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Does Choice Cost Traditional Public Schools Money?

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One of the leading criticisms of voucher programs—and charter and virtual schools for that matter—is that they undermine traditional public schools' finances by sucking away their per-pupil funding and resources.

A new paper published by the Friedman Foundation for Educational Choice, which supports public and private school choice, challenges that assertion.

Author Benjamin Scafidi attacks the question this way: If a substantial number of students left a public school district, is it realistic that the school system could cut its costs enough to account for the loss in student population, and the resulting loss of money? His argument, for both large and small districts, is yes.

In the paper, Scafidi starts with the United States' average per-pupil spending in 2008-09, which was $12,450. He estimates that 36 percent of those costs were "fixed" in the short run, while 64 percent, or $7,967 per student, were variable, or costs that can change with student enrollment.  Assuming that a school choice program redirects less money to a charter or voucher program than was going to a student's traditional school, that shift can improve the financial standing of the public school district, argues Scafidi, an associate professor of economics at Georgia College & State University, in Milledgeville.

Scafidi considers the costs of instruction, student support, instructional and staff support, food service, and some other areas to be variable in the short run. In other words, those costs can and often do fall as students leave traditional publics, even from one year to the next, enough to make up for the loss of funding that comes with the loss of students. His paper cites examples of cost-cutting measures from a couple small districts and large ones in defense of this argument.

I asked Helen Ladd, a professor of public policy and economics at Duke University, for her impressions of Scafidi's conclusions.  Ladd, who has studied school choice and  finance, said in an e-mail that the impact on school districts of student losses through choice would depend on the circumstances, but that in most cases "districts are likely to be worse off."

Among the factors that will affect whether districts end up worse off financially, she said, is the extent to which students leaving the traditional public system are relatively advantaged students, who carry low costs, or disadvantaged students , who cost districts more—as well as whether a district's overall per-pupil funding and costs are being altered by overall increases or declines in enrollment.

Ladd also raised another question that could negatively affect the finances of public schools that lose students. Some of those students may leave the traditional public schools through vouchers or for other options, and then return to the public system in the middle of the year—at which point they aren't likely to be bringing a substantial amount of their funding along with them. 

"My sense is this return of students is not a trivial issue," Ladd said.

Scafidi's paper does not factor in this exodus-and-return of students. But the author said he believes his premise holds up, for a couple reasons.

In some states, when a student leaves a public school, at least some of the money does not leave with the student that first year, he said. States vary greatly in how often they count students for the purposes of determining enrollment, and per-pupil funding. Coming up with an overall sense of trends in this area is difficult, added Scafidi, who said he's unaware of data that show whether more students transfer out or transfer into school districts during the school year. But "as long as school choice leads to a net increase in students leaving," he believes his findings are solid.

Do you agree?

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