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Over-Regulation in Louisiana’s Voucher Program

• Adam Peshek

Voucher programs improve academic outcomes for children. That has been proven by the vast majority of social science research using the gold standard of measurement – random student assignment.

But for vouchers to work, a program must be well designed and implemented. It must not overregulate schools or handcuff them financially. They must be given the autonomy to maintain their unique identity, including the ability to control their curriculum rather than being forced to follow the public school template. Doing so only defeats the purpose of the vouchers.

Unfortunately, such problems undermine the Louisiana Scholarship Program (LSP), a school choice program that otherwise merits a 91% satisfaction rate from participating parents (see here). And so the results of a National Bureau of Economic Research working paper are not surprising.

The paper – “School Vouchers and Student Achievement: First-Year Evidence from the Louisiana Scholarship Program,” by Abdulkadiroglu, Pathak, and Walters – concludes that students participating in the program perform worse on state tests than students who were eligible for the program but did not participate: “LSP participation reduces academic achievement one year after program entry, lowering mean test scores and increasing the likelihood of failure in math, reading, science and social studies.”

The LSP provides private school scholarships to students with family incomes that are no greater than 250 percent of the federal poverty level and come from public schools earning a C, D, or F on the state’s accountability system. In other words, low-income students coming from the state’s lowest-performing public schools. Family income of participating students is actually much lower than eligibility, as the authors note:

Eighty-one percent of LSP private school enrollees are Black and average family income equals $17,389 for this group. These income levels are well below 250 percent of the poverty line, the limit for eligibility ($37,825 for a family of two and $57,625 for a family of four in 2012

It is widely recognized that the LSP’s requirements on private schools are among the most regulated (if not the most) of any other private school choice program. Schools in the program are required to administer the state achievement test to participating students, those with more than 40 total LSP students or 10 LSP students per grade level are required to be included in the state’s accountability system, and LSP schools are required to take the voucher amount as payment-in-full:

LSP-eligible private schools typically charge less than public per-pupil expenditure: in 2014 the average LSP voucher paid $5,311, while students’ sending districts spent $8,605 (Louisiana Department of Education, 2014a). Private schools must accept the LSP voucher as full payment of tuition; charging “top-up” fees to LSP voucher recipients is prohibited.

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So, to sum up: the LSP program consists of the most academically struggling, disadvantaged students in the state, participating schools are required to take on a culture-shifting amount of government regulation, and the amount that the school can receive from accepting students is a “take it or leave it” amount, which may be well-below what their actual tuition costs are and is more than $3,000 less than what the district is spending on the same student.

For a very long time, school choice observers have warned (see here, here, here, here, here, here, here) that the high-regulation approach to school choice will lead to unintended consequences, like the best private schools choosing not to participate. My gut for a long time has told me that the following thought process has occurred at a large number of private schools in Louisiana: “I am the leader of a successful school with a stable student body, a healthy bottom line, and a strong academic reputation. Why on earth am I going to subject myself to increased government control for the benefit of admitting hard-to-educate students for less money than I charge for tuition?”

In fact, one of the strongest examples of this came from an AEI paper released a year ago by Brian Kisida, Patrick Wolf, and Evan Rhinesmith that showed that approximately 70% of private schools in Louisiana choose to not participate in the voucher program. If the remaining 30% consisted of the state’s premier private schools, than this high regulation approach might show some merit. However, common sense and the NBER authors point to a different outcome:

Survey data indicate that LSP-eligible schools experience rapid enrollment declines relative to other nearby private schools before entering the program. This fact suggests that the LSP may attract a negatively-selected set of private schools struggling to maintain enrollment. Private school selection may also stem from the requirement that schools accept LSP vouchers as full payment of tuition. Voucher payments are capped at the per-pupil expenditure of sending districts, implying that only private schools using fewer resources per student than public schools are likely to opt in to the program. Consistent with this argument, tuition at LSP-eligible private schools is typically well below public per-pupil spending (Louisiana Department of Education, 2014a). Our findings imply that these schools also provide lower educational quality.

In fact, they find that private schools participating in the LSP program experienced an average enrollment loss of 13% over the decade prior to participating, compared to non-participating private schools actually seeing a 3% increase in enrollment during the same period.

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Through their high-regulation approach, Louisiana has accomplished exactly what it should have tried to avoid: scaring away the best schools and attracting schools that are so desperate for new revenue that they will put up with the requirements that scared away the best schools.

So what should be done?

First, remove the state testing mandate and, instead, require private schools to administer either the state test or a national norm-reference test, like the Iowa Test of Basic Skills, the Stanford Achievement Test, California Achievement test, or many other recognized tests. I prefer this approach for a number of reasons:

  • It provides information on student learning,
  • It allows private schools to maintain their autonomy,
  • It does not stifle innovation,
  • It avoids the slippery slope of regulatory creep, and
  • It provides choice – which is the goal of these programs to begin with.

For more on this, I would refer you to a panel we had on the topic at our national summit in 2014.

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Second, make the LSP funding amount more-equitable with the amount that districts spend on students. As the authors noted, “LSP-eligible private schools typically charge less than public per-pupil expenditure: in 2014 the average LSP voucher paid $5,311, while students’ sending districts spent $05.” Raising the LSP voucher amount to just $6,500 would still be significantly less than is spent in public schools, and would open up a number of other school options.

Third, remove the requirement that private schools must take the voucher amount as payment in full. This artificial cap on what a private school can charge is, without a doubt, keeping many quality private schools out of the program. But you may say, “that’s not fair, low-income families cannot make up the difference.” We have plenty of evidence to the contrary. For 15 years, the Florida Tax Credit Scholarship Program has awarded private school scholarships to students from families with an income at 185 percent of poverty or less – much lower than LSP eligibility. Historically, the amount awarded to students in Florida has been much less than is awarded in Louisiana. In 2009, when the program was serving just under 30,000 students, scholarships were worth less than $4,000. This is worth less than the vast majority of tuition in the state. To make up the difference, families have made financial sacrifices, relied on the generosity of others, or taken advantage of other forms of financial aid, including scholarships from schools. The example from Florida and other states has shown that strict price fixing is not the only way to ensure private school seats are available.

Ninety-nine percent of LSP parents say their child feels safe and welcome in their school (see here), but those achievements are under threat by a regulatory structure that follows the template of the lagging education these students are trying to escape.  Louisiana can learn from this and reform its choice program to create a better environment for students and schools to participate and succeed.

About the author

Adam Peshek @AdamPeshek

Adam Peshek is Managing Director of Opportunity Policy at ExcelinEd, where he provides strategic support to state leaders interested in developing, adopting, and implementing policies that increase educational options for children. He has provided expert testimony in more than a dozen state legislatures and is a frequent commentator on ESAs, school choice, and education policy across the country. He is also the is the co-editor of the first published volume on ESAs, Education Savings Accounts: The New Frontier in School Choice. Adam currently resides in Atlanta, Georgia and is a Senior Fellow with the Beacon Center of Tennessee.