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The Economic Case

for School Choice


Ben Scafidi
Kennesaw State University
Friedman Foundation for Educational
Choice

Evidence on School Choice


Outcomes
Students who receive school
choice opportunities benefit
Students who remain in public
schools benefit
http://www.edchoice.org/Researc
h/Reports/A-Win-Win-Solution-The-Empirical-Evidence-on-Schoo
l-Choice.aspx

Roadmap
Staffing in Public Schools
U.S., Michigan, and Ohio
Opportunity Costs

Does School Choice Harm State


Budgets?
Does School Choice Harm Budgets of
Local School Districts?
Bonus Coverage
3

Growth in Students and Public School Personnel


United States, FY 1950 to FY 2009

702%

800%

700%

600%

500%

386%

400%

252%

300%

96%

200%
Source: U.S. Department of Education, National Center for Education
Statistics 1991 Digest of Education Statistics Tables 39 and 84; 2008 Digest
of Education
Statistics Table 87
100%

0%

Some Notes About the


Public School Hiring Spree
Student achievement did not rise
Nationally, public high school graduation rates are
about the same as they were in 1970

No evidence the kids are worse


No Child Left Behind did not make us do it.
Inherent tradeoff between class size and
teacher quality.

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Opportunity Costs
of the Staffing Surge

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What if U.S. public schools had increased


non-teaching staff at the same rate as its
increase in students?
Would have saved U.S. public schools
$26,500,000,000 per year in annual
recurring savings.
What could U.S. public schools do with
$26.5 billion per year?
Give every teacher a $8,500 raise
Reduce property taxes
Offer 3.3 million children $8,000
scholarships to private schools

What about Michigan?

What if Michigan public schools had reduced


non-teaching staff at the same rate as its
decline in students?
Would have saved Michigan public
schools $374,000,000 per year in annual
recurring savings.
What could Michigan public schools do
with $374 million per year?
Give every teacher a $4,300 raise
Reduce property taxes
Offer 46,000 children $8,000 scholarships to
private schools

What about Ohio?

What if Ohio public schools had reduced


non-teaching staff at the same rate as
its decline in students?
Would have saved Ohio public schools
$2,300,000,000 per year in annual
recurring savings.
What could U.S. public schools do with
$2.3 billion per year?
Give every teacher a $21,500 raise
Reduce property taxes
Offer 290,000 children $8,000 scholarships
to private schools

Fiscal Effects of School


Choice on State and
Local Budgets

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It is straightforward to design a
school choice program that saves
the state money

Make state funds that


follow the child less than
average state spending
per student.
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The Fiscal Effects


of School Choice Programs
on Public School Districts

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When some students leave


traditional public schools via
school choice, are students who
remain in public schools
harmed?
They are not harmed
academically, and
they may benefit academically.

However, do students who


remain in traditional public
schools have fewer resources
available for their education?
21

The fiscal effect of a given school


choice program on local school
district budgets is more
complicated than it is for state
budgets.
Specifically, school choice
programs that allow school
districts to retain funding for any
fixed costs would not harm the
fiscal health of public schools or
decrease resources available to

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All Costs are Either Fixed or


Variable

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- Interest
- General
Administration
- School
Administration
- Operations &
Maintenance
- Transportation
- "Other" Support
Services
- Instruction
- Student Support
- Instructional Staff
Support
- Enterprise

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How to Divine Which


of These Costs are Fixed?
If a significant number of students left
a public school district for any reason
from one year to the next, is it feasible
for the district to reduce the costs of
these items commensurate with the
decrease in its student population?
Using 4 school districts in Georgia, I
analyzed how they were able to reduce
expenses when they lost students for
reasons not related to school choice.
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Results
In FY 2009, U.S. public schools spent an average
of $12,450 per student.
Using the methodology in my report, 64% of this
$12,450 are short-run variable costs ($7,967).
The other $4,483 per student are short-run fixed
costs that states could let school districts retain
when they lost students via school choice.
In the long-run, all costs are variable.

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Thus, any school choice program where $7,967 per student or less
(on average) follows a child to the school of his or her choice
improves the fiscal situation of a public school district, on average.
And, students who remain in public schools would have more
resources devoted to their education.

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Keep in Mind
By letting school districts retain funds
for students they no longer serve,

THEY WILL BE GETTING PAID


FOR STUDENTS THEY NO
LONGER SERVE!!!!
How many other industries have that
business model?
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If school districts say they


cannot reduce costs when
they lose students, then
They are suggesting that all of
their costs are fixed.
If that were really true, then
They should not get extra funding
when they add studentsbecause
all of their costs are fixed.
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So what does all of this mean?


The best time to expand school choice is
when the economy and budget are growing.
The Great Recession has passed.
States have a choice:
Design school choice programs that save your
state money and leave more resources for
students who remain in public schools.
Or, give more state funding to public schools
and wonder why the bureaucracy grows and
student achievement does not.
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Friedman Reports are available

www.edchoice.org
Click on research
Then, click on national research or state
research

For upcoming research

www.edchoice.org/upd
ates

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More than Scores: An Analysis of Why


and How Parents Choose Private Schools
www.edchoice.org/morethanscores
Parents choose private schools for a
wide variety of reasons, but
standardized test scores are not among
the most important reasons.
Instead of trying to turn private
schools into public schools, states
should allow a spontaneous education
order to arise.

Balderdash
African-American families are the ones who
(were) most prone to enroll their kids in the
fly-by-night schools that cropped up after
vouchers existed. [African-American families]
dont know how to make good choices for their
children. They really dont. They didnt have
parents who made good choices for them or
helped them learn how to make good choices,
so they dont know how to do that.
Racine Unified School District
Superintendent Ann Laing, Wisconsin (2012)
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Previews
Staffing Surge 3
Where do you think public schools reduced
staff during the Great Recession?

America is becoming more racially


integrated
Neighborhoods
Marriage
Adoption
Voting

What about American public schools?


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