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School vouchers require caution

Thursday, November 15, 2012

A business, or a non-profit that acts like a business, has two different types of costs: fixed and variable.

Imagine a fast-food restaurant selling hamburgers. The cost of the ground meat would be a variable cost. The more hamburgers you sell, the more ground meat you need to buy -- but that's OK, presumably, because you're bringing in extra revenue from all those extra hamburgers you're selling. The cost is, for the most part, linked to revenue, and so it's self-supporting.

However, the restaurant also has an electric bill. The number of hamburgers sold isn't going to have a whole lot of impact on the electric bill; maybe a little, if you're able to turn equipment off during slow parts of the day, but not much. The electric bill has to be paid, every month, whether the restaurant is selling a lot of hamburgers or only a few. Electricity is a fixed cost. Rent is a fixed cost.

Imagine two different restaurants in the same chain -- one at a busy intersection that does a lot of business, the other in a dying part of town which is struggling. Because the restaurant chain is extremely standardized, both locations have the same building, the same equipment, and therefore many of the same fixed expenses. The busy, successful restaurant is going to be better able to bear those fixed expenses because of the volume of business it's doing. Ten cents from each burger sold at the busy restaurant is enough to pay the power bill; but since the other restaurant sells half as many burgers, it takes 20 cents from each burger.

The struggling restaurant may be able to adjust its staffing somewhat to cope with its slower business, but there are limits -- especially since the company that sold you the franchise insists that you have a grill man at all times, and someone dedicated to the drive-through at all times, and sets minimum standards on various aspects of your operation.

Be patient -- I'm going somewhere with this.

The newspaper in Lewisburg has had a couple of stories lately about the idea of school vouchers. There are occasional proposals to implement a voucher program in Tennessee; it hasn't happened yet. School vouchers, which are used in some other parts of the country, work like this. If you decide you want to enroll your kids in a private school, instead of a public school, the local government will give you a "voucher," or coupon, representing some of your taxes which would normally support the public school system. You can take that coupon to a private school -- a church-related school, a private prep school or what have you -- and apply it to the cost of tuition. The government redeems the voucher, paying that money directly to the private school -- which means that money is no longer available to the public school system.

In theory, it's a fair and sensible idea. After all, it's your tax money, and why shouldn't you be allowed to use it to send your kids to private school instead of public school? Without vouchers, families with children in private schools are, in effect, paying for two different school systems -- the public schools they aren't using, and the private schools they are using.

But the practical upshot of a voucher program, and the reason it has to be looked at carefully, has to do with those fixed and variable costs I was talking about a moment ago.

When you take a student (and that student's tax revenue) out of the public school system, you are reducing some of the school system's variable costs. If the public school system doesn't have as many students, it doesn't have to hire as many teachers. It doesn't have to buy as many textbooks or serve as many school lunches.

But there are fixed costs to the school system as well. Buildings must be heated and cooled. Most have been bought, expanded or renovated with bond issues or other long-term financing, and the government which operates the school system may still be making payments on many, if not most, of the buildings. When you pull students out of the public school system, those fixed costs remain -- and their impact becomes much more burdensome on the system that remains. Many of those families remaining in the school system would be in economic or social situations which would make it difficult, even with the aid of vouchers, to move their children to private schools.

Does this mean vouchers are a bad idea and shouldn't be implemented at all? No, not necessarily. But it does mean that any attempt to implement school vouchers must be done with an eye to what it will do to the remaining public school system. This country has, for generations, made a commitment to full public education. School choice is a good idea and a commendable goal, but it must be done in such a way as to not threaten the existing school system or renege on the promise we've made to give others the same chance we had ourselves.

--John I. Carney is city editor of the Times-Gazette and covers county government.

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It will be interesting to see how this whole voucher idea shakes out during the next session of the General Assembly. I hope your readers appreciate the careful way you have examined and presented the issue,

-- Posted by kentflanagan on Thu, Nov 15, 2012, at 2:23 PM

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John I. Carney
Loose Talk / Charge Complete
John I. Carney is city editor of the Times-Gazette.

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