Rapidly expanding school voucher programs pinch state budgets
by Kevin Hardy, Stateline
May 20, 2025
In submitting her updated budget proposal in March, Arizona Gov. Katie Hobbs lamented the rising costs of the state’s school vouchers program that directs public dollars to pay private school tuition.
Characterizing vouchers as an “entitlement program,” Hobbs said the state could spend more than $1 billion subsidizing private education in the upcoming fiscal year. The Democratic governor said those expenses could crowd out other budget priorities, including disability programs and pay raises for firefighters and state troopers.
It’s a dilemma that some budget experts fear will become more common nationwide as the costs of school choice measures mount across the states, reaching billions of dollars each year.
“School vouchers are increasingly eating up state budgets in a way that I don’t think is sustainable long term,” said Whitney Tucker, director of state fiscal policy research at the Center on Budget and Policy Priorities, a think tank that advocates for left-leaning tax policies.
Vouchers and scholarship programs, which use taxpayer money to cover private school tuition, are part of the wider school choice movement that also includes charter schools and other alternatives to public schools.
Opponents have long warned about vouchers draining resources from public education as students move from public schools to private ones. But research into several programs has shown many voucher recipients already were enrolled in private schools. That means universal vouchers could drive up costs by creating two parallel education systems — both funded by taxpayers.
School vouchers are increasingly eating up state budgets in a way that I don't think is sustainable long term.
– Whitney Tucker, director of state fiscal policy research at the Center on Budget and Policy Priorities
In Arizona, state officials reported most private school students receiving vouchers in the first two years of the expanded program were not previously enrolled in public schools. In fiscal year 2024, more than half the state’s 75,000 voucher recipients were previously enrolled in private schools or were being homeschooled.
“Vouchers don’t shift costs — they add costs,” Joshua Cowen, a professor of education policy at Michigan State University who studies the issue, recently told Stateline. “Most voucher recipients were already in private schools, meaning states are paying for education they previously didn’t have to fund.”
Voucher proponents, though, say those figures can be misleading. Arizona, like other states with recent expansions, previously had more modest voucher programs. So some kids who were already enrolled in private schools could have already been receiving state subsidies.
In addition to increasing competition, supporters say the programs can actually save taxpayer dollars by delivering education at a lower overall cost than traditional public schools.
One thing is certain: With a record number of students receiving subsidies to attend private schools, vouchers are quickly creating budget concerns for some state leaders.
The rising costs of school choice measures come after years of deep cuts to income taxes in many states, leaving them with less money to spend. An end of pandemic-era aid and potential looming cuts to federal support also have created widespread uncertainty about state budgets.
“We’re seeing a number of things that are creating a sort of perfect storm from a fiscal perspective in the states,” said Tucker, of the Center on Budget and Policy Priorities.
Last year, Arizona leaders waded through an estimated $1.3 billion budget shortfall. Budget experts said the voucher program was responsible for hundreds of millions of that deficit.
A new universal voucher program in Texas is expected to cost $1 billion over its next two-year budget cycle — a figure that could balloon to nearly $5 billion by 2030, according to a legislative fiscal note.
Earlier this year, Wyoming Republican Gov. Mark Gordon signed a bill expanding the state’s voucher program. But last week, he acknowledged his own “substantial concerns” about the state’s ability to fund vouchers and its public education obligations under the constitution.
“I think the legislature’s got a very tall task to understand how they’re going to be able to fund all of these things,” he said in an interview with WyoFile.
Voucher proponents, who have been active at the state level for years, are gaining new momentum with support from President Donald Trump and congressional Republicans.
In January, Trump ordered federal agencies to allow states, tribes and military families to access federal money for private K-12 education through education savings accounts, voucher programs or tax credits.
Last week, Republicans on the House Ways and Means Committee voted in favor of making $20 billion available over the next four years for a federal school voucher program. Part of broader work on a bill to extend Trump’s 2017 tax cuts, the measure would need a simple majority in the House and the Senate to pass.
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Martin Lueken, the director of the Fiscal Research and Education Center at EdChoice, a nonprofit that advocates for school choice measures, argues school choice measures can actually deliver savings to taxpayers.
Lueken said vouchers are not to blame for state budget woes. He said public school systems for years have increased spending faster than inflation. And he noted that school choice measures make up a small share of overall state spending — nationally about 0.3% of total state expenditures in states with school choice, he said.
“Public schooling remains one of the largest line items in state budgets,” he said in an interview. “They are still the dominant provider of K-12 education, and certainly looking at the education pie, they still receive the lion’s share.
“It’s not a choice problem. I would say that it’s a problem with the status quo and the public school system,” he said.
Washington, D.C., and 35 states offer some school choice programs, according to EdChoice. That includes 18 states with voucher programs so expansive that virtually all students can participate regardless of income.
But Lueken said framing vouchers as a new entitlement program is misleading. That’s because all students, even the wealthiest, have always been entitled to a public education — whether they’ve chosen to attend free public schools or private ones that charge tuition.
“At the end of the day, the thing that matters most above dollars are students and families,” he said. “Research is clear that competition works. Public schools have responded in very positive ways when they are faced with increased competitive pressure from choice programs.”
Public school advocates say funding both private and public schools is untenable.
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In Wisconsin, Republican lawmakers are considering a major voucher expansion that would alter the funding structure for vouchers, potentially putting more strain on the state’s general fund.
The state spent about $629 million on its four voucher programs during the 2024-2025 school year, according to the Wisconsin Association of School Business Officials, which represents employees in school district finance, human resources and leadership.
The association warns proposed legislation could exacerbate problems with the “unaffordable parallel school systems” in place now by shifting more private schooling costs from parents of those students to state taxpayers at large.
Such expansion “could create the conditions for even greater funding challenges for Wisconsin’s traditional public schools and the state budget as a whole,” the association’s research director wrote in a paper on the issue.
In Arizona, Hobbs originally sought to eliminate the universal voucher program — a nonstarter in the Republican-controlled legislature. She has since proposed shrinking the program by placing income limits that would disqualify the state’s wealthiest families.
That idea also faced Republican opposition.
Legislators are now pushing to enshrine access to vouchers in the state constitution.
Marisol Garcia, president of the Arizona Education Association, the state’s 20,000-member teachers union, noted that vouchers and public education funds are both sourced from the general fund.
“So it almost immediately started to impact public services,” she said of the universal voucher program.
While the union says vouchers have led to cutbacks of important resources such as counselors in public schools, Garcia said the sweeping program also affects the state’s ability to fund other services like housing, transportation and health care.
“Every budget cycle becomes where can we cut in order to essentially feed this out-of-control program?” she said.
Stateline reporter Kevin Hardy can be reached at khardy@stateline.org.
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