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THE EFFECTS OF TOWN TUITIONING IN VERMONT AND MAINE
by Christopher W. Hammons, Ph.D.
February, 2002

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A publication of the Milton & Rose D. Friedman Foundation
One American Square . Suite 1750
Indianapolis, Indiana 46282
317-681-0745 phone . 317-681-0945 fax
www.friedmanfoundation.org

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Executive Summary
Download the full report here:  http://www.schoolReport.com/friedman_study.pdf

If students are thought of as education customers seeking to spend their dollars in the local education market, what effect does this have on potential suppliers of education such as public and private schools? Advocates of school choice have long maintained that competition for students forces all schools to improve their programs to attract more money. We test this assertion, looking specifically at the states of Maine and Vermont.

To provide educational opportunities for its children, many of whom live in rural and non-urban areas, Vermont and Maine long ago instituted a practice known as “town tuitioning.” The practice allows parents living in districts that do not own and operate elementary or secondary schools to send their children to public or non-sectarian private schools in other areas of the state, or even outside the state, using funds provided by the child’s home district. The practice has been in effect since 1869 in Vermont and 1873 in Maine, meaning that voucher programs have existed in the United States for over 100 years but are often adapted to reflect local needs. Our investigation of the town tuitioning process in Maine and Vermont yields three specific conclusions.

First, schools perform better in a choice environment. In a choice environment, schools have a strong incentive and desire to improve their performance to attract more students and with them valuable tuition dollars. Our analysis shows that schools that have higher standardized test scores attract more tuition money from parents. We interpret the positive relationship between tuition money and test scores as compelling evidence that schools are willing to work harder when competing with each other for tuition dollars. To test this idea further, we looked at each high school in Vermont and Maine and found that test scores were highest in areas with a greater concentration of tuition towns and high schools. That is, test scores were higher in areas with the greatest possible competition and lower in areas with little or no competition for tuition dollars.

Second, the benefits of competition among schools are not limited to any particular demographic group. While there is not much racial diversity in Maine and Vermont (both states are over 95% white) our analysis indicates that the benefits of choice cut across existing socio-economic differences. Schools that are closer to tuition towns — whether affluent or poor, rural or urban — have higher standardized test scores than schools that are more distant from tuition towns. Our model indicates that if a town one mile away from a school decided to tuition its students, we would expect that the percentage of students passing the state test at that school would increase by 3.4 points — a gain of 12 percent over existing scores — regardless of the demographics of the school. To this end, higher tests scores might be achieved by expanding school choice to towns that do not currently have it, increasing the incentives for nearby schools to attract tuition dollars.

The third specific conclusion of our investigation is that there is a financial benefit to school choice that extends beyond school performance. The effects of competition, when measured in dollars, illustrate that a significant amount of money would be required to achieve the same effects that occur in a choice environment as a result of competition. To buy the same 3.4 point gain in test scores mentioned above would require Maine and Vermont to increase current per-pupil spending by an average increase of $909 per student. Given the tremendous amount of money already spent on education, an additional $909 for every student in Maine and Vermont would cost the states roughly $300 million dollars a year extra in combined spending. Hence, existing voucher programs provide a substantial economic benefit to both states with minimal costs, in essence providing a greater return on current education spending.

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Download the full report here:  http://www.schoolReport.com/friedman_study.pdf


About the Author
Christopher Hammons, Ph.D. is an education researcher and political science professor at Houston Baptist University in Houston, Texas. He has published articles on special education, home-schooling and school choice, and has acted as research associate on numerous other projects.

Acknowledgements
The author would like to acknowledge the many people who provided invaluable assistance with this project. In particular Jay Greene from the Manhattan Institute, Libby Sternberg for her insight into the educational system of Vermont, and the staff at the Departments of Education in both Maine and Vermont for help with data collection, mapping, and enrollment information.

About the Foundation
The Milton and Rose D. Friedman Foundation is a non-profit, 501(c)(3) organization established in 1996 by Nobel  laureate Dr. Milton Friedman and Dr. Rose D. Friedman. The origins of the foundation lie in the Friedmans' long-standing concern about the serious deficiencies in America's elementary and secondary public schools. The best way to improve the quality of education, they believe, is to enable all parents to have a truly free choice of the schools that their children attend. The Friedman Foundation works to build upon this vision, clarify its meaning to the general public and amplify the national call for true education reform through school choice.


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