Competitive Effects of Means-Tested School Vouchers

1. Competitive Effects of Means-Tested School Vouchers David Figlio, Northwestern and NBER Cassandra Hart, Northwestern December 2009

2. Introduction • School choice options have become increasingly prevalent in recent years • Considerable attention paid to potential competitive effects of choice, both positive (efficiency) and negative (cream-skimming) • Challenging to gauge competitive effects because of interrelationship between private school supply and public school performance • Prior literature: cross-sectional studies of private school penetration in US and international; Milwaukee vouchers; Florida school grades; Sweden voucher program introduction; Chile voucher cross-section

3. This paper • Study introduction of large new school voucher program; use introduction of this program as source of plausibly exogenous variation that increased demand for private school options after 2001 • Look at quantity and variety of nearby private school options in year prior to program announcement, which could generate variation in access to the program • Florida is large and varied in its pre-program private school supply • Identifying off of a policy change; use student data from 99-00 through 06-07

4. How vouchers might affect public schools • Competition effect • Composition effect • Resource effect • First year of program was before any students left the public schools – but were applying • Work in progress: still trying to tease out three effects in the “mobility” years of the program

5. Florida’s Corporate Tax Credit Scholarship Program • Funded by fully tax creditable corporate contributions to one of three Scholarship Funding Organizations, each with geographic range; total contributions capped by Legislature • Began with 20,000+ students, now at 27,000+ students • Students below 185% of poverty line and attending public school in prior year (or entering grades K/1) eligible; renewal requires income below 200% of poverty line • Initial voucher was $3,500; now, it’s $3,950-$4,100 (around 90% of average “rack rate” religious school tuition/fees in Florida)

6. Private school landscape in Florida • 2000 Census 5% microdata sample: 11.4% of Florida students 6-17 attended private schools; 5.4% of income-eligible students attended private schools • Large regional variation in private school penetration at MSA level • Considerable within-MSA variation as well (wait a few slides)

7. Regional variation in private school penetration in 2000 Census

8. Data • (Standardized) student test scores, basic demographics from 1999-2000 through 2006-07 from Florida Education Data Warehouse • Developmental scale scores employed, grades 3-10 • Exclude students with disabilities (eligible for other voucher program, McKay Scholarships) • 9.8M student-year observations; 2.8M students • Private school universe from Florida Dept of Education • Public and private addresses geocoded using ARCGis • Private competitors measured by grade span served

9. Empirical approach • School and time fixed effect models (clustered SE) • Dependent variable: standardized student DSS test scores, controlling for prior-year test scores when available • Controls for student characteristics and grade • Policy variable: private school competition (measured in 2000) x post-policy • “Post-policy” occurs once program is announced • Other models look year-by-year after policy is announced

10. Competition measures • Physical distance in miles to nearest private school competitor (measured negative) • Number of private competitors within 5 miles • Number of types of private competitors within 5 miles • Types (self-identified by schools): non-religious; non-denominational; Catholic; Protestant; Evangelical; Baptist; Islamic; Jewish; “Christian”; other religious • Herfindahl index of competitor types (1-Herfindahl) • Robust to other radii of competition • Study sample: schools with competitor within 5 miles (basically the whole state)

11. Competition measures #1

12. Competition measures #2

13. Competition measures #3

14. Competition measures #4

15. Within-MSA variation

16. Within-MSA variation

17. Within-MSA variation

18. First-year estimates of voucher effects

19. Adding leads of policy variable

20. Differences by program eligibility

21. Effects same for poor vs very poor

22. Differences by context (reading; distance measure of competition)

23. Over-time changes in policy effects

24. Bigger differences in “mobility” years • Competition effect? • Resource effect? • Composition effect?

25. Evidence of negative selection

26. Evidence of negative selection

27. Where do students fall in their prior school’s distribution?

28. Where do students fall in their prior school’s distribution?

29. Distributions by race/ethnicity

30. Distributions by race/ethnicity

31. Summing up • Preliminary conclusions • Limitations/generalizability