Full disclosure: I have a dog in this race. I am on the board of Delaware Christian Academy, a private Christian school using a traditional curriculum and accepting state-financed vouchers. I have long advocated educational vouchers as a means for improving educational quality.
Along with Dr. Milton Friedman, who would have been 101 years old on July 31 of this year, I think competition in K-12 education is healthy.
No claims will be made here, however, about the merits or demerits of voucher finance of private schools nor any speculation offered about its impact on public schools except for the rather obvious fact that if students leave public schools for private schools, public school funding declines in dollar terms. I nonetheless believe those are relevant and uncontroversial, and in a future column I’ll put my advocate’s hat on.
That said, let me put on the hat of an economist to point out some simple economics of educational finance in Indiana.
A central principle of economics is the distinction between the average and the marginal. An often-referenced metric is “spending per student.” The total spending in a school system, public or private, can be defined as the total amount spent during a calendar period. For example, the XYZ school system spends $11 million on teacher salaries, building rent, office support, materials and supplies, school transportation, janitorial services and so on. If the school system enrolls 1,000 students then the spending per student is $11,000 ($11 m/1000= $11,000). In economic terms this is average spending per student and $11,000 is pretty close to the Indiana state average for public school districts.
But what occurs to total spending at XYZ if an additional student – student number 1,001—enrolls at XYZ? The change in total spending from an additional student is what economists call the marginal spending per student. The answer depends crucially on the way the XYZ school system is funded.