School Choice Pays Off -- Literally

February 11, 2013

While many doubt the effectiveness of school choice, a recent evaluation of the District of Columbia Opportunity Scholarship Program (OSP) found that the voucher program produced $2.62 in benefits for every dollar it spent, say Patrick J. Wolf, professor of education reform and 21st Century Endowed Chair in School Choice at the University of Arkansas in Fayetteville, and Michael Q. McShane, a research fellow in education policy studies at the American Enterprise Institute and a distinguished doctoral fellow in the department of education reform at the University of Arkansas.

  • The program, which was launched in 2004 and ran for five years initially, increased funding for public charter school facilities and added funds for educational improvements in District of Columbia (D.C.) public schools.
  • The OSP increased the high school graduation rate of students by 12 percent if they were lucky enough to win the annual scholarship lottery, which allowed students to choose from more than 60 private schools in the District participating in the program.
  • More than 3,700 students won the scholarships and an estimated 421 extra students received their diplomas as a result of this program.

Wolf and McShane estimate that a high school diploma is worth almost $350,000 to an individual when accounting for their increased quality of life and earning potential. They estimate an additional $87,000 in societal benefits after factoring for the reduced likelihood of high school diploma holders committing crimes and the cost savings of the justice system.

  • After multiplying the value of a high school diploma by the number of additional graduates, Wolf and McShane determine a total benefit of over $183 million.
  • The program cost $70 million dollars.
  • Dividing the benefits by the costs yields an overall benefit-to-cost ratio of 2.62, or $2.62 for every dollar that was spent.

The program's five-year pilot run ended in 2009 when President Obama cut funding for it. The program did not accept new students until April 2011, when Senator Joe Lieberman and House Speaker John Boehner convinced President Obama to reauthorize the program as a condition of reaching a final budget compromise.

With 1,584 low-income D.C. students currently participating in the program, expectations are high that this new cohort will experience the same success as their predecessors enjoyed.

Source: Patrick Wolfe and Michale McShane, "School Choice Pays Off, Literally," American Enterprise Institute, February 1, 2013.

 

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