Benefit costs, not school choice programs, are the real drain on public education spending

By Aaron Garth Smith & Jordan Campbell of Reason. Excerpts:

"Between 2002 and 2019, all school choice states except North Carolina saw inflation-adjusted increases in public school per-pupil revenue as Chart 1 illustrates below. New Hampshire had the highest growth in funding at 51%, going from $12,738 per student in 2002 to spending $19,283 per student in 2019. Between 2002 and 2019, the vast majority of states had education funding bumps exceeding 10%. Even school choice bellwethers like Florida and Wisconsin increased public education funding by more than 5%. North Carolina’s school revenue was essentially flat with a decrease of less than 1%."

"Using 2009 as a reference point, half of the states with school choice still increased real spending by 2019, and these data don’t include more recent revenue trends from the latest school year—including a massive injection of about $200 billion in federal COVID-19 relief funding for K-12 public education.[ii] Future Census data will likely show a significant funding boom across school choice states through at least the current school year, regardless of what baseline year is used.   

School choice states have indeed increased funding for public education over time, and as our Reason Foundation colleague Christian Barnard says, it’s not even debatable. If anything, it’s school choice programs—which research indicates leads to increases in parent satisfaction, educational attainment, and test scores—that are underfunded."

"Fortunately, EdChoice has data on each state’s school choice funding as a share of its total K-12 education expenditures. They find that school choice programs—education savings accounts, vouchers, and tax credit scholarships— account for less than 0.4% of total U.S. education expenditures. Florida comes in on top of that list at a paltry 3.25%."

"Pennsylvania spent approximately $81 per student on choice programs while Louisiana spent $77. Interestingly, all but six of the 26 states spent less than $100 per student, including seven that fall below $10 per student."

"school choice programs consume a tiny sliver of the public education funding pie. This becomes even more apparent when comparing these amounts to total spending on public schools. Rhode Island, Pennsylvania, and Illinois all spend in the neighborhood of $20,000 per student with the District of Columbia topping out at an astounding $31,109 per student."

"research suggests that teacher pension costs are responsible for a substantial share of the growth observed in the last two decades."

"inflation-adjusted instructional benefits—which doesn’t even include all district and school staff—have risen dramatically in school choice states. For example, Pennsylvania increased spending on instructional benefits by $2,414 per student from $1,358 in 2002 to $3,772 in 2019. This means that for every class of 20 students in Pennsylvania about $75,000 is now spent on instructional benefits alone—$48,000 more than was spent in 2002."

"As a result, instructional benefits consumed substantial portions of public education’s revenue growth during this time period. For example, Virginia increased funding by $1,717 per student but benefits grew by $901 per student. Ohio’s benefits spending consumed $573 of its $1,749 revenue increase. For some states, spending on instructional benefits actually outpaced revenue growth. This was the case for Arizona where funding increased by $122 per student while benefits grew by $393 per student—a net loss of $271 per student."

"For almost every state, growth in per pupil instructional benefits between 2002 and 2019 exceeded spending on school choice, and in many cases, this gap is large. In Chart 5 you can see that in Georgia, benefits grew by $471 per student and school choice spending in 2019 was only $62 per student. Even in Indiana, a school choice heavyweight that experienced relatively moderate growth, the increase in benefit costs is still on par with school choice spending."

"how much would school choice states have saved if they maintained benefit spending at 2002 per pupil levels adjusted for inflation? In 2019, these 26 states combined would’ve spent about $17.8 billion less on instructional benefits, compared to the $2.6 billion they spent on school choice programs. In other words, growth in benefit spending is diverting over six times more from classrooms than what’s spent on school choice programs. Clearly, the notion that school choice drains funds from public education is not just unfounded, but it’s also a distraction from an actual fiscal crisis that’s consuming education budgets in virtually every state."