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Vouchers Could Save Broke School Districts

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The Austin Independent School District, like many others in Texas and around the country, is facing a substantial budget shortfall because of problems in the economy and cuts in statewide education funding. In the case of the AISD this is being estimated at as much as $100 million, and although this is probably an overestimate intended to frighten voters, there is discussion of radical cuts including closing 6 schools, increasing class sizes and actually laying off administrators.

Yet in all of these desperate plans to cut the budget, one very effective option is being overlooked, educational vouchers.

Ordinarily the argument for school vouchers is that they will give underserved students access to a better education. But there is another argument in favor of them which is purely fiscal and ought to be considered by school districts which are short of funds. A voucher program can actually be used to increase the effective amount of money available to spend per student in the public school system by allowing some students to leave, but holding a portion of what would have been spent on them in reserve to underwrite the cost of educating the students who stay behind.

The AISD has 85,000 students and spends about $9100 per student. That’s a total budget of more than $750 million. Cutting $100 million out of that is a substantial reduction, but one which could be largely offset by a voucher program. If students in an affluent community like Austin were offered $6000 vouchers it’s likely that a significant portion of those enrolled — likely as many as 20% would consider attending private school with their families making up any additional cost. This would leave the school district with a net profit per student using a voucher of $3100.

Typical private schools in the Austin area charge around $8000 in tuition and while a few are much more expensive, many are less expensive, especially in the lower grades. $6000 towards that tuition would make it easy for middle class families to move their kids to private schools for a cost of at most $200 a month and likely less.

Admittedly the capacity for 17,000 or more new students does not exist in the current private school system in the Austin area, but the six schools which are being considered for shut-down — two of which are rated exemplary — could effectively be converted to private schools, even with the same teachers, staffs and buildings and handle much of that demand. Entrepreneurs would be eager to step in and take advantage of the opportunity and the school district would even make more money back from the rental of the facilities. Some of those schools could even operate very cost effectively as teacher-run cooperatives, a business model which can work very well in education and has low administrative overhead.

Issuing vouchers to 17,000 students while keeping $3100 per student in reserve would produce $51 million in additional revenue to the school system. Facility rental would add about another $32 million if education entrepreneurs and the school district are smart and work together. That total of $83 million would largely wipe out the shortfall and the rest would be easy to take care of with administrative cuts which are already being considered, or perhaps by selling the school district’s lavish administration building which is valued at $29 million.

This system might have to be phased in gradually. A lot of parents would leap at the opportunity, but it might take a few years before sufficient additional private school capacity were developed. However, an assisted privatization of schools which would otherwise be closed would greatly accelerate the process. In fact, the district might find it advantageous to privatize a few additional schools to create more capacity.

Many of these schools might very well be able to operate at below the voucher cost, especially in the lower grades. Private schools routinely operate at a cost of $5000 or less per student for pre-kindergarden through 3rd grade. The hard truth is that private education can do a better job for less money than public education traditionally does.

Of course, what this scenario points out is that it’s probable that without the huge administrative overhead — almost 50% of the AISD budget goes to administrative costs — and with decentralization you could cut the cost per student substantially and still provide an acceptable education, public or private.

For this kind of partial privatization plan to work you would need the cooperation of administrators and teachers, whose unions have traditionally been the main stumbling block to any kind of education voucher program. In this case, since the alternatives are larger class sizes, fewer schools and teacher and staff layoffs, logic would suggest that the unions would reevaluate their position on vouchers, or that teachers would see sense and take action on their own.

This proposal may seem radical, but it’s also practical and realistic. Desperate times call for desperate measures and it’s time to put aside old assumptions and innovate to get more for our education dollars. Austin could be a pioneer in school privatization and set an example for other challenged districts to follow.

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About Dave Nalle

  • http://theugliestamerican.blogspot.com Andy Marsh

    My first problem with this entire idea is the fact that the school district already spends $9100 per student. That’s more then $200,000 per classroom with a class size of 25. That’s entirely too much money!
    The first thing that needs to be taken care of in public education is admin costs. Administrators make way too much money. And apparently, in Austin, they spend way too much money also…that might explain the $29 million admin building!
    And why is it that, as you say, many private schools in the area have a lower tuition than what the city spends per student? Not only a lower per student cost, but I’d be willing to bet, a better per student result as well!

  • http://www.republicofdave.com Dave Nalle

    Yes, the math never looks good for the public schools. But no one ever wants to talk about actually cutting their overhead, except that now circumstances have forced it on them, so why not use this opportunity to set a new example and get some kids out of the failed and inefficient system?

    Dave

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