The State Legislature has introduced New Jersey Senate bill S1872 entitled the Opportunity Scholarship Act which would create a five year pilot program to provide scholarship donation tax credits that would be used to fund school vouchers for tuition assistance. This taxpayer funded voucher plan would enable children from low-income families to transfer from underperforming public schools to the public, private or religious school of their choice. But to finance these vouchers, S1872 would transfer $360 million of state funds largely to private and religious schools and from our state’s public schools that are already reeling from approximately $1.5 billion in state aid reductions.
The voucher plan would allow corporations to contribute to state run scholarship organizations or funds. These state run scholarship organizations or funds would then distribute the monies to private and religious schools or to out of district public schools in certain cases. The state treasury, however, would refund each corporate donor’s contribution in the form of dollar for dollar tax credits which would result in the taxpayer subsidizing 100% of the voucher program.
S1872 significantly increases not only the number of eligible students but also the kinds of schools eligible for vouchers. The bill would enable almost 280,000 students to qualify for vouchers. Students, however, would qualify for vouchers if they were merely residing in a school district with a chronically failing school and not just attending a failing school. Furthermore, students who are currently attending charter, private, and religious schools are also eligible for vouchers. S1872 would allocate $90 million of the scholarship’s funds strictly to students who are already attending private and religious schools. Moreover, this amount can increase by the amount of the $270 million allocated for current public school students residing in a school district with at least one failing school that goes unused.
Vouchers are routinely advertised as improving educational quality by creating a competitive model. But a voucher plan is a funding vehicle for schools rather than a means for improving schools. A voucher by itself does not contribute to helping our schools and students achieve because it provides no operational, curricular, programmatic, or facility improvement.
The benefits taxpayers derive from their local school district quality and property taxes are capitalized in their property values. The greater is the quality of the local school district, the greater is the taxpayer’s property value because the demand for quality education leads to a higher market price. As a result, taxpayers strive to protect and improve their property values by constantly evaluating the quality of their school district so as to maximize their property values and avoid the risks inherent with vouchers.
Vouchers, however, create overcrowding, congestion, and financial burdens for those school districts receiving voucher students particularly if these districts are unable to refuse voucher students for capacity reasons. These burdens deteriorate the quality of education and the level of student achievement in receiving districts. When a school district’s quality deteriorates or is expected to decline, taxpayers will usually vote with their feet. By voting with their feet, taxpayers in districts receiving voucher students are quite likely choose another public school district that best meets their needs and one that will contribute to their property values rather than one subject to the incremental burdens of voucher students.
Contrary to a voucher plan’s assertion that it will somehow create a “true” competitive model, a taxpayer’s choice of municipalities and, therefore, school districts, already reflects a home owner’s optimal asset allocation decision. Thus, the current model of school choice for the provision of education through local public school districts that does not involve vouchers results in a competitive marketplace that aligns taxpayer preferences with the quality of public education better than a voucher plan could ever hope to accomplish.
The provision of education through local public school districts in which all of students who live within the district attend its local public schools enables community members to get to know and understand one another. The public benefit of having children attend their local schools rather than schools in remote districts accrues, therefore, to students and parents alike. This “network of acquaintances” is defined by Fischel (2002) as “community-specific social capital.”
Community-specific social capital (Fischel, 2002) “facilitates collective action” and builds public support for the public funding of public education which “reduces the transaction costs of the provision of true local public goods such as education.” But vouchers would disperse students from their home towns and thereby reduce the communal capital of the local school district. Vouchers would also impose significant transportation costs on districts such as Summit which do not own or operate a fleet of buses.
Another major adverse impact of the voucher plan is its $8,000 cap on the annual amount for which voucher students could be compelled to pay to their chosen public, private or religious school. This would result in voucher payments not only falling short of average tuition charges at the overwhelming majority of public, private and religious schools as well as much further below average per pupil costs but also forcing many public, private and religious schools to close. The districts from which voucher students would transfer would suffer losses of state enrollment-based aid as well as a possible degradation of test scores which would lead to No Child Left Behind financial and operational penalties.
If the question is how to improve the quality of education statewide, then the answer is not found within the Opportunity Scholarship Act. We should oppose the passage of S1872 because it will adversely impact our students and schools statewide while exposing homeowners to the risks associated with vouchers. Taxpayers resemble investors because they want their major asset, their home, to appreciate in value. Home owners have a vested interest in the success of their local schools, therefore, because they strive to offset risks such as those posed by vouchers to their property’s value which can not be easily diversified.
Fischel, W. A., (2002). An Economic Case against Vouchers: Why Local Public Schools Are a Local Public Good, Dartmouth Economics Department Working Paper: Dartmouth College.