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School Finance Reform: Don't Give Up On Vouchers


Economic Viewpoint

SCHOOL-FINANCE REFORM: DON'T GIVE UP ON VOUCHERS

The California school-finance scheme known as Proposition 174 would have given vouchers worth $2,600 to all students to help them attend private schools if they chose. It was opposed by the two national teachers' unions, many politicians, and other groups--and soundly thrashed in a November referendum. Despite that rejection and rebuffs of related proposals in Oregon and the state of Washington, radical school-finance reform seems inevitable.

Although I supported Proposition 174 because it offered an improvement on the status quo, grave defects in voucher proposals must be remedied if they are to appeal to a strong majority of voters. The vouchers should be provided only to low-income families, since it is almost always their children who are saddled with inferior schools in the inner city. These families do not have the economic means to choose communities with good public schools, whereas middle- and upper-income families already exercise considerable choice among schools. They can move to the suburbs or city neighborhoods with good public schools, or--if they have the means--they can send their children to private schools.

Limiting the vouchers to poor families answers the valid objection that if all families are included, richer families will surely be the main users of the vouchers to send children to private school. Milwaukee has started an experimental program that gives a limited number of vouchers to children from the inner city for private-school attendance.

The present system of public-school finance is roundabout and inefficient, first taxing households to provide revenues for public schools and then indirectly returning taxes to families with children in public schools. The California voucher proposal would have directly given back some of the tax revenues to all families who chose private schools. A still better system would not only give vouchers to students from poorer families but would also require public schools to become partly self-supporting by charging all students tuition equal to the voucher level.

PRECEDENT. For example, public-school tuition would equal $3,000 if that is the value of school vouchers. Taxes would have to cover only the excess of public-school expenditures over tuition income. There is precedent for tuition charges by public schools in the early history of common schools in the U.S. and in the sizable fees currently assessed by state-run colleges and universities.

Tuition income would help offset any reduction in government spending on public schools because of the public financing of tuition vouchers. Such income would also make it easier for public schools to finance a continuing growth in spending on students--which more than doubled during the past 25 years.

Some voters who are fed up with public schools mpposed the California initiative because they feared it would add to the deficit in the state's budget. But if vouchers were limited to poor families and if public schools charged tuition, the financial demands on state budgets might be reduced rather than increased. It would then be financially much easier to do more for the poorer students who need help the most by raising the size of their vouchers above the California proposal of $2,600. This figure amounts to less than half of the national average cost of a student in public high school.

TAX CUT. Poorer families who continue to send their children to public schools would be financially no worse off under the proposed system than at present, since their vouchers would cover the tuition charges of these schools. It might appear that middle-class families with children in public schools would become financially strapped, since they would have to pay both tuition and school taxes. But the taxes needed to finance public schools would be reduced because these schools would now have tuition revenue. For this reason, an initial reduction in school taxes should be mandated to recognize that schools also will get revenue from tuition.

The present public-school financing system has encouraged sharp segregation of students by income, race, and other characteristics. Vouchers limited to students from poorer families would reduce this segregation because some private schools with a mainly affluent clientele would be happy to accept more students from diverse backgrounds if they brought vouchers covering part of their tuition. Even at present, segregation by race, income, and family education is much lower in Roman Catholic private schools than in public high schools.

If public schools were to charge tuition, families would determine where to send their children by comparing differences in quality between private schools and available public schools to differences in tuition. This would increase the competition between the private sector and all public schools, not just those with students who are eligible for vouchers.

This competition for students would force public schools to become better. The system of higher education in the U.S. is the world's best mainly because competition between private colleges and tuition-charging public colleges has improved the performance of both.GARY S. BECKER


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