The Hidden Costs of Vouchers Programs

Universal voucher programs for schools are rapidly expanding across the country. Under these programs, states give parents stipends to either homeschool their children or send them to private school. As a policy tool, school vouchers have a long and questionable history. Following the Brown v. Board of Education ruling in 1954, several Southern states used vouchers to undermine school integration efforts, with states offering voucher programs to enable parents of white children to afford segregated private schools.¹

Starting in the 1990s, many states enacted “modern” voucher programs with the claim of supporting students with special needs or students in low-income districts, offering a small number of these students pathways to private school. The number of students using vouchers stood at just 11,000 in 2000 but had increased to over 600,000 by 2021.² More recently, legislation has broadened the applicant pool for vouchers by creating universal programs; as of January 2025, 12 states have programs in which any student can use public funds to pay for private education.³

While additional costs to provide quality education are not problematic, study after study has found that voucher programs do not improve student achievement. Therefore, vouchers are not a cost-effective way to spend any additional dollars that states or localities are willing to commit to K–12 education. (For details, see “Ideology Over Evidence.”)

Proponents of vouchers have been undeterred by the lackluster achievement results and often claim school choice is inherently beneficial.⁴ In addition, they try to claim that expanding vouchers would not harm public resources for education. Their argument hinges on the fact that public school spending is generally determined by governments setting a per-pupil allocation and then multiplying this allocation by projected enrollment. This funding model allows voucher proponents to claim that if vouchers pull children out of public schools, it still leaves per-pupil spending untouched, even though vouchers might reduce overall spending. In effect, proponents are arguing that vouchers would not degrade public schools’ ability to provide educational services.

The Economic Policy Institute’s analysis shows that vouchers do harm public schools because not all education costs can change commensurately with student enrollment. For example, schools still need to pay for building operations and maintenance, regardless of whether some students leave public schools to attend private schools using vouchers. These “fixed costs” can’t be reduced when overall spending is reduced, and that leaves less money for districts to spend on costs that can be reduced, which often include instruction and student support services. To illustrate the damage, we developed a free online tool (available at go.aft.org/uw6) that estimates the fiscal externality of voucher programs—the dollar costs to school districts from students leaving public schools with a voucher. (In economics, an externality produces an outcome for those who aren’t responsible for the decision at hand. In this case, the fiscal externality is the negative effect that voucher programs have on public school systems as they redirect money away from traditional public schools.) The fiscal externality does not quantify the entire cost of voucher programs. It represents a piece of those costs—but an important, often hidden, piece.

Users of the tool can try out different scenarios to see how much money students will lose out on, putting a number to the reality that children who don’t participate in voucher programs still bear the cost of educational choices that others make. Here are some factors affecting how much vouchers cost public schools:

How many children will go to private schools or be homeschooled in a given year?

How quickly will enrollment numbers in public schools fall?

How many of the school district’s costs are fixed and can’t be changed in response to lower enrollment numbers? (For example, heating and cooling costs for school buildings will remain the same regardless of enrollment.)

How many of the school district’s costs are variable and can be changed in response to the drop in enrollment numbers? (If, for example, fourth-graders were exclusively targeted by voucher programs, school districts could reduce the number of fourth-grade teachers in response—but often the decline in enrollment is much more diffuse, making the choice to let go of any one teacher difficult.)

Consider this example from Ohio, a state with one of the oldest active voucher programs in the country and where vouchers have grown substantially. Using the fiscal externality tool to estimate the impact of a 5 percent decline in enrollment for the Cleveland Metropolitan School District shows that Cleveland public school students stand to lose $364 to $927 per pupil in education spending, which adds up to $12 million to $31 million per year.

These externalities are not just a problem for public budgets. Students stand to lose out on their potential educational achievement when funding to schools is cut.⁵ When that funding is reduced, students, particularly in high-poverty neighborhoods, are likely to have worse outcomes than they would have had if their schools had retained the previous level of education funding.

Hilary Wething is an economist at the Economic Policy Institute (EPI); previously, she was an assistant professor of public policy at Pennsylvania State University. This article is adapted from her EPI report How Vouchers Harm Public Schools, which is available at go.aft.org/uw6.

Endnotes

1. C. Ford, S. Johnson, and L. Partelow, The Racist Origins of Private School Vouchers (Washington, DC: Center for American Progress, July 12, 2017).

2. K. Welner, G. Orfield, and L. Huerta, eds., The School Voucher Illusion: Exposing the Pretense of Equity (New York: Teachers College Press, 2023).

3. L. Cohen and B. DiMarco, “Early Returns: First Results from the New Wave of Public Funding of Private Schooling,”FutureEd, October 7, 2024, future-ed.org/early-returns-first-results-from-the-new-wave-of-public-funding-of-private-schooling.

4. J. Cowen, The Privateers: How Billionaires Created a Culture War and Sold School Vouchers (Cambridge, MA: Harvard Education Press, 2024).

5. J. Lafortune, J. Rothstein, and D. Schanzenbach, “School Finance Reform and the Distribution of Student Achievement,” American Economic Journal: Applied Economics 10, no. 2 (April 2018): 1–26.

[Illustration by Pep Montserrat]