Government schools are a high priority in every state's budget, sometimes receiving more than half of the money taken in taxes. School choice will not de-fund education, but rather will make it more financially efficient and responsible with the generous resources it already receives.
Education in the United States has become increasingly expensive to taxpayers. In the 1969-70 school year, every man, woman, and child in the United States contributed $850 (in 1996-97 dollars) to support government schools. In the 1996-97 school year, they contributed more than $1,181 to the support of government schools. Some put the expenditures on education at a much higher level. According to research by Merill Lynch, a global investment firm, the United States annually spends $740 billion on education, or nearly 10 percent of the nation's gross domestic product. That amount is more than the nation spends on defense and Social Security combined.
More money fails to improve academic achievement. Between 1970 and 1997, total revenues for public schools increased from $44.5 billion to over $305 billion. Yet scores on the SAT, a college entrance exam, have dropped by 27 points at the same time.
In 1985, a federal judge directed the Kansas City, Mo., school district to devise a "money-is-no-object" educational plan to improve the education of black students and encourage desegregation. Local and state taxpayers were ordered to pay for it. The result: Kansas City spent more money per pupil, on a cost-of-living adjusted basis, than any other of the 280 largest school districts in the United States. The money bought 15 new schools, an Olympic-sized swimming pool with an underwater viewing room, television and animated studios, a 25-acre wildlife sanctuary, a zoo, a robotics lab, field trips to Mexico and Senegal, and higher teachers' salaries. The student-to-teacher ratio was the lowest of any major school district in the nation at 13 to 1. By the time the experiment ended in 1997, however, costs mounted to nearly $2 billion, test scores did not rise, and there was less student integration rather than more.
Expected student population growth may bankrupt government education if alternatives are not devised. The projected growth in the student population across the nation over the next 10 years will be financially significant. Either the market will bear the burden of providing more schools, or taxes will have to be increased to meet the expansion needs of more schools, teachers, administrators, and support staff involved in government education.
Government schools have many opportunities to be more efficient. Government schools could save money by privatizing support services such as janitorial, food, and transportation services. Competitive contracting can provide schools with the kind of expertise, flexibility, and cost efficiencies not always available with in-house service provision. Any savings in support services can be used to provide additional resources for the classroom. Properly designed and monitored, contracts between government schools and private providers can help school administrators do more with less.
School choice likely will reduce bureaucracy and centralization. As researcher John E. Chubb explains, "There is every reason to believe that the administrative structure of schools under school choice would be less bureaucratized than today's public school system, and look more like private educational systems, where competition compels decentralization and administrative savings." Most choice plans actually would reduce overhead administrative expenditures and increase the availability of more public money. An analysis of government schools in New York City found that they have about 240 times the number of administrators as do local Catholic schools, but only 4 times as many pupils. Competition will reduce the waste that exists in the current system.
A carefully crafted school choice plan will save the state money and provide higher per-pupil government school funding. The Mackinac Center for Public Policy's Universal Tuition Tax Credit is a school choice plan that will produce significant savings to the state and the government school system. With the maximum credit limited to 50 percent of the per-pupil government school revenues, every student who transfers to an alternative school produces a net saving to the state of at least half of the per-pupil revenue to the state. For example, in the 1998-99 school year, the average foundation grant was approximately $5,800. The maximum tax credit therefore would have been $2,900. If a student transferred to an alternative school, the state must no longer spend the $5,800 and at most forgoes $2,900 through the tax credit, producing a minimum net saving of $2,900.
 U.S. Department of Education, National Center for Education Statistics. Digest of Education Statistics, 1999, NCES 2000-031, May 2000, Table 39.
 Michael Moe, Director of Global Growth Research and education analyst at Merill Lynch, presentation at The Pierre Hotel, New York City, "Freedom and Equal Opportunity in Education: A Moral Imperative and a Call to Entrepreneurs,"12 January 2000.
 Digest of Education Statistics., Table 160 & 135.
 Paul Ciotti, "Money and School Performance: Lessons from the Kansas City Desegregation Experiment," Policy Analysis No. 298, Cato Institute, 16 March 1998.
 Peter Applebome, "Record School Enrollments, Now and Ahead," The New York Times, 22 August 1997, p. A8.
 Janet R. Beales, Doing More With Less: Competitive Contracting for School Support Services, Mackinac Center for Public Policy and the Reason Foundation, November 1994, p. 2.
 John E. Chubb, Educational Choice, Answers to the Most Frequently Asked Questions About Mediocrity in American Education and What Can Be Done About It, The Yankee Institute for Public Policy Studies, July 1989, p. 22.
 John E. Chubb and Terry M. Moe, "American Public Schools: Choice is a Panacea," The Brookings Review, summer 1990.
 Laura M. Litvan, "More Firms Paying Kids' Tuition," Investor's Business Daily, August 28, 1997, p. A1.
 Anderson et. al., The Universal Tuition Tax Credit.