Provo Daily Herald

The Economics of Vouchers

October 14, 2007

http://www.heraldextra.com/content/view/240238/

Voucher opponents are misleading when they say that the program will cost Utah a lot of money. It simply is not true.

Take their claim that vouchers will cost $429 million over 13 years (2008 to 2020). That sounds like a huge number, and opponents use it to argue that such a large sum would be better spent on hiring teachers. They conjure up a whole army of additional educators in the mind's eye, but they don't tell you that they're all fake.

A closer look reveals a far different story. The voucher program will cost so little that it's hardly worth quibbling over. We invite you to walk with us through a simply analysis, starting with an accurate base.

The true cost of vouchers over 13 years is $327 million, not $429 million as opponents claim. They conveniently fail to adjust for inflation.

A July memorandum from the Legislative Fiscal Analyst compares apples-to-apples:

"We have previously projected the nominal cost of the voucher program to state government over the same thirteen years for the same population of students to be approximately $429 million," the memo reads. "Adjusted for inflation, the real cost of vouchers to state government over thirteen years would be around $327 million."

Now that we have an accurate start, we can begin to put that $327 million in perspective. It's a little over $25 million per year if spread evenly.

Is that a lot of money? It would be if you won a lottery, but it's chump change in light of Utah's $4.1 billion annual budget for public education (K-12). And we haven't yet accounted for money that school districts will save.

If a student changes to a private school, he or she takes costs away -- a savings range of $95-265 million, depending on how many choose vouchers, according to the Legislative Fiscal Analyst.

So let's be generous to the critics and give them the smallest savings scenario -- $95 million. Using that figure, Utah's total spending on education would rise by $232 million (327 minus 95) over 13 years, or $17.8 million per year.

To give you a sense of scale, that means that you could allocate about $19,000 to each of Utah's 949 public schools, or slightly more than half a teacher with benefits -- hardly the army of educators presented by voucher opponents.

In fact, school districts today can slide that much money to individual schools if they want to. It's a rounding adjustment.

Bottom line: The total cost of vouchers is a minuscule 4-tenths of 1 percent (0.004) of the colossal $53.3 billion that Utah will spend on public schools over 13 years, given current levels.

We have tried to resist characterizing $232 million over 13 years as a drop in the bucket. But when the money is placed in its correct context we are forced to conclude ... it's a drop in the bucket.

By comparison, in 2007 the Legislature gave school teachers a blanket raise of $349 million in just one year. Utah's spending on education has increased $2 billion over the past two years. Clearly the Legislature has made public education a priority. Now it's fair to ask whether we're getting measurably better performance for the money. And it's equally fair to ask why parents should be denied a choice for children who could do better in another educational setting.

Clearly, the cost of vouchers to the taxpayers is no reason to deny choice. The costs are negligible. Nor is negative impact on the public school system a reason. Public schools will be funded as usual -- even for students who aren't there. School districts will continue to receive the same amount of state money from taxpayers as if all the voucher students were still in their seats.

Put another way, the public system does not have to compete for tax dollars; it gets those dollars whether vouchers go forward or not.

While it's true that costs arising from vouchers will be higher if the program is used by more parents than expected, one should remember that this is all money for education -- the No. 1 priority of Utahns in virtually every poll we've seen. If the program is successful, it's well worth spending that drop in the bucket.

More important, vouchers are worth trying for the sake of individual children who are not reaching their full potential in the public schools. Society has a moral obligation to let them grow.

Referendum 1 is an excellent piece of legislation -- not perfect, perhaps, but fundamentally brilliant in its approach. It points the way to global competitiveness. It gives parents the ability to choose what is best for their children. It costs very little. And it protects the intellectual lives of individual young people who won't be sacrificed in a one-size-fits-all system.