How to Improve Education While Spending Less Money

A new legislative session is under way in Jefferson City, and everyone is concerned about the budget. Legislators are searching for ways to provide services to Missouri’s citizens while still reducing the overall amount of government spending. Another major issue worrying Missourians is education — particularly given the fact that many school districts across the state are having trouble making ends meet, and the two largest school districts in the state, Saint Louis and Kansas City, have lost their accreditation.

The school districts’ financial challenges are growing, because of the economic crisis. Many families that had previously sent their children to private schools can no longer afford to do so, meaning that a number of these students will now depend on the resources of their local public schools. While the state’s educational funding formula should guarantee that local districts will receive additional resources from the state for each of the new students they serve, there will be no similar increase in the amount of local funding available. As public school enrollment rises, districts relying heavily on local tax revenues will now have to divide those limited funds among a larger number of students, driving down the total amount they can spend per pupil.

Fortunately, there is a way for Missouri to address this challenge, potentially saving taxpayers millions of dollars in the process.

According to the Department of Elementary and Secondary Education, state and local taxpayers pay a statewide average of $9,338 for each student attending Missouri’s public schools. In 2008, taxpayers spent an average of $15,549 for each child attending Saint Louis public schools, and $15,142 for each child attending Kansas City public schools. Taking Saint Louis as an example, consider that all but the most expensive private schools in the city charge tuition that ranges between $5,000 and $14,000. Thus, private schools tend to be able to provide educational services for significantly less than it costs Saint Louis public schools to offer their services. The same could be said for private schools in communities all over the state.

The General Assembly could help school districts and students across the state by adopting a three-year pilot program that would permit local districts to contract with private schools or other nearby public school districts to educate some of their students.

The program could specify that the cost of tuition at a contract school could not exceed, say, 80 percent of the district’s per-pupil funding. Half of any leftover funding would remain for the district’s use, and the other half would become pure savings for the government. Districts taking advantage of the program would thus be able to keep and use at least 10 percent of each student’s funding, even though the public schools would no longer expend resources to educate that student.

Here’s an example of how the pilot program could work: If the Saint Louis Public Schools chose to participate, the district could contract with several private schools in the area to educate 200 students at an average tuition of $8,000 per student, per year. The district would normally spend more than $3.1 million educating these students, but under the pilot program the district would only spend $1.6 million for that purpose. Of the remaining amount, $750,000 would be available to help educate the students remaining in the public schools — and the state and local taxpayers would still be saving another $750,000!

While this idea may sound unusual, the General Assembly long ago authorized Missouri school districts to contract with “other political subdivisions, public agencies, not-for-profit organizations, or private agencies” in order to send certain students to schools for which they were better suited. My proposal would simply take that concept a step further. Not only would it help parents find schools that might better fit their children, it should increase the per-pupil funding for participating school districts while also saving state and local taxpayers thousands of dollars per child.

Importantly, 10 states and the District of Columbia have already proven the value of this concept by adopting similar programs. During 2007, the Milton and Rose D. Friedman Foundation published a study showing that, since 1990, these 11 jurisdictions had saved at least $444 million by creating programs that help students transfer from traditional public schools to less-expensive alternatives. With the economy flagging, and so many school districts struggling to make ends meet, Missouri would be wise to consider following in their footsteps.

Dave Roland is an expert on school choice programs and a policy analyst with the Show-Me Institute.