The Right Choice for Taxpayers: How Parental Choice would Save Public Funds

In the winter 1998 issue of this journal, Robert C. Embry, Jr., president of Baltimore’s Abell Foundation, asked in a letter to the editor, “A graduated voucher [system] would certainly reduce the public cost of existing private school students – but would it be enough to keep or attract the middle class?”1 In part, the focus of the question was misdirected, for in one sense it really should not matter if school choice would stem the exodus of Baltimore’s bourgeoisie or not. If the seemingly general consensus that superior education is available through the private sector is accurate, and if indeed we are interested in providing the best education for our children, then it should in and of itself be policy to encourage, rather than discourage, the use of private-sector education in order to improve the quality of education overall. Additionally, one would hope that the introduction of full school choice would enable the “lower class” to become “middle class,” at least in regard to the education of their offspring.

However, the truth is, either in terms of retaining an existing middle class or creating a new one, we will not know the effects of school choice until we try it. But one thing should be clear: The downside risk appears to be minimal. For what has Baltimore to lose – other than yet more population if the status quo continues?


But let us get to the point and focus on costs. A common concern among voucher agnostics is that, while public-sector expenditure on students transferring from public to private schools might indeed be reduced, overall costs would increase because of a sudden need to subsidize children currently enrolled in private schools. Certainly, this was a point raised by Mr. Embry in his letter.2 This is a valid concern, though, if properly formulated, a graduated scholarship plan would produce substantial overall public savings, if based upon the following precepts:

First, the enabling legislation would need to be drafted for the express purpose of reducing public expense.
Second, voucher reimbursement to parents opting for non-government schools would be set at half the amount of per-pupil costs in the public schools. For Baltimore City in school year (SY) 1996-97, this was $6,408,3 resulting in a voucher of no more than $3,204. Contrary to popular belief, this would go a substantial way toward defraying the expenses of private tuition in the Baltimore area. On average, private-sector education is remarkably cheap – far cheaper to consumers than public-sector education is to taxpayers. For example, research by the Children’s Educational Opportunities Foundation of Baltimore demonstrates that, excluding the elite academies, there are over 60 non-government schools in the metropolitan area serving the K-8 population. As of SY 1997-98, these institutions between them had 2,600 open seats at an average tuition cost of $2,900.4
Third, eligibility would have to be limited either to students (a) who had been enrolled in a public school for the previous three years or (b) who entered the 1st grade after the effective date of the act. In other words, there would be no “grandfathering in” of current private-school students. Thus, the compensation to parents would be phased in eventually to assimilate all non-government school children over 12 years, though parents using private schools at the outset of the program would be excluded.

Previous Bills

Though one would certainly never know it from the scant media attention they received, legislative bills incorporating these concepts were introduced in 1995 (H.B. 1288), 1996 (H.B. 969) and again during the 1998 legislative session, this most recent attempt being H.B. 559, the Maryland School Resources Conservation Program Act by Delegates Anthony J. O’Donnell (R-Calvert, St. Mary’s) and John S. Morgan (R-Howard, Prince George’s). In each case, the bills were defeated within the heavily Democratic House Ways and Means Committee.

Subsequent to the 1996 effort, TEACH Maryland,5 a pro-school-choice advocacy group founded a number of years ago, developed a formula to calculate the savings that each of the major local education districts would enjoy if it adopted a choice program based upon the pattern outlined above. Results for the Baltimore City public schools (BCPS) are shown in table 1.

City Savings

Providing vouchers to parents would allow savings both in operating costs and in capital costs (in the case of the latter because a choice plan would mean that the public schools would not have to expand, thereby saving millions of dollars in capital improvements). Table 1 presents operating, capital and combined operating/capital savings. These projections are based on the terms of the Maryland School Resources Conservation Act, which represented the legislature’s 1996 foray into this area. Though these data are a few years old, there is no reason to suppose that the relationship among updated figures would not be about the same.

We base our calculations upon various data for SY 1994-95 provided by the state Department of Education, namely:6

Total BCPS enrollment in grades pre-K through 12: 113,428
Total BCPS enrollment in grades 7 through 12: 42,313
Total BCPS enrollment in grades pre-K through 6: 71,115
Total city 1st grade students in non-public schools: 1,541
Total BCPS per-pupil operating costs, all grades: $5,565
Federal/state share of BCPS per-pupil operating costs: $4,044
Baltimore City share of per pupil operating costs: $1,521

We also make the following assumptions, all of them very conservative. First, we assume that just four percent of the total number of public school students would be eligible and would elect to transfer to private schools each year.

Second, for the purposes of our calculations, we very conservatively assume that all transferees would claim the maximum grant available. This would be $2,782, half the 1995 BCPS per-pupil spending of $5,565. (In actual fact, most parents would probably receive less than the full amount because, in the case of attendance by a student at a religious school, reimbursement would be reduced in proportion to the cost of any religious instruction included in the school’s tuition. Additionally, some transferring students, especially in the lower grades would have private tuition costs lower the amount of the grant, in which case the difference could revert to the public sector.)

Third, we assume a rate of enrollment growth for both public and non-public schools of one percent per year. In the case of the BCPS, this is in fact extraordinarily generous, seeing as how its enrollment dropped by 2.9 percent from 1992 through 1997.7 Nonetheless, the 1995 figures utilized here assumed increasing enrollment for the city and we have not amended this assumption. As school budgets are rarely cut, this declining head count has the effect of accelerating our own projections for increasing BCPS per-pupil expenditure. If we were to take this acceleration into account, this would make the size of our voucher larger, as it would be pegged at 50 percent of BCPS per-capita spending. However, we conservatively grow our voucher size at a slower rate based upon an optimistic assumption that BCPS enrollment will increase slightly (rather than continuing to decrease).

Fourth, based upon the above, we assume that unit costs inflate by three percent per year.

Fifth, we assume that capital costs for new facilities are approximately $14,280 per seat for grades pre-K through 6 and $18,700 for grades 7 though 12.

Table 1 tells the tale. If matters are left unattended, and excluding the infusion over five years of $254 million under the state/city school settlement of last year, BCPS operating costs will reach $937 million by fiscal 2005, with per-student costs at $7,479. (These calculations assume our plan have been initiated in 1995.) As can be seen from the table, under the plan we propose, spending per capita on public school students would still be $7,479 in 2005, but overall operating costs would be far lower. Over a ten-year period, we predict that almost 48,000 public school students would be transferred to non-government schools of their parents’ choosing. Because the tax dollars following these students to their new schools would be set at no more than half the amount the state spent on them while they were still in public school, the savings realized would be significant.

To illustrate, under a continuation of the public school monopoly, operating costs would, we estimate, increase from $631 million to $937 million (48.5 percent). By contrast, under a voucher plan, operating costs would increase from $631 million to $819 million (29.8 percent). We estimate that by 2005, taxpayers would be enjoying an annual savings of $118.4 million on operating expenditures, while the cumulative 1995-2005 savings would be $589.0 million. Similarly, BCPS capital-cost savings would be $26.6 million annually by 2005, for a 10-year cumulative savings of $223.7 million. Combined operating and capital savings would be on the order of $144.9 million annually in 1995 and $812.8 million cumulatively.8

Such savings would not be restricted to the Baltimore City school system. Table 2 shows that similar, if not greater, savings would be achieved in the nine other public school systems listed here. The Montgomery County public schools would save the most, almost $1.5 billion. The Prince George’s County system would come in a close second at $1.2 billion. Even the relatively rural Charles County system would save about $206 million.9

In addition to these specific cost savings, we can rest assured that an educational funding mechanism reliant on competition would encourage the more efficient use of tax dollars. Removal of decision-making from the political realm to the market place would produce not only the savings described herein but also a more rational assignment of dollars for educational purposes, giving greater assurance to taxpayers that their tax dollars were being wisely employed. As an additional benefit, the type of legislation we have proposed could actually benefit the public education establishment fiscally, inasmuch as part of the savings realized under our plan could be earmarked for return to the relevant public education agency.

Unfortunately, the real issue is not about costs or being responsible with taxpayers’ money. No, the issue is about control, power. Everyone in politics knows – as did every dictator in modern history – that if you control education you control both the present (in terms of political leverage) and the future (in terms of indoctrination of future citizens). How else can one explain the vehement opposition to the simple – and thoroughly American – concept of giving parents the economic freedom to direct the education of their own children? After all, is that so very much to ask?

Mr. Schiavone is the president of TEACH Maryland.

End Notes

[Back] 1.Robert C. Embry, Jr., “Abell Foundation Head Has Qualms about Vouchers,” Letters to the Editor, Calvert News, Vol. II, No. 1, Winter 1998, pp. 3, 23, at 23.

[Back] 2.Embry, “Abell Foundation Head Has Qualms about Vouchers.”

[Back] 3.State of Maryland, Department of Education (MSDE), The Fact Book, 1997-98: A Statistical Handbook (Baltimore, Md.: MSDE, [no date]), pp. 22-23.

[Back] 4.From data provided by the Children’s Educational Opportunities Foundation of Baltimore, Inc.

[Back] 5.The acronym “TEACH” stands for “Toward Educational Access Through Choice.”

[Back] 6.All data taken from, State of Maryland, Department of Education (MSDE), The Fact Book, 1994-95: A Statistical Handbook (Baltimore, Md.: MSDE, [no date]), passim.

[Back] 7.MSDE, The Fact Book, 1997-98, p. 3.

[Back] 8.All figures based upon TEACH Maryland calculations using MSDE statistics and the assumptions defined within the text.

[Back] 9.All figures based upon TEACH Maryland calculations using MSDE statistics and the assumptions defined within the text.

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