Economist Milton Friedman argued for the modern concept of vouchers in the 1950s, stating they'd promote competition and improve schools. Vouchers have since been introduced in countries all over the world but are controversial as they reflect political and ideological splits as well as the role of unions in education.
Under non-voucher education systems citizens that currently pay for private schooling are still charged taxes that are used to fund public schools, arguably their cost for education is two-fold as they are funding both public and private schools simultaneously. Vouchers are designed to provide citizens freedom to spend their tax money as they choose for the type of school they want. This causes controversy as it puts public education in direct competition with private education, threatening to reduce public school funding if parents choose to withdraw their children in favor of a private school. Proponents argue that competition through free market capitalism would increase the quality of education for both private and public education sectors as it has for state universities, manufacturing, energy, transportation, parcel postal (UPS, FedEx vs. USPS) sectors of government that have historically been socialized and opened up to free market competition. Frequently, institutions are forced to operate at higher efficiencies when they are allowed to compete and any loss of supply and demand for public institutions would be offset and equalized by the increased demand for private institutions. For example, if the demand for private schools increased, they would need to hire more teachers and staff to compensate for their increased growth, so any jobs lost from the public sector would be offset by jobs gained in the private sector.
Proponents also note that school vouchers would allow for greater economic diversity by offering lower income students opportunities to attend previously unaffordable private schools. School voucher proponent and Nobel Prize winning economist Milton Friedman observed that the poor have an incentive to support school choice, as their children attend substandard schools, and would thus benefit most from alternative schools. Friedrich von Hayek explains:
Other influential supporters include Newark Mayor Cory Booker, Illinois business man and politician Jim Oberweis, South Carolina's current governor Mark Sanford, billionaire and American philanthropist John T. Walton, Former Mayor of Baltimore Kurt L. Schmoke, Presidential Candidate John H. Cox, Presidential Candidate Mitt Romneyas well as Presidential candidate John McCain claim that, "School choice stimulates improvement and creates expanded opportunities for our children to get a quality education.
The Liberty and Democracy Party supports vouchers as a stepping-stone to abolishing public schools. LDP spokesman Shem Bennett said, "Initially some public schools would remain. But under the LDP’s plan, schools would slowly privatise and diversify as there’d be no need for government ownership.
The Friedman Foundation for Educational Choice, founded by Milton and Rose Friedman in 1996, is a non-profit organization that promotes universal school vouchers and other forms of school choice. In defense of vouchers, it cites empirical research showing that students who were randomly assigned to receive vouchers had higher academic outcomes than students who applied for vouchers but lost a random lottery and didn’t receive them; and that vouchers improve academic outcomes at public schools, reduce racial segregation, deliver better services to special education students, and do not drain money from public schools.
Some critics assert that a voucher is like a discount coupon for those who can already afford the full cost of a private school education. According to the National Conference of State Legislatures, 76% of the money handed out for Arizona’s voucher program has gone to children already in private schools.
In the U.S., some critics believe school vouchers are a violation of the United States Constitution's establishment clause, which says, "Congress shall make no law respecting an establishment of religion," as many voucher programs would allow children receiving vouchers to attend church-run schools. However, the Supreme Court in Zelman v. Simmons-Harris (2002) rejected this argument.
Some economist critics point to the problem of "cream skimming," a variety of adverse selection in the educational market. With a greater pool of applicants, the private schools could be more selective over which students to admit, excluding those who do not belong to a preferred group (for instance, religion or ethnicity), those with disabilities such as autism or multiple sclerosis, and those with disciplinary problems. By law, the public schools must accept any student. So that they would presumably end up with all students whom the private schools turn away for such reasons. This would likely further undermine the reputation and competitiveness of the public schools, leading to a vicious circle that tends toward the total abolition of the public schools and perhaps the end of universal education. Although since the school would essentially become a business, just like any other business; discrimination by race, social class or religion would be illegal and thus force schools to claim that the student simply didn't meet their standards or more likely, simply avoid saying why they wouldn't take such a student thus allowing such abuses. Just as a medical doctor cannot reject a patient based on such discrimination neither could a school openly reject a prospective student. However, as in the case of health care, rejection on monetary terms would still exist, and this is likely to discriminate in a similar manner as economic theory would suggest.
Other opponents in the U.S. object on different grounds. They believe that granting government money, even indirectly, to private and religious schools will inevitably lead to increased governmental control over non-government education, and possibly over the teachings of the sponsoring religious group (most often a church). Individuals who oppose vouchers on these grounds are often libertarian; most also call for the abolition of all state sponsorship of education, which they believe to be wrong in principle. The Alliance for the Separation of School & State opposes education vouchers on the grounds that "if vouchers become commonplace, private and religious schools will become more and more like public schools. Moreover, they suggest that if it is wrong in principle for the government to tax in order to fund public education, then one should not accept any portion of the ill-gotten money to fund private education.
However, the importance of government funding for education does not imply that the government should run its own schools. In general, to subsidize a good, there are two broad choices: subsidize producers or subsidize consumers.
For example, a producer food subsidy might have a government run store that distributes potatoes to every qualifying poor person. If the individual doesn't like potatoes, too bad. On the other hand, an example of a consumer food subsidy would be the federal food stamps program. Qualifying poor people get to choose (within limits) the food that they want and the government pays for it. With a consumer subsidy (food stamps), a poor person can buy more food and more of the food they want. Back in the arena of education, the government run school system is a producer subsidy while a school voucher would be a consumer subsidy. Because education is not perfectly rivalrous nor excludable (depending on school policies), this theory is debatable.
The rationality of the consumer is also arguable, as highest utility for the consumer may not be socially optimal. In theory, a consumer subsidy gives individuals power to choose what they want, which does not necessarily entail better education, but possibly grade inflation and shortcutting. However this may be a temporary problem since in a free-society the free flow of information will allow parents and students to evaluate which schools are performing well and those which are "cheating". As a result of the market, bad schools that engage in grade-inflation and other low quality schemes will readily and easily wither away. If consumers have the freedom to look up information on truly well-preforming schools and those that merely cheat or have bad performance, these objections will have much weight. When such students enter the workforce their performance will theoretically be worse, causing lower efficiency in the long run. However, this argument rests on the assumption that purchasers of education are seeking a degree rather than knowledge. Moreover, even if degree-seeking is the primary motive of education, a degree from a rigorous and reputable school or program often holds more value than one from an institution known to be lax or lacking, and this provides motivation not to simply choose the easiest curriculum available. Presumably at the elementary and secondary levels, decisions (when choices are offered) will be made by parents of students. Of course, they may give some consideration to the desires of their sons and daughters. In post-secondary education, students typically decide for themselves between those schools that are both affordable and willing to accept them for admission, although perhaps relying partly on advice and funding from others such as parents.
Many concerns or criticisms regarding school vouchers are not leveled strictly at their implementation, but rather are in favor of a significant degree of government regulation concerning how they are spent.
The argument that education is a private good is based on the failure to differentiate education from public education. Education refers merely to the teaching of individual students for their own benefit. Public education refers to the goal of educating the entire public for their own benefit and the benefit of society as a whole. Looked at from this point of view, public education is a public good. This interpretation is arrived at by looking at society as a whole as benefiting from the education (or suffering from the lack of education) of its citizens. Few people would argue that an uneducated citizenry is preferable to an educated one. Educated citizens are more likely to contribute to society and less likely to require social support. This benefit is neither excludable nor exhaustible. A better educated citizenry improves conditions in the entire society, and everyone in the society benefits from those improved conditions. Since markets tend not to produce public goods, the argument is that the government should provide public education.
Empirical proof for the model of public education as a public good is abundant. Private schools operating in the free market have restrictive admission policies. Practically no private firms provide public education. The few that do are actually publicly funded: students who transfer in from public schools pay their tuitions with vouchers. There are charitable foundations that send children to private schools, but they do not provide access for the public at large and are therefore not providing public education
However, it has been pointed-out in the Economist (Jun 30th 2005 - Toddlers and taboos: What counts as heresy in schools is normal in nurseries) that a voucher system has already been unproblematically introduced in Britain for funding pre-school education: they argue it has been lower in costs, greater in efficiency and generative of less bureaucracy than state provision. In principle, this system might be extended to school age educational provision.
In 2006, 7% of Swedish primary school students and 13% of secondary school students attended private schools.
Milton Friedman criticised the system, saying "I do not believe that [CE] Mr. Tsang's proposal is properly structured". He said that the whole point of a voucher system is to provide a competitive market place, therefore, it shouldn't be limited to non-profit kindergartens.
After protests by parents with children enrolled in for profit kindergartens, the program was extended to children in for- profit kindergartens, but only for children enrolled in or before September 2007. The government will also provide up to HK$30000 subsidy to for profit kindergartens wanting to convert to non profit.
In the 1980s, the Reagan administration pushed for vouchers, as did the current Bush administration in the initial education-reform proposals leading up to the No Child Left Behind Act. So far, voucher programs have persisted only in about half a dozen states and districts; most are offered to students in low-income families, low performing schools, or special-education programs.
The city of Milwaukee, Wisconsin led the way in 1990 and now has nearly 15,000 students using vouchers. The 2006-2007 school year will mark the first time in Milwaukee that more than $100 million will be paid in vouchers. Twenty-six percent of Milwaukee students will receive public funding to attend schools outside the traditional Milwaukee Public School system. In fact, if the voucher program alone were considered a school district, it would mark the sixth-largest district in Wisconsin. St. Anthony Catholic School, located on Milwaukee's south side, boasts 966 voucher students, meaning that it very likely receives more public money for general school support of a parochial elementary or high school than any before it in American history. Under the current state formula for paying school vouchers, however, Milwaukee residents pay more in property taxes for voucher students than for students attending public schools. This imbalance has received considerable criticism, and is the subject of 2007 legislative proposals designed to alter the formula.
The school voucher question in the United States has also received a considerable amount of judicial review in the early 2000s.
A program launched in the city of Cleveland in 1995 and authorized by the state of Ohio was challenged in court on the grounds that it violated both the federal constitutional principle of separation of church and state and the guarantee of religious liberty in the Ohio Constitution. These claims were rejected by the Ohio Supreme Court, but the federal claims were upheld by the local federal district court and by the Sixth Circuit appeals court. The fact that nearly all of the families using vouchers attended Catholic schools in the Cleveland area was cited in the decisions. In a 2002 ruling in the case Zelman v. Simmons-Harris, the Supreme Court of the United States ruled in a 5-4 vote that the Ohio program was constitutional. The justices cited the private choice made by the parents and affirmed that the ultimate purpose (improving elementary education) was secular.
In 2006, the Florida Supreme Court struck down legislation known as the Opportunity Scholarship Program (OSP), which would have implemented a system of school vouchers in Florida. The court ruled that the OSP violated article IX, section 1(a) of the Florida Constitution: "Adequate provision shall be made by law for a uniform, efficient, safe, secure, and high quality system of free public schools.
Political support for school vouchers in the United States is mixed. On the left/right spectrum, conservatives are more likely to support vouchers. Some state legislatures have enacted voucher laws. As of 2006, the federal government operates the largest voucher program, for evacuees from the region affected by Hurricane Katrina.
Some public opinion surveys show that support for vouchers has increased in the last few years, although just how much is debatable. Majorities seem to favor improving existing schools over providing vouchers, yet as many as 40% of those surveyed admit that they don't know enough to form an opinion or don't understand the system of school vouchers.
In November 2000, a voucher system proposed by Tim Draper was placed on the California ballot as Proposition 38. It was unusual among school voucher proposals in that it required neither accreditation on the part of schools accepting vouchers, nor proof of need on the part of families applying for them; neither did it have any requirement that schools accept vouchers as payment-in-full, nor any other provision to guarantee a reduction in the real cost of private school tuition. The measure was defeated by a final percentage tally of 70.6 to 29.4.
A state-wide universal school voucher system providing a maximum tuition subsidy of $3000 was passed in Utah in 2007, but voters repealed it in a statewide referendum before it took effect.
In Pittsburgh, Pennsylvania the privately funded Extra Mile Education Foundation has had very positive results with using private donations to pay the tuition for low income African-American children to attend private Catholic schools. No tax money is used for the vouchers. Most of the students who are enrolled in the program are non-Catholic. 70% of the students come from families whose income is low enough to qualify for free or reduced priced lunches. Of the students who graduate from the program (i.e., from 8th grade), not a single student has ever failed 9th grade, and 96% of the students graduate from high school within 4 years.