Louisiana's Lesson: Attacking Private School Choice Hurts Public School Districts

Buckle up, friends. We’re heading back to Louisiana for today’s post. Figuratively, of course—Louisiana isn’t exactly somewhere I’d like to be in person right now. Here’s hoping everyone stays safe down there.

The good news is that we get to remain dry (literally and figuratively) in our chairs and take a look at yet more research related to educational choice in Louisiana, this time on the financial consequences of scaling back the Louisiana Scholarship Program (LSP). Those who argue that private school choice sucks money out of public education may want to brace themselves; today’s post may cause severe damage to their inaccurate worldview.

We’ve spent a fair amount of time covering the disappointing results (see here and here) of the Louisiana Scholarship Program, which awards private school vouchers to roughly 7,000 kids. We’ve also talked about what we can learn from the program’s problems. But explanation or no explanation, the program’s outcomes are concerning. And combined with a real or imagined budget squeeze in the Pelican State, those outcomes prompted Governor John Bel Edwards proposing a cut in the program. That proposal eventually became a decision to trim the program’s budget by about $6 million. The cut probably means some interested students won’t be able to get vouchers this year. Opponents of school choice no doubt believe that’s great news. But is it really?

We all know that there a lot of reasons people choose schools, only some of which are related to academics. We know that parents are best positioned to determine what kind of education their children need. And we know from the explosive expansion of both public and private educational choice that there is enormous parental demand for more options in education.

We also know that choice overwhelmingly makes public education systems better, not worse. Yet we often don’t think about the inverse of that equation. What if scaling back or eliminating private school choice programs actually makes public education worse off? And what if that’s as true of finances as it is of academics?

That’s exactly the question a group of researchers at the University of Arkansas set off to answer in a new working paper on the fiscal effects on Louisiana school districts of scaling back or eliminating the LSP. The answer they reach won’t be surprising to school choice advocates—we have long known that private school choice programs can and do save money— but it may knock some ardent choice opponents out of their chairs. From the study’s summary:

For each district, we compare the additional costs incurred to the additional funding received from the state. We conclude that the overall fiscal impact on districts will be negative; in other words, the overall additional variable costs incurred by the districts will be greater than the overall additional funding provided to the districts. In fact, we find that only 2 to 7 of the 69 school districts would benefit from the elimination of the program. For the affected districts, the average outcome would be a financial loss of about $1,500 per returning voucher student in 2016. In each scenario, we find that over 80% of student transfers would result in a financial loss for the local district.

Ahem. Kind of puts a gaping hole in the argument that these programs are harming public schools financially, doesn’t it? Choice opponents frequently resort to the argument that we should be putting more money into public schools rather than doing crazy things like allowing families to choose other, potentially better options. But in Louisiana, it appears that these folks have their wires crossed. Forcing voucher students back into Louisiana’s public school system would actually take money away from most public school districts, not give them more to work with. Take a moment to collect yourself if necessary.

The thing I like most about this study is that it provides an interesting perspective on the interplay of “fixed” and “variable” costs in education. It’s impossible to have a wonky debate over educational choice without someone pointing out that a school losing only a handful of students will still have to pay its principal, turn on its lights, etc.—in other words, its fixed costs won’t change. Here, we have the inverse. Forcing voucher students back into public schools will, in most cases, drive up variable costs enough to exceed the additional funding the students bring into the schools under Louisiana’s school finance formula. As my dad always says, there are two sides to every fish in a barrel. Or maybe I’ve got that wrong.

Anyway, I should note that this study may actually be understating the financial burden that trimming or eliminating the LSP will have on public schools in the state. That’s because the researchers “assume that that districts are operating efficiently, so that current expenditures represent the costs necessary to adequately educate students.” In other words, the model assumes that schools are spending only exactly what it costs to serve students. If schools are engaging in inefficient behavior or silly spending—inconceivable, I know—the math could change for the worse.

To make matters worse, the actual financial burdens faced by affected schools may be more severe in practice than they look on paper. Because of the timelines involved in Louisiana’s school finance system and the state’s fiscal year, schools wouldn’t receive the additional funding associated with returning voucher students right away. That means the schools would have to bear the increased costs of educating those students in the absence of additional funding for a number of months before their (inadequate) financial relief arrived. Ouch.

So there you have it. Less school choice in Louisiana means more financial pressure for the state’s public school districts. I know I trot this quote out too often already, but I feel compelled to leave you with some wisdom from Mr. Hayek that I think applies perfectly to this situation:

Is there a greater tragedy imaginable than that, in our endeavour consciously to shape our future in accordance with high ideals, we should in fact unwittingly produce the very opposite of what we have been striving for?

Hayek was a smart dude, wasn’t he? Have a great weekend! I’ll see you back here next week.