May 16, 2005 (EM284)

In Brief:

School Vouchers in Sweden

The credibility of voucher programs as tools to improve public education is growing in Canada and elsewhere.

The principle that inspires them—that the best use of governments’ funding power is to direct resources, not to provide services directly—is also finding wider support in mature welfare states. The recent use of school vouchers in Sweden, where splitting the purchaser from the provider improved healthcare efficiency, offers another object lesson.

The Swedes started to use vouchers in elementary and middle schools in 1992, with the passage of national legislation called Freedom of Choice and Independent Schools, and expanded the program two years later to include high schools. Rapidly growing private, for-profit companies like Kunskapsskolan have introduced unique curricula to attract vouchered students.

In North America, vouchers are already in use in six of the United States and the District of Columbia, and many more are hearing increasingly vocal demands for such alternatives to assist children trapped in low-performing inner-city schools. The Province of Ontario installed a form of them in 2002 by expanding tax credits for children in private schools. A 2001 Compas poll reported that 57 percent of the Canadian public supports the use of vouchers.

Why, then, don’t we have them already? In spite of abundant evidence that provincial education systems cost more and deliver less than students, parents and their communities want, special interest groups like teachers’ unions stand in the way. In terms of influence, “educrats” will lose the most from the systemic decentralization of public schools. Competitive schools mean less concentrated bargaining power and more merit pay for teachers, long the bête noire of their powerful professional organizations.

What happened in Sweden may change some of their minds. The two largest teachers’ unions are converts to the voucher system, probably because their colleagues who work inside the burgeoning market for independent schools are generally more satisfied with working conditions than those who remain in public schools. In a poll conducted by Svenskt Näringsliv, the Confederation of Swedish Enterprise, students overwhelmingly confirmed they liked the new freedom of choice.

Parents are on board, too, because they like the academic improvement that vouchers have generated. A 2001 study from the Swedish Ministry of Finance showed that, far from deteriorating as a result of competition from independent schools, municipal schools have been forced to make better use of their resources and improve their quality. The study described a strong positive correlation between the amount of students in independent schools in a municipality and high test results in that municipality’s schools.

The rapid growth of independent schools—before vouchers, they held fewer than one percent of Swedish students; now more than ten percent of secondary and over six percent of elementary students attend them—did confirm one negative prediction. They have increased the level of educational segregation. Religious and ethnic minorities are placing their children in schools that cater to their special needs, as are parents who seek a specialized pedagogical emphasis, like music.

But in another important sense, vouchers have reduced segregation. Swedish policy analyst Kristian Tiger describes the system as “a possible instrument of social and economic integration. Before the reform, the principle of proximity determined which school a student had to attend. . . . Sweden has wealthy areas and low-income areas, prosperous places as well as places with many social problems, idyllic neighbourhoods and rough neighbourhoods. The old system only fortified segregation of that sort. The voucher system has made it possible for children to choose schools further away from their homes.”

That desire to open up better schools to the economically disadvantaged is precisely the motive behind American school vouchers. A study of Ohio’s controversial program in the city of Dayton identified large gains in academic scores among vouchered African-American students. The District of Columbia, Florida, Utah and Wisconsin also provide vouchers for low-income and disabled students, and parents in six states can take advantage of Ontario-style tax credits to pay for part of the cost of a private school.

Two other states, Maine and Vermont, have a long history of paying tuition at non-religious schools. So does the country of Denmark, where the policy has had the same effect as noted in Sweden, with state schools improved by competition for students. New Zealand introduced a voucher program in 1989 for low-income children; 97 percent of their parents say they are satisfied or very satisfied with the education their children are receiving at an independent school. In none of these jurisdictions have public schools collapsed or been bled dry by the experience.

Although Sweden’s Kunskapsskolan has yet to show a profit, it has a positive cash flow and long waiting lists for entry into its 22 schools confirm its academic attractions. Entrepreneur Peje Emilsson uses a flatter organizational structure than municipal schools. A central organizational unit takes care of recruitment, training and administration. Expensive fixed overheads like laboratories and technical shops are shared in rotation. Teachers act more like tutors than classroom instructors, with personalized learning programs that are highly flexible.

School vouchers have quickly gained public and political acceptance in Sweden. Only the Communist party and a few municipal politicians oppose the program. That consensus offers food for Canadian thought. We should consider giving vouchers a try.

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