How Private Education Can Help Funding for Public School Students

The fate of America’s public and private education sectors hangs in the balance as never before. On one hand, hundreds of private schools around the nation have permanently shut their doors as a result of the COVID-19 pandemic[2], even as pundits and politicians openly contemplate the abolition of private education as a long-term goal.

On the other hand, parents have turned to private and grassroots efforts in unprecedented numbers to ensure the continued education of their children in the wake of prolonged campus closures. Terms like “microschools” and “pandemic pods”—describing small groups of students—have vaulted to the forefront of education in America, and prominent state and federal policy proposals have urged that K-12 funding directly support families and students rather than institutions that are unable to meet their needs.[3]

Amid the urgency and enthusiasm for supporting families with such options, however, teachers unions and their allies have actively sought to block not only the physical reopening of their own district school campuses, but also opportunities for charter and private schools to serve families who are comfortable with the health and safety measures they have taken.[4]

According to the unions’ messaging, families who opt for these education alternatives undermine the health and quality of the traditional public school system, jeopardize its funding, and exacerbate inequality. Yet as the findings in this report illustrate, such concerns bear little semblance to reality. If anything, private education appears to offer states a release valve from the downward pressure on public school funding caused by overall K-12 enrollment growth, while also providing new opportunity to students in need. In particular, this report highlights the following:

States with the highest share of students in private education also tend to have the highest investments in public schools on a per pupil basis. In other words, far from decimating public education, higher enrollment in private schools tends to align with having more resources available to serve public school students.
Predictions of the public school system’s collapse due to privatization are alarmist and at odds with observable data. Among those states with the lowest proportions of private school students (5% or less of the state’s public K-12 population), per pupil funding at public schools averaged $12,300 in the 2016-2017 school year. In comparison, states with 10%-15% private enrollment averaged $15,900 in public school funding per pupil, while those with private school populations over 15% averaged $19,900 per public school pupil.
Public school enrollment growth—not private choice programs—appears to most severely restrict available K-12 funding per student among the states. While opponents of school choice have made private education a scapegoat for the perceived funding inadequacies of states’ K-12 systems, it has been the increases in states’ public school enrollment totals that have blunted public funding increases per student.
Statewide decreases in public school enrollment have aligned with the sharpest increases in public school funding per student. Among states whose public school populations contracted between 2001 and 2015, total public school funding per student increased an average of 63%, the highest of any group in the country.
The more significantly a state’s public K-12 population grows, the more severely its K-12 spending increases are diluted. Among states whose public K-12 populations grew moderately (no more than 20%) between 2001 and 2015, public school funding increased 52%, while those whose enrollments increased most sharply (20% or more) saw per pupil funding increases of just 31% on average.
Private choice programs offer a cost-effective solution to reduce inequality. While school administrators and political commentators have sought to restrict learning opportunities for students as a means to ensure educational uniformity, programs such as education savings accounts can help provide economically disadvantaged students with the same education opportunities enjoyed by their peers both during and after the pandemic.

“Draining resources from public schools has already undermined districts around the country, especially those serving low-income and minority students. Time is short for rescuing and improving public education. Destroying it will not require privatizing the entire system or anything near that. We are watching death by a thousand cuts.”[5]

“Death by a Thousand Cuts: The Story of Privatizing Public Education in the USA,”
republished in an analysis of public and private education by the Washington Post, 2018

These words, praised by an education reporter and blogger for the Washington Post as part of “an important article” on the history of public and private education, capture a deeply held dogma that private education directly threatens the well-being of public school students. But does even a partially privatized system, as suggested, truly threaten the destruction of public education? Would merely increasing the share of students in private education lead to an unraveling of the resources available to public school students?

To shed light on this question, we might consider a state like West Virginia, where 5% of K-12 students attend private school (and none attend charter schools).[6] If the state’s share of private education were instead double, triple, or perhaps even quadruple that level, would it not be reasonable to assume based on the logic above that West Virginia’s public education system might find itself several steps closer to extinction? Would not the loss of 15% to 20% of a state’s students to private schools—rather than a mere 5%—begin to invite precisely the sort of “death by a thousand cuts” to public school funding feared by critics?

Perhaps, but such alarmism seems difficult to reconcile with the significant number of states who already have private school populations in this range, including the likes of Wisconsin (15%), Pennsylvania (16%), New York (17%), the District of Columbia (19%), Louisiana (21%), and Hawaii (23%).[7] Indeed, far from being hamstrung in their ability to fund public education, several of these states boast among the highest per pupil funding rates in the nation. In comparison to West Virginia, for instance, where per pupil funding as of 2017 averaged $12,566, Pennsylvania funded its public students at $17,479, New York at $24,377, and D.C. at $30,115, according to the U.S. Department of Education.[8]

The narrative against private education collapses even further when looking at national patterns more broadly. As shown below in Figure 1, for example, states with the highest proportions of their students enrolled in private schools actually tend to be the ones that provide the most generous funding to public school students.

Source: Author’s calculations, using U.S. Department of Education, National Center for Education Statistics: Table 205.80. Private Elementary and Secondary Schools, Enrollment, Teachers, and High School Graduates, by State: Selected Years, 2005 Through 2015; Table 203.20. Enrollment in Public Elementary and Secondary Schools, by Region, State, and Jurisdiction: Selected Years, Fall 1990 Through Fall 2029; Table 236.75. Total and Current Expenditures Per Pupil in Fall Enrollment in Public Elementary and Secondary Schools, by Function and State or Jurisdiction: 2016-17.

This relationship of course does not in itself mean that private school enrollment levels are a driver of public school funding levels. The political and policy decisions of state lawmakers, coupled with the economic wealth, tax burdens, and a host of other factors unique to each state, all help shape the level of funding directed to K-12 education. However, it offers stark evidence against the claim that an expansive private education sector is somehow incompatible with or detrimental to the ability of states to adequately fund public school students.

Indeed, as shown in Figure 2, when grouped together, states with the lowest share of private school enrollment levels (less than 5% of their public K-12 population) averaged $12,300 in per pupil public school spending in 2016-2017. In comparison, those with private school enrollment between 10%-15% averaged nearly $16,000 per student, and those with the highest private enrollments (over 15%) averaged almost $20,000 per public school pupil.

As described above, this alone does not establish that private school enrollment levels play a significant role in determining how much states will choose to expend on public school systems. However, it does force opponents of school choice to reckon with the reality that private education makes a poor scapegoat for whatever financial situation a state’s public school system may face.

While it is clear that the widespread adoption of private education does not inhibit a state’s ability to fund their public school systems, critics still contend that state-supported choice programs do actively harm public school students. Indeed, the argument goes, by actively funding private educational options—rather than simply tolerating their proliferation—states must, by definition, be reducing the amount of public revenue available to spend on public school students.

While perhaps appealing on the surface, this explanation, too, quickly falls apart when held up to the light of data, as it ignores the fact that educating those students in the public school system would cost even more. As scholars at EdChoice found in the wake of the COVID-19 pandemic, for example:

The United States spends more than $700 billion per year on K-12 education (nearly $14,000 per student); educational choice programs currently only cost about $2.9 billion. The cost to absorb those students back into the public school system, however, would be $6.2 billion. Hence, the net effect of closing states’ existing private school choice programs and moving those students back into the public school system would be more than $3.3 billion. [9]

In other words, if critics succeeded in outlawing private education—as suggested in this report’s epigraph—advocates of public education would find even greater strains on state budgets. Conversely, an expansion of private education would reduce the economic strain on state budgets, requiring dollars to be spread out over fewer students still in the public school system and thus actually allowing states to spend more on a per pupil basis.

Two significant trends further suggest that the conventional dialogue around private education and public school funding has badly misrepresented reality.

First, while opponents of school choice frequently warn against the rise of private education, rarely do they acknowledge that the U.S. has witnessed a steady decline in the share of private school enrollment over the past few decades. As scholar Neal McCluskey of the Cato Institute has documented, private school enrollment has actually dropped over the past 30 years, with a particularly pronounced decline from 2001 to 2011, when enrollment fell 17%.[10] In other words, it is the proponents of private education who appear to have endured the most turbulence in recent years.

Second, and perhaps more significant, is the fact that disparities in the trajectory of public school funding over the past two decades appear to be driven not by private school enrollment patterns, but by those of public school. As the Arizona Tax Research Association (ATRA) has found, “The most compelling connection between demographics and per pupil K-12 expenditures is in student growth. As nearly all states have participated in overall K-12 spending increases over the past decades, most of the states who occupy the bottom of per pupil spending are the states who grew the most.”[11] In other words, states whose public school populations have swelled in recent years now deliver comparatively lower funding to those populations on a per student basis.

Figure 3 further illustrates this dynamic, showing each state’s change in total public school enrollment from 2001 to 2015 (y-axis) compared to its increase in public school funding per student over the same period (x-axis). Consistent with the findings from ATRA, Figure 3 shows that states with more modest increases—if not outright declines—in their public school populations tend to be the states that have most significantly increased their K-12 spending per student. In contrast, states with higher growth in the number of students have seen their investments in K-12 more diluted, leading to a smaller increase in the resources available for each pupil.

Source: Author’s calculations, using U.S. Department of Education, National Center for Education Statistics: Table 236.75. Total and current expenditures per pupil in fall enrollment in public elementary and secondary schools, by function and state or jurisdiction: 2015-16; Table 165. Total and current expenditures per pupil in fall enrollment in public elementary and secondary education, by function and state or jurisdiction: 2001-02; Table 203.20. Enrollment in public elementary and secondary schools, by region, state, and jurisdiction: Selected years, fall 1990 through fall 2029; Table 36. Enrollment in public elementary and secondary schools, by region, state, and jurisdiction: Selected years, fall 1990 through fall 2021.

While this may seem counterintuitive, the logic is fairly straightforward. For any given amount of tax revenue a state dedicates to its K-12 system, those dollars have to be spread out more thinly when there are more students to serve. Even if a state aggressively increases its tax collections over time, the impact of any additional funding for K-12 will be lessened if those new dollars have to be divided among a larger number of students. Conversely, even a modest amount of revenue can significantly boost per pupil funding for a smaller population of students.

It should be little surprise therefore that states like Arizona, which as noted by ATRA “has consistently ranked in the top 10 states who increase dollars to their entire K-12 education system,” has regularly found itself ranked lower than peers when it comes to per pupil funding.[12] In fact, as shown in Figure 4, states like Arizona—whose public school populations have surged more than 20% since 2001—have averaged a per pupil funding increase of just 31%, while states whose public school populations have declined have seen a 63% increase in per pupil funding.

It is difficult to reconcile such a striking pattern with the arguments of school choice opponents. If, as suggested before, America’s public school landscape faces an existential threat from student attrition to private alternatives, how is it that the states with the most significant decreases in public enrollment enjoy the most dramatic increases in public funding per student?

Indeed, it is true that state funding formulas typically distribute funds to districts largely on the basis of the total number of students enrolled. More students in total means more dollars in total. But as any public school advocate would agree, the more relevant measure is funding available per student. To say that California funds its schools more generously than Massachusetts—simply because the former has so many more students and thus spends more in total than the latter—would be both misleading and unhelpful in gauging the relative investment of each state.

While the fiscal arguments against private education largely fail to withstand scrutiny, there remains the charge that private education fuels inequality. This allegation has taken on particular force during the COVID-19 pandemic and associated public school closures, during which thousands of families have flocked to private, in-person learning communities of just a handful of students, sometimes called pandemic pods or microschools. National media outlets such as the Washington Post, for example, labeled pandemic pods a “solution for fall,” but only to those “who can afford” them.[13] The New York Times, meanwhile, featured an op-ed calling them “the latest in school segregation” because “the learning pod movement appears to be led by families with means, a large portion of whom are white.”[14]

Unfortunately, such criticisms appear to spring from the same mindset that prompted the Philadelphia Public School system to initially discourage its teachers from providing any kind of instruction during campus shutdowns in the spring of 2020. Concerned that teachers might not adequately be able to serve all students, the district issued a letter to school principals stating: “To ensure equity, remote instruction should not be provided to students, including through the internet, technology at home, by phone, or otherwise.”[15]

Indeed, rather than seeking to elevate the quality of learning for as many students as possible, teachers unions and their allies seem to be advocating for the very opposite—bringing all students down to the lowest common level of achievement, so long as the result is absolute equality.

But if education advocates are sincere in their concern for improving the educational opportunities of marginalized students, they must work toward closing achievement gaps by lifting students up, not bringing others down. In places like Arizona, the state’s education savings account program (also known as Empowerment Scholarship Accounts, or ESAs) serves roughly 10,000 of the state’s highest-need students—including those from failing schools, Indian reservations, and the foster care system, as well as those with special needs. This program offers more than $6,000 per student to these families, empowering even the most economically disadvantaged families with opportunities to participate in private education alternatives like pandemic pods and microschools.[16]

“Privatization is a bad idea, and it can and should be stopped in its tracks.”

– The National Education Association[17]

As America navigates this time of unprecedented education disruption, it is essential that our K-12 policies and priorities serve the needs of students, not protect the narrow interests of public unions or school administrators. As families across the nation have sought to escape school closures and the suspension of their children’s learning routines, thousands have turned to education alternatives, including homeschooling and private microschools. These families should be supported, not inhibited or vilified for their decisions to place the well-being of their children above the decrees of public school administrators who have sought to dissuade them from these opportunities.[18]

At the same time, it must be recognized and affirmed that these families’ decisions do not negatively impact the resources available to other students. There is no doubt that school districts will be required to redraw many of their plans in the post-COVID-19 era, and that in the short term, they will face a degree of turbulence and uncertainty—whether from accelerated teacher retirements or in grappling with the very modes of education delivery they will adopt going forward.[19] But the response to these challenges and uncertainties—and our natural bias toward preserving the status quo—must not come at the expense of educational opportunity for students.

Whereas opponents of school choice have sought to paint education alternatives as destructive of the public school system and corrosive of our ideals of equity, it is clear they have not only rescued thousands of students, but offer opportunities for millions more. Indeed, rather than seeking to suppress these opportunities out of fear or self-interest, education advocates ought to join in ensuring that all students have the same access to them. Far from decimating the public school system, an increase in the number of families availing themselves of private school or other educational opportunities may actually increase the funding available for students who remain in the public school system.

End Notes

[1] Dianna Douglas, “Are Private Schools Immoral?” The Atlantic Interview, December 14, 2017, https://www.theatlantic.com/education/archive/2017/12/progressives-are-undermining-public-schools/548084/.

[2] “COVID-19 Permanent Private School Closures,” Cato Institute, accessed August 30, 2020, https://www.cato.org/covid-19-permanent-private-closures.

[3] Office of U.S. Senator Rand Paul, “Dr. Rand Paul Introduces SCHOOL Act to Empower Parents, Increase Education Options and Flexibility,” August 5, 2020, news release, https://www.paul.senate.gov/news/dr-rand-paul-introduces-school-act-empower-parents-increase-education-options-and-flexibility; Commonwealth Foundation, “Pa. Legislature Looks to Help Families with Education Expenses,” news release, July 15, 2020, https://www.commonwealthfoundation.org/policyblog/detail/pa-legislature-looks-to-help-families-with-education-expenses.

[4] John and Kimberly Beahn, et al. v. Travis A. Gayles, et al, Case 8:20-cv-02239-GJH, U.S. District Court for the District of Maryland, August 4, 2020, https://wtop.com/wp-content/uploads/2020/08/080520_school_lawsuit.pdf.

[5] Joanne Barkan, “Death by a Thousand Cuts: The Story of Privatizing Public Education in the USA,” republished by Valerie Strauss, “What and Who Are Fueling the Movement to Privatize Public Education — And Why You Should Care,” Answer Sheet (blog), Washington Post, May 30, 2018, https://www.washingtonpost.com/news/answer-sheet/wp/2018/05/30/what-and-who-is-fueling-the-movement-to-privatize-public-education-and-why-you-should-care/.

[6] U.S. Department of Education, “Table 205.80. Private Elementary and Secondary Schools, Enrollment, Teachers, and High School Graduates, by State: Selected Years, 2005 Through 2015,” 2017 Digest of Education Statistics, National Center for Education Statistics, https://nces.ed.gov/programs/digest/d17/tables/dt17_205.80.asp; U.S. Department of Education, “Table 203.20. Enrollment in Public Elementary and Secondary Schools, by Region, State, and Jurisdiction: Selected Years, Fall 1990 Through Fall 2029,” 2019 Digest of Education Statistics, National Center for Education Statistics, https://nces.ed.gov/programs/digest/d19/tables/dt19_203.20.asp; U.S. Department of Education, “West Virginia Charter Schools,” National Charter School Resource Center, accessed August 26, 2020, https://charterschoolcenter.ed.gov/category/states/west-virginia.

[7] Ibid.

[8] U.S. Department of Education, “Table 236.75. Total and Current Expenditures Per Pupil in Fall Enrollment in Public Elementary and Secondary Schools, by Function and State or Jurisdiction: 2016-17,” 2019 Digest of Education Statistics, National Center for Education Statistics, https://nces.ed.gov/programs/digest/d19/tables/dt19_236.75.asp.

[9] Martin Lueken and Robert Enlow, “K-12 Fiscal Relief in the Aftermath of COVID-19,” EdChoice, April 23, 2020, https://www.edchoice.org/engage/k-12-fiscal-relief-in-the-aftermath-of-covid-19/.

[10] Neal McCluskey, “Private Schools Face an Existential Threat,” Cato Institute, August 13, 2020, https://www.cato.org/blog/private-schools-face-existential-threat.

[11] “Arizona K-12 School Finance Statistics,” Arizona Tax Research Association (ATRA), January 2017, http://www.arizonatax.org/sites/default/files/publications/special_reports/file/breaking_down_k-12_stats_v2_0.pdf.

[12] ATRA.

[13] Laura Meckler and Hannah Natanson, “For Parents Who Can Afford It, a Solution for Fall: Bring the Teachers to Them,” Washington Post, July 17, 2020, https://www.washingtonpost.com/education/fall-remote-private-teacher-pods/2020/07/17/9956ff28-c77f-11ea-8ffe-372be8d82298_story.html.

[14] Clara Green, “The Latest in School Segregation: Private Pandemic ‘Pods,’” New York Times, July 22, 2020, https://www.nytimes.com/2020/07/22/opinion/pandemic-pods-schools.html.

[15] Avi Wolfman-Arent, “Philly Schools Forbid Graded ‘Remote Instruction’ During Shutdown for Equity Concerns,” March 18, 2020, https://whyy.org/articles/philly-schools-forbid-remote-instruction-during-shutdown-for-equity-concerns/.

[16] Matt Beienburg, Education Savings Accounts Serving Low-income Communities: The Impact of ESAs in Arizona, Part II, Goldwater Institute, November 19, 2019, https://www.goldwaterinstitute.org/wp-content/uploads/2019/11/Education-Savings-Accounts-Serving-Low-Income-Communities_web-1.pdf.

[17] “Privatization,” National Education Association, accessed September 29, 2020, http://ftp.arizonaea.org/home/16355.htm.

[18] “Board of Education Statement on ‘Learning Pods’ and Their Impact on the Community,” Denver Public Schools, August 13, 2020, https://www.dpsk12.org/board-of-education-statement-on-learning-pods-and-their-impact-on-the-community/?fbclid=IwAR157QGzgMnF-iocZtT8KDXpWmhB4zhbX6jy_DY4iVGzHDU1McGTAfzUva8.

[19] Mark Johnson, “COVID-19 Is Pushing More Teachers to Consider Retirement,” Lansing State Journal, July 13, 2020, https://www.lansingstatejournal.com/story/news/2020/07/13/covid-19-pushing-more-teachers-consider-retirement/5416434002/.