Private School Costs vs. Public School Costs

A close analysis of public and private school costs shows that commonly-used measures do not accurately reflect the true costs of educating children in the two systems. Neither the prevailing "tuition" costs nor the commonly discussed "per pupil expenditures" fully take into account all costs.

In the government school system, Michigan anticipates a per-pupil "guarantee" or "foundation allowance" of about $5,445 per pupil in fiscal year 1998.⁷² Some school districts will spend less, and others much more, so that the average revenue is about 6 percent higher than that.⁷³ An approximation of 1.6 million students multiplied by the formula guarantee yields an estimate of over $9 billion in direct per-pupil expenditures annually spent on public education. Adjusting for per-pupil expenditures above the guarantee brings the total to over $9.5 billion.

Even that amount does not include categorical and intermediate school district expenditures of roughly $1.3 billion annually, nor some federal funds, nor other local taxpayer sources. Adding these yields current expenditures for Michigan’s government school system that exceed $11 billion annually. ⁷⁴

The taxpayers also provide additional direct and indirect support of public schools. For example, taxpayer dollars help provide land and facilities for the school system, along with government services, without those facilities contributing to the local tax base.⁷⁵ Government agencies in Michigan pay no property tax, no sales tax, and no income or single business tax; further, they borrow money at tax-exempt rates.⁷⁶ All these costs are indirectly paid for by the taxpayers, and many do not appear in the accounting for expenditures. Thus, the actual burden of the government school system on the taxpayers is significantly higher than the foundation allowance might imply.

Private school tuition is about half that of the average per pupil revenue of public schools. Private school tuition in Michigan averages about $2,500, with significant variation among schools.⁷⁷ This amount is much less than half of the expenditures of the public school system, which is consistent with the national pattern.⁷⁸ However, just as the per-pupil expenditure for public schools is a significant underestimate of the government school costs, private school tuition also underestimates private school costs. Most religious schools receive significant contributions from their sponsoring organizations to support their operations. Many also receive volunteer time and services from parents. Furthermore, those same parents often face fees for their children’s participation in extra-curricular activities such as sports, music, and various student clubs.⁷⁹ Thus, while private school tuition is often half or less than the commonly discussed per-pupil expenditure figure for public schools, actual costs are a larger share. Once all private and taxpayer-funded costs are included for both systems, the ratio of total public school costs to total private school costs is less clear, but is probably about 2:1.

It should be noted, however, that the prime motivation behind the movement to parental choice in education is not efficiency or the need to save money, but the desire to improve the education of children.