public accountant verify that tuition and voucher dollars go towards education expenses.
On top of that, the schools have to meet other financial requirements, including some that not even public schools necessarily meet, such as having 3 months worth of working capital on hand.
Not only do people need to read the bill, but I think we need to re-evaluate the meaning of the word "accountability." In our current system, what are public schools accountable for? Not graduation rates or student performance.
Really, they're only accountable to making sure that they spend tax dollars in accordance to guidelines produced by the Legislature, the state office of education, and their local school district.
By our current standards of “accountability” a school could have a 70% drop out rate and still be “accountable” so long as it spent education dollars on employee’s salaries, teaching supplies, building costs, etc. Worse case scenario: the school gets labeled failing and possibly gets extra funding because of it. Unfortunately, this type of “accountability” provides no incentive to make sure that public dollars are used in productive ways.
Voucher schools, on the other hand, will not only be accountable for how they spend public dollars, but how well they educate students. If the school does not perform satisfactorily, the parents can leave. And if the performance is bad enough, the school risks losing its students and closing.
This is the ultimate kind of accountability and the engine of our nation’s ingenuity and progress.
You might think it’s fun to mock but if it weren’t for direct accountability (which is created through choice and competition), we'd be having this conversation by telegraph instead of by internet. And until we inject our education system with direct accountability to individual families, we will continue to see little to no progress in our schools despite our ever-increasing investment in education.
Dave,
You are right about the fact that we need to reexamine the concept of accountability. You are desperately wrong if you think this voucher bill is the vehicle to get that conversation going.
What you and I think is an “education expense” may be clear: textbooks, pencils, computers etc… But you can bet that others will twist the concept toward absurdity. My point is that the GAP between how private schools (education expense) and public schools (spend tax dollars in accordance to {inflexible and onerous} guidelines produced by the Legislature, the state office of education, and their local school district) are held financially accountable is too wide. The bill should have better defined what the money could be used for and, AT THE SAME TIME, relieved some of the over burdensome regulation on public ed.
You also do a great job of mischaracterizing accountability on the “production” side of the equation (a common tactic from voucher supporters who rationalize at will). Specifically, you are willing to blame a school for a 70 percent drop out rate then turn around and hold up the parents as the great motivators for improvement. In reality, when a student drops out of school or fails to become academically proficient, the parents and the student are just as responsible as anyone else. They have made a “choice” albeit a poor one.
Furthermore, your statement that “Voucher schools, on the other hand, will not only be accountable for how they spend public dollars, but how well they educate students. If the school does not perform satisfactorily, the parents can leave. And if the performance is bad enough, the school risks losing its students and closing.” could also be said of any public school. In theory, an urban public school that does not perform well (and we have some with dismal test scores) should loose students and close. Of course it never happens because of poor choices or the raw demographics of the involved families.
Therein lies the rub. Those of us who have spent considerable time in public schools can tell you that a small portion of the parents are actively involved and all vouchers will ultimately do is further punish kids whose parents are not. “Direct accountability” may be the key, as you say, but place the accountability on the right shoulders and make the competition fair. Then I could stop mocking.
Steve. without your blogg, I fear that the facts would be lost in the chaos that some opponents appear to be actively perpetuating. Thanks for at least keeping the facts alive in the voucher debate. Voin Campbell
I'm not sure why districts are worried about losing students. Utah population is still going to increase, and there will very likely be still a net increase in the public school population. Hopefully districts would be happy that some children and their families choose vouchers in an effort to slow the growth of (and the demand for resources to support) public education.
If vouchers are such a great idea, why do you have to stoop down to homophobic lies in push polls? That's right, they aren't great idea.
Steve,
I have many concerns about vouchers, some of which are financial. It's one thing for either side to claim numbers--I want to see the details and how each side arrived at the numbers. I'm not convinced the savings will be as high as you claim. I think that most schools/districts won't have that many real costs that will go down for the number of students that they have they go to private schools on the voucher plan. Where can I go to see the details of what makes up that $1.4 billion savings that you mention?
Public schools do have accountability for student achievement. Under No Child Left Behind(NCLB), schools have to meet Adequete Yearly Progress(AYP), with a goal of 100% of the students on grade level by 2014. If AYP is not met two years in a row the state or feds could come in and take over operation of the school/district and deny federal money for the school/district. The voucher accepting schools do not have to follow NCLB or meet AYP, but they are more "accountable".
Public schools must post their Iowa Basic, CRT, and UBSCT tests results each year. There is no requirement for the voucher accepting school to take the Iowa Basic, CRT or UBSCT, just a requirement for one "standardized test" to be administered. The voucher accepting school does not have to publish the results of that test. Yet the voucher accepting school is more "accountable".
Public schools are required to have a basic audit yearly and an in-depth audit every three years. The results of the audit are required to be released to all the households in the district, not just the homes with children attending schools in the district. Where is the requirement for the voucher accepting schools to have the same audits and release the results to the entire community(the whole state in this case.)? The voucher accepting schools are required to have an audit in 5 years. Yet the voucher accepting schools are more "accountable".
Public schools are required to have state certified teachers holding at least a bachelor's degree in the subject they are teaching, and under NCLB be "highly qualified" in that subject. Teachers at voucher accepting schools do not have to state certified or hold a bachelor's degree, they do have to pass a background check(as amended in HB 174). Yet the voucher accepting schools are more "accountable".
Maybe public schools should start calling the WPU money a "scholarship" that way they could use the same "accountability" standards that the voucher accepting schools will be following.
3:55 anon,
Most of what you mention regards inputs, not results. People, not systems, are accountable. If a disproportionate number of students in a public school classroom fail, what are the accountability measures for the teacher?
If a school fails AYP, part of the take over is removing all administrators from the school and any teachers who are unwilling to follow the guidelines that state or feds set for the education of the students. This is a threat that is constantly over the heads of the public school teachers, so they are going to teach to whatever test lets them keep their job. If you don't like that remove the AYP testing, but of course that means removing the NCLB standards and the federal education money. If you want teacher accountability based on test results, you need to make sure that you have a way to test all teachers, including fine arts and P.E. teachers, or remove those subjects from the state core curriculum. Giving some, not all, teachers a chance at merit pay is not fair and not good business practices.
The voucher accepting schools do not have any accountability for the teachers. There is nothing in the law that says that the schools have to release under performing teachers.
Steve,
I have a doctor friend that is fond of saying "In God we trust, all others must show data." Let me be the third reader to request more information on how you arrive at the $1.4 Billion in savings. Please don't ignore this important question any longer.
Joshua,
Do you think we are being ignored? Perhaps they don't have solid basis for the $1.4 billion? I've actually asked several legislators for this information and the response is always the same--they basically ignore my question, answer it with a non-answer, or side-step it. Makes me think it is built on shabby information and data.
So Steve, let me repeat the call for you to point us to some place where we can see the background and basis for arriving at the $1.4 billion savings number. A summary of how this figure was arrived at would make a great post for your blog, with links to the supporting information and data.
Dear Mr. Urquhart,
I recently read your rebuttal concerning the voucher debate. I'm sorry to say that your rebuttals seemed more like sorry pleas for votes. I might be wrong, but shouldn't your arguments be based on factual evidence and not fingerpointing or name-calling?
And isn't it true that most of the people pushing for the vouchers don't even live in Utah? I already know the answer so don't try to lie.
A key understanding regarding public education expenses: typically 80 - 85% of a school district's annual maintenance and operations costs go to pay licensed and classified staff: teachers and support personnel. Costs for pencils, materials, texts etc. pale when compared to salaries and benefits.
Thus 'compensatory funding' worries me. Money for kids' teachers is still being lost. Though a significant portion of the weighted pupil unit remains behind when a family chooses a voucher for a private school, the overall budget for salaries for classroom teachers is reduced - a full teacher salary still needs to be paid regardless whether the class has 27 or 26 students. Only with one now 'vouched out', the pot for payment has been reduced, but the cost for the unit - a teacher - has remained the same. Troublesome.Especially in a state that ranks at the bottom in the nation in per student funding.
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