Why lawmakers repealed voucher cost calculation

One of the selling points when Indiana’s school voucher program was created in 2011 was that it would save money — because students who got vouchers for private-school tuition would cost the state less than if they attended their local public schools.

Legislators even wrote a formula for calculating the savings and included it in the state budget, along with a plan for distributing the extra money to public schools.

But the savings disappeared as the state expanded the voucher program to include many students who had never attended a public school. The savings became a cost – and the cost grew, reaching $40 million in the 2014-15 school year.

How did state legislators respond? By repealing the cost calculation formula.

The formula was part of the state budgets in 2011 and 2013. It was in the 2015 budget bill introduced early this year in the House. But lawmakers deleted the language before approving the budget in April.

Rep. Bob Behning, chairman of the House Education Committee, told me it was proper to dump the formula because it no longer works now that the mix of voucher students has changed.

“It doesn’t make sense for us to calculate the savings in that format,” he said.

Here’s how the formula works. First you take the students who used vouchers to transfer out of public schools and calculate how much their schooling would have cost the state if they had stayed in public schools. Then you subtract what the state spends on vouchers. That’s the savings – or, if the result is negative, the cost.

Vouchers pay either 90 percent or 50 percent of per-pupil spending for the student’s local public school, depending on family income. So for a student who qualifies for a voucher and moves from a public school to a private school, the state saves 10 percent or 50 percent of the cost.

In the first year of the program, nearly all voucher students previously attended public schools – so vouchers initially produced a savings. But that has changed. The legislature expanded the program in 2013 to award vouchers to students who would otherwise attend “failing” public schools, students in special education, and siblings of prior voucher recipients, even if they hadn’t attended public schools.

And perhaps more significantly, private schools figured out they could qualify students for vouchers by awarding them tuition assistance from state-sanctioned “scholarship granting organizations.” That became the fastest-growing segment of the voucher student population.

In 2014-15, fully half the 29,148 students who received vouchers had never attended an Indiana public school. Among first-time voucher recipients, 80 percent hadn’t attended a public school. Using the state cost calculation formula, those students are pure cost to the state – no savings.

The Indiana Department of Education, following the budget law, has included the savings or cost in annual reports on the voucher program, the most recent of which was released this month. Going forward, it could still calculate and report the voucher program’s cost. But the law won’t require it.

Department spokesman Daniel Altman said it’s too early to say what future reports will include. “However, we will ensure that we provide an accurate reporting on the program to the public,” he said.

Voucher supporters, including some legislators and the advocacy group Hoosiers for Quality Education, dispute the claim that the program cost $40 million last year.

For calculating costs, the question is whether voucher students would have attended public schools if it weren’t for vouchers. If they would have, then the program would still save the state money. But if their parents always intended to send them to private schools and are simply taking advantage of vouchers to make it cheaper or free, they are an added cost.

Behning argues that, in most cases, it’s the former. He said families with incomes modest enough to qualify for vouchers couldn’t afford private school tuition without the assistance.

He posited a four-person family that qualifies for full vouchers with an income of $44,000. With two children in private school, tuition might cost 20 percent of the family’s income.

“There’s no way those parents are going to be able to afford private school tuition,” Behning said. Without vouchers, “those kids would have been in public school.”

But Indiana’s income guidelines to qualify for vouchers are extraordinarily generous. A family of five that makes over $77,000 can qualify for partial vouchers. Once they qualify, a family of five whose income rises to $100,000 can keep getting vouchers. Probably it could afford private school.

Single-parent families and families with two working parents are used to scraping together money to cover child care or preschool costs. And child care is often more expensive than private school tuition, which ranges locally from $3,500 to $7,000. (Behning noted that some voucher families would also receive government preschool assistance; but some certainly would not).

Also, as State Impact Indiana reported last week, voucher numbers have exploded in some areas, such as Fort Wayne and Indianapolis, without a corresponding drop in local public school enrollment. That suggests vouchers are going to families that always planned to choose private schools.

Behning said cost should ultimately be a secondary consideration in evaluating whether Indiana’s voucher program is fulfilling its purpose. “The goal was to provide parents with the best choice of school, whether it be public, private or charter,” he said.

And I agree that cost shouldn’t be primary. Indiana provides state funding for private schools that aren’t accountable to the public, that can discriminate in admissions and that teach religious doctrine and, in some cases, controversial views of history and current events. That’s either good public policy or it isn’t.

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