Economics for Today 9th Edition by Irvin Tucker

Exercise 16

CAN VOUCHERS FIX OUR SCHOOLS?
Applicable Concept: public goods versus private goods
In their book following Free to Choose, published in 1980, economists Milton Friedman and his wife Rose Friedman proposed a voucher plan for schools. The objective of their proposal was to retain government financing, but give parents greater freedom to choose the schools their children attend. The Friedmans pointed out that under the current system parents face a strong incentive not to remove their children from the public schools. The reason is because if parents decide to withdraw their children from a public school and send them to a private school, they must pay private tuition in addition to the taxes that finance children enrolled in the public schools.
To remove the financial penalty that limits the freedom of parents to choose schools, the government could give parents a voucher, which is a piece of paper redeemable for a sum of money payable to any approved school. For example, if the government spends $8,000 per year to educate a student, then the voucher could be for this amount. The voucher plan embodies the same principle as the GI Bill that provides educational benefits to military veterans. The veteran receives a voucher good only for educational expenses and is free to choose the school where it is used, provided the school satisfies certain standards.
The Friedmans argue that parents could, and should, be permitted to use the vouchers not only at private schools, but also at other public schools-and not only at schools in their own district, city, or state, but at any school that is willing to accept their child. That option would give every parent a greater opportunity to choose and at the same time would require public schools to charge tuition. The tuition would be competitive because public schools must compete for students both with other public schools and with private schools. It is important to note that this plan relieves no one of the burden of taxation to pay for schooling. It simply gives parents a wider choice as to which competing schools their children can attend, given the amount of funding per student that the community has obligated itself to provide. The plan also does not affect the present standards imposed on private schools to ensure that students attending them satisfy the compulsory attendance laws.
In 1990, Milwaukee began an experiment with school vouchers. The program gave selected children from low-income families taxpayer-funded vouchers to allow them to attend private schools. There has been a continuing heated debate among parents, politicians, and educators over the results. In 1998, Wisconsin's highest court ruled in a 4-2 decision that without violating the constitutional separation of church and state, Milwaukee could use public money for vouchers for students who attend religious schools.
A 2002 article in USA Today reported:
Opponents of vouchers have repeatedly argued that they would damage the public schools, draining them of resources and better students. A recent study of the Milwaukee voucher program by Caroline Hoxby, a Harvard economist, suggests just the opposite. She wrote that "schools that faced the most potential competition from vouchers had the best productivity response." No doubt, the nation's experience with vouchers is limited, yet the evidence cited in a recent Brookings Institution report shows that they do seem to benefit African- American youngsters.
The controversy continues: For example, in a 2002 landmark case, the U.S. Supreme Court ruled that government vouchers for private or parochial schools are constitutional. In 2003, however, a Denver judge struck down Colorado's new school voucher law, ruling that it violated the state's constitution by stripping local school boards of their control over education. In 2006, the Florida Supreme Court ruled that Florida's voucher program for students in the lowest-rated public schools was unconstitutional. Then in 2010, Florida legislated a tax-credit voucher plan for low-income students. In 2013 the Indiana Supreme Court upheld the state's voucher program, which is the nation's broadest school voucher program. And in the 2014-2015 school year, North Carolina awarded vouchers to students whose families meet certain income requirements.
The Friedmans present a one-sided view of the benefits of a voucher system. Other economists disagree about the potential effectiveness of vouchers. Do you support a voucher system for education? Explain your reasoning.