Friedman’s Foundation Rates Voucher Plans

By Caroline Hendrie — March 17, 2004 6 min read
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A report card being issued this week on the nation’s school voucher programs is designed to underscore just how far many of them depart from “the gold standard” of universal school choice that was first proposed nearly a half-century ago by the economist Milton Friedman.

In its first-ever ranking of voucher programs, the foundation established by Mr. Friedman and his wife assigns letter grades, ranging from A-minus to C- minus, to 13 programs that provide publicly financed vouchers or tax breaks that help subsidize the costs of private K-12 schooling.

Topping the list is Florida’s voucher program for children with disabilities, while Ohio’s voucher program for Cleveland ranks second to last, barely above a modest tax- credit program in Iowa.

Read “Grading Vouchers: Ranking America’s School Choice Program,” from the Milton and Rose D. Friedman Foundation.(Requires Adobe’s Acrobat Reader).

Mr. Friedman, who issued a now-famous call in 1955 to divorce the government financing of education from the operation of schools, said last week that he regards the report card as a “very important” step.

“You have to hold out a standard,” the 91-year-old economist said in a telephone interview from his home in San Francisco. “You may compromise, ... but you have to know where you’re headed.”

Making Comparisons

Where Mr. Friedman wants to head is toward a system in which all families can get vouchers equal to the public schools’ per-pupil budget, letting them shop among public and private schools. That concept, the report asserts, is “the gold standard of educational choice in America.”

No place has come close to adopting such a free-market program, however. Instead, policymakers have placed limits—on which students are eligible, what schools can participate, and how much money vouchers are worth—that vary greatly from program to program.

“It’s time to say, ‘Let’s look at these compared to the gold standard,’ ” said Robert C. Enlow, the executive director of the Milton and Rose D. Friedman Foundation, based in Indianapolis. “There are enough programs out there to begin having a discussion about the different types of them and whether they’re good or bad.”

Word of the report was greeted with skepticism by voucher critics, including People for the American Way. The Washington- based liberal advocacy organization criticizes vouchers as ducking accountability to taxpayers and draining funding for public schools.

“The Friedman group has always been the ones that advanced vouchers in this country, and it’s in their best interest to make voucher programs look good across the country,” said Nancy Keenan, the group’s education policy director. “They don’t work, the money comes from our public schools, and private schools don’t perform any better.”

Since Wisconsin kicked off the modern voucher movement in 1990 with its Milwaukee program, voucher supporters have struggled in the legal and political arenas. So some observers see the Friedman Foundation’s decision to rank programs as a sign of the movement’s maturation.

‘The Gold Standard’

This newly created report card for voucher programs is based on a belief that they should reflect the true cost of education, be open to as many students as possible, and place few restrictions on schools.

Overall Grade

Rank of Program Rating Grade
Florida “McKay” Vouchers 3.6 A-
Arizona tax-credit vouchers 3.5 A-
Pennsylvania tax-credit vouchers 3.33 B+
Vermont “tuitioning” 2.97 B
Maine “tuitioning” 2.93 B
Florida “opportunity” vouchers 2.87 B
Colorado vouchers 2.73 B-
Florida tax-credit scholarships 2.43 C+
Illinois personal-tax credit 2 C
Minnesota personal-tax deduction 2 C
Wisconsin vouchers (Milwaukee) 1.83 C
Ohio vouchers (Cleveland) 1.8 C-
Iowa personal-tax credit 1.77 C-
SOURCE: Milton and Rose D. Friedman Foundation

“I used to argue that the school choice movement did not have the luxury of being able to debate about the relative merits of school choice programs,” said Clint Bolick, the president of two new national, pro-voucher advocacy groups. “We are now strong enough to have intrafamilial debate, and I think it’s very, very healthy.”

The School Choice Alliance and School Choice Advocates, the groups Mr. Bolick is leading, will focus on securing broader educational options for low-income families, not publicly financed vouchers for all. Yet he welcomed the report as “an opening salvo in putting forth one perspective,” and he predicted it would prompt “some spirited, good-faith debate.”

In the perspective of the 8-year-old Friedman Foundation, good voucher programs are defined in part by an absence of what it sees as red tape. The foundation’s complicated ranking system gives higher grades to programs that involve relatively fewer constraints on student eligibility, higher dollar values, and fewer rules affecting participating schools.

The idea is to distinguish “those voucher programs that are designed to be large, generous, and inclusive from those that are small, stingy, and restrictive,” according to the report, which was set to be made public on March 15.

In the student-eligibility category, Florida’s McKay Scholarship program for children with disabilities gets the top grade of an A-minus. It is open to all children eligible for special education, regardless of where they live or their families’ incomes. The lowest-scoring, with a C-minus, is the Wisconsin program, because only families in Milwaukee with incomes of less than 1.75 times the poverty level are eligible.

For purchasing power, five programs get A’s: Florida’s McKay program; Arizona’s tax credit for individuals who donate to scholarship-granting organizations; Pennsylvania’s tax credit for corporations that contribute to scholarship groups; and the “tuitioning” programs in Maine and Vermont, where students in towns without public schools at their grade levels are allowed to enroll in secular private schools at public expense.

Getting failing grades are personal-income-tax breaks for education expenses available in Illinois, Minnesota, and Iowa, as well as Ohio’s Cleveland program, which provides vouchers worth up to $2,700.

The tax breaks in Arizona, Illinois, Minnesota, and Pennsylvania get A’s in the “school eligibility” category because few limits are placed on qualifying schools. The worst grade in that category, a C-minus, goes to Maine’s program, in part because it requires “schools with large numbers of tuitioning students to administer the state test,” the report says.

Annual Project

Mr. Enlow, who wrote the report, said the foundation hopes to issue one each year from now on. “We feel there are enough programs out there to start reviewing them annually,” he said.

One program that was passed too recently for the report is the new federally financed voucher program approved this year for the District of Columbia.

Mr. Friedman made clear in the interview that he takes a dim view of the pilot, $14 million-a-year program, in part because it was packaged with funding increases of $13 million each to the capital city’s regular public school system and its growing network of public charter schools.

Mr. Friedman says those increases effectively triple the cost of the $7,500 vouchers, which in his view makes passage of the new program a potentially Pyrrhic victory. Among the attractions of vouchers, he argues, are that they will typically save taxpayers money and introduce competitive pressures that will stimulate public schools to improve.

But that won’t happen, he says, if public schools are insulated from financial losses when they lose students to private schools.

“How can you afford to waste money that way?” he asked. “Since the school system is being paid to give students away, there’s no competitive pressure on them.”

Still, Mr. Friedman predicted that the District of Columbia program would add to the momentum for more voucher initiatives. “I trust it will be copied all over the country,” he said. “The opponents are right to be concerned about it.”

And he said he had not lost hope that the kind of universal voucher program he proposed almost 50 years ago would eventually come to pass.

“Possibly not in my lifetime,” said the nonagenarian winner of the Nobel Memorial Prize in economics, “but I hope in yours.”


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