Administrative Costs of Education Voucher Programs

September 2003
Paul Hill

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Though response to the Zelman case has not been as dramatic as possible, a number of states and localities are now considering creating voucher programs. A few localities have experience designing and implementing such programs, but most will encounter challenging issues. On the surface, the economics of most such programs look favorable. The face value of vouchers is typically less than the public schools’ total per pupil expenditure, and the public school system does not have to maintain private school buildings. The public school system does, however, have to maintain its existing schools, and districts that lose a small proportion of their students to voucher programs are seldom able to reduce their central administrative overhead costs. There are, furthermore, some public costs of managing a voucher program. Voucher programs require public schools to transfer student records, re-allocate categorical program funding, arrange to test voucher students enrolled in private schools, re-structure public schools that had lost large numbers of students, prepare to accept disillusioned voucher students back into the public schools, and in some cases arrange student transportation to private schools. This paper focuses on the administrative costs of voucher programs. It considers the tasks that public and private agencies must undertake, and estimates the administrative burdens and cash flows that local voucher programs create. It assumes that all voucher programs, including those meant in part to reduce overcrowding, will be voluntary, i.e. that no child can be assigned to attend a private school against its parents’ will. It also assumes that public agencies will continue to care about the educational experiences and growth of voucher students, and will therefore want both to administer voucher programs in ways that let private schools do their best for students and to ensure that student outcomes are evaluated. The paper starts by identifying the administrative arrangements that must be made for any public voucher program, and by outlining typical roles for state government, the local education agency, a special local voucher program office, and individual private schools admitting voucher students. It also examines in detail some vital administrative functions that must be coordinated among these actors, i.e. providing accurate and complete student record information, understanding how families choose schools, and assessing student outcomes. The second major section focuses on the person-power and financial demands that a voucher program is likely to impose on state government, the local education agency, the voucher program office, and private schools. The final section estimates the probable gross and net annual dollar costs of voucher program administration, as borne by state government and cooperating local school districts. All the cost estimates are approximate: costs are highly sensitive to the design of the voucher program, existing local practices on providing services to children in private schools, and to the condition of local school district records.