As voucher programs for schools rapidly expand across the country, a new EPI report illustrates the damage of letting public money leave the public school system and subsidize private forms of schooling.

The report unveils a new tool that estimates fiscal externalities—the costs to school districts from students leaving public schools with a voucher. Users of the tool can try out different scenarios for every school district in the country to see how much money public school students will lose out on when declines in student enrollment intersect with the fixed nature of many school costs. When enrollment declines, school districts are often stuck with paying the same amount for fixed costs, such as heating classrooms, and have less money to spend on costs that can be adjusted, like teaching supplies. This cost to student learning is the fiscal externality.

The fiscal externality helps to put a number to the reality that children who don’t participate in voucher programs will still bear the cost for educational choices that others make. The fiscal externality doesn’t quantify the entire cost of voucher programs. It represents a piece of those costs, but it’s an important and often hidden cost.

As an example, the report assesses the impact of vouchers to the Cleveland Metropolitan School District for a projected enrollment decline of 5 percent. Depending on the share of education costs the district views as fixed, Cleveland public school students stand to lose between $364-$927 per pupil in education spending, which adds up to a total fiscal externality of $12-$31 million.

“Vouchers undermine efforts to make excellent public education available to all children by pressuring fiscal resources available to public schools,” said Hilary Wething, EPI economist and author of the report. “These externalities are not just a problem for public budgets. Students stand to lose out on their potential educational achievement when funding to schools is cut.”