Society and Culture, Education

The DC Opportunity Scholarship Program had a 162% rate of return on investment

Image Credit: Shutterstock

Image Credit: Shutterstock

Dr. Patrick Wolf of the University of Arkansas and I recently published a cost-benefit analysis of the DC opportunity scholarship in the peer-reviewed journal Education Finance and Policy.

The takeaway, as we noted in the National Review Online:

The District of Columbia Opportunity Scholarship Program (OSP) produced $2.62 in benefits for every dollar spent on it. In other words, the return on public investment for the private-school voucher program during its early years was 162 percent.

How did this happen? Well, the DC Opportunity Scholarship Program increased the graduation rate of students who won the voucher lottery by 12 percentage points. Couple that with the fact that:

Students who graduate from high school live longer, healthier, and more productive lives than their peers who do not. They make significantly more money and as a consequence pay significantly more taxes, are less likely to commit crimes, and are less likely to become a burden on the public.

…and you see the serious economic benefit of this program.

In total, the net-present value of the benefits of these new high school graduates, who would not have graduated absent the program, is $183 million. The program cost taxpayers $70 million, yielding that 162% rate of return.

Writing about our piece, Matthew Ladner of the Foundation for Educational Excellence brought up a great point over at Jay P. Greene’s blog. It’s important to remember that the OSP was an additional expenditure, DCPS was held harmless. Put simply, the district still got the per pupil allotment for students even though the kids were in private schools.

In the paper, we did some forensic accounting and estimated that DCPS spends about $15,000 for what we considered a student “comparable” to an OSP student. From our study of the patterns of participation in the program, the $7,500 voucher was insufficient to fund students with serious learning disabilities or who were English language learners. If we separate those students and the expenditures associated with them from the total per pupil funding calculation, we can generate an accurate comparison group. In real terms, DCPS spends about $15,000 per year on non-ELL, non-special needs students.

By simply multiplying the $7,500 in savings (what DCPS would have spent on them minus the voucher amount) by the 1,548 students currently participating in the program, even a back of the envelope calculation shows us that the program could save $11,610,000 per year, while delivering higher graduation rates. If a teacher in the District makes about $90,000 with salary and benefits that means that the savings from this program could fully fund 129 teaching positions.

Just something to think about.

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