What Might Federal “Back-Door” Vouchers Mean for California, and What Are State Policymakers’ Options?

This post is the third in a series on K-12 private school vouchers and how federal support for them could affect California.

In two recent blog posts we explained the problems that traditional K-12 private school vouchers raise and how voucher-like programs implemented by many states could potentially serve as a model for the Trump Administration. These “back-door” vouchers, just like traditional vouchers, undermine K-12 public education by diverting public dollars to support private schools. The possibility of the federal government imposing voucher-like programs on states runs directly counter to longstanding California values and ideals, chief among them the principle that public dollars should be reserved for public schools. California voters have clearly affirmed this principle twice in just the last quarter century, overwhelmingly rejecting state ballot measures in 1993 and 2000 that would have shifted some state funding to support private schools. Yet, federal enactment of voucher-like programs can happen without the support of state policymakers, threatening a core California ideal: ensuring a high-quality education for all students.

President Trump’s Secretary of Education, Betsy DeVos, has supported proposed legislation that would enact a national back-door voucher program funded through a set of new federal tax credits. As our most recent blog post on K-12 private school vouchers explained, the tax scheme that would fund these so-called neovouchers would make them far less transparent than traditional vouchers. Still, the ultimate effects of neovouchers would be virtually indistinguishable from those of traditional school vouchers. To the extent that federal enactment of back-door vouchers leads California students to leave K-12 public schools to attend private schools, the implications for local school districts as well as for the state budget could be significant.

What Back-Door Vouchers Would Mean for Local School Districts in California

Under California’s Local Control Funding Formula (LCFF), the state provides each K-12 school district a base grant as well as additional grants for disadvantaged students — English learners, students from low-income families, and foster youth. Funding for the base grant is calculated using each school district’s average daily attendance (ADA), while the additional grants are based on district enrollment of disadvantaged students. If back-door vouchers cause students to leave public schools in order to attend private schools, the home school districts stand to lose the LCFF dollars associated with these students. This would mean fewer resources for public schools that would face challenges meeting their costs because many of those costs are fixed, such as transportation services and maintenance of facilities. Moreover, as we noted in our first blog post in this series, small declines in ADA can destabilize public school systems and communities in sparsely populated areas. This is because the departure of even a small number of students would mean lost funding that could force small districts to reduce classes and course offerings, cut activities, or reduce student services and supports.

What Back-Door Vouchers Would Mean for the State Budget

California’s constitution requires a minimum level of state and local funding each year for K-12 schools and community colleges. In most years, this Proposition 98 guarantee is based on formulas that include changes in the number of students statewide that attend California’s K-12 public schools. In these years, the Prop. 98 minimum funding guarantee grows when total K-12 enrollment increases. However, this growth would slow to the extent that parents use back-door vouchers to send their children to private schools. Moreover, if K-12 school attendance falls in three successive years, the Prop. 98 minimum funding guarantee drops based on Prop. 98’s most often used formulas. Because K-12 public school attendance in California has already declined over the past several years, to the extent that parents use back-door vouchers to send their children to private schools — and overall statewide student attendance continues to decline — the Prop. 98 minimum funding guarantee would also fall.

In fact, for each student that leaves a California public school in 2018-19, the Prop. 98 guarantee would fall by about $13,000, based on recent economic assumptions made by the Legislative Analyst’s Office. This means that a decline of 200,000 students, for example — which represents only about 3.4 percent of the nearly 6 million students who attend California public schools — would reduce the 2018-19 Prop. 98 guarantee by $2.6 billion.

What State Policymakers Can Do to Mitigate Federal Enactment of Back-Door Vouchers

California’s Constitution prohibits spending state and local dollars on private schools. However, state policymakers cannot prevent the federal government from enacting voucher-like programs designed to divert federal dollars to private schools including those in California. While federal enactment of back-door vouchers could substantially affect state and local school funding, state policymakers do have options for mitigating such an impact. For example, California policymakers could:

  • Protect K-12 school districts from losing funding when students leave to attend private schools. The state Legislature could build upon existing “hold harmless” provisions that prevent reductions in funding for local school districts in the first year of declining enrollment. For example, the Legislature could enhance this protection by lengthening the time frame that school districts maintain prior-year funding levels. Another option would be to protect school districts that experience large declines in enrollment by adapting existing provisions that mitigate reductions in funding for districts where military base closures cause significant drops in students. These provisions allow school districts that experience a decline in ADA of 5 percent or more to receive a share of their funding that would otherwise be lost due to declining enrollment.
  • Backfill reductions to the Prop. 98 guarantee that result from fewer students attending public schools. California’s constitutionally required Prop. 98 minimum funding level for K-12 schools and community colleges is just that — a minimum funding level. If the Prop. 98 guarantee falls because students leave K-12 public schools to attend private schools, the Legislature could opt to maintain Prop. 98 funding at the level that would have existed absent the statewide reduction in the number of public school students.  
  • Regulate private schools. Private schools in California are currently not licensed, regulated, or monitored by the state. (The exception is specialized schools that serve public school students with disabilities.) If the federal government imposes back-door vouchers, California could establish rules for private schools that accept these vouchers. For example, state policymakers could enact rules to hold private schools accountable for delivering a basic level of instruction as well as measures to increase transparency to make it easier to determine whether they are doing so. In addition, the state could:
    • Require private schools to receive official accreditation from the state or from independent agencies. Rules for accreditation could include: prohibitions against rejecting student applicants except for specified reasons, adherence to a published student discipline policy, and minimum annual requirements for the number of instructional days and hours (so-called “seat-time”).
    • Require private schools to develop and administer a comprehensive academic accountability plan approved by the state. Such a plan could require private schools to administer, and report results from, statewide tests used to assess public schools.
    • Require background checks and accreditation for teachers employed in private schools as well as implementation of state-approved teacher evaluation plans.
  • Tax the benefits that back-door vouchers provide. California policymakers could consider whether the benefits that back-door vouchers provide should be designated as income for state tax purposes. For example, the Legislature could tax private schools for the value of vouchers they receive.
  • Make changes to the state’s tax code to discourage donations that support back-door vouchers. The California Legislature could enact state laws to mitigate federal benefits received by California taxpayers that donate money to support back-door vouchers. For example, the Legislature could tax dollars donated to voucher nonprofits or treat the value of any federal credit received by a California taxpayer as income.

Proponents of private school vouchers hold out the promise that they would provide more parents with the option of sending their children to a private school. However, the value of a K-12 school voucher is not likely to pay the full cost of tuition at a private school. So, vouchers may in fact only benefit wealthier families who can afford to pay the portion of private school tuition not covered by a voucher. Moreover, compared to public schools, private schools are not required to provide the same level of services to students with special education needs as public schools, and special education students typically are more costly to educate. As a result, students with special needs would likely remain in public schools where they have access to better services, even as private school vouchers would divert from public schools scarce resources that are needed to educate the most costly and vulnerable students. Leaving behind students with special needs or those from lower-income families runs counter to California’s values and ideals. This is why California policymakers need to consider how to mitigate the potential federal imposition of back-door vouchers and uphold the state’s longstanding principle of ensuring a high-quality education for all of its students.

— Jonathan Kaplan