VOUCHERS, PUBLIC SCHOOL RESPONSE, AND THE ROLE OF INCENTIVES: EVIDENCE FROM FLORIDA

I. INTRODUCTION The concern over public school performance in the last two decades has pushed public school reform to the forefront of policy debate in the United States. School accountability and school choice, and especially vouchers, are among the most hotly debated instruments of public school reform. Understanding the behavior and response of public schools facing these initiatives is key to an effective policy design. This paper takes an important step forward in that direction by analyzing public school behavior under the Florida voucher program. The Florida voucher program, known as the "opportunity scholarship" program, is unique in that it embeds a voucher program within a school accountability system. Moreover, the federal No Child Left Behind (NCLB) Act is similar to and largely modeled after the Florida program, which makes the latter all the more interesting and relevant. Much of the literature studying the effect of voucher programs on public schools has looked at the effect on student and mean school scores. In contrast, this study tries to go inside the black box to investigate some of the ways in which schools facing the voucher program behaved in the first 3 years after the program. (1) Exploiting the institutional details of the Florida program during this period, it analyzes the incentives built into the system, and investigates public school behavior and response facing these incentives. The Florida voucher program, written into law in June 1999, made all students of a school eligible for vouchers to move to private or higher performing public schools if the school got two "F" grades in a period of 4 years. Thus, the program can be looked upon as a "threat of voucher" program--schools getting an "F" grade for the first time were directly threatened by vouchers, but vouchers were implemented only if they got another "F" grade in the next 3 years. Vouchers were always associated with a loss in revenue and also media publicity and visibility. Moreover, the "F" grade, being the lowest performing grade, was likely associated with shame and stigma. Therefore, the threatened schools had a strong incentive to try to avoid the second "F." (2) This paper studies some alternative ways in which the threatened schools responded, facing the incentives built into the system. Under the 1999 Florida grading criteria, certain percentages of a school's students had to score above some specified cutoffs on the score scale for it to escape the second "F." Therefore the threatened schools had an incentive to focus more on students expected to score just below these high stakes cutoffs rather than equally on all students. Did this take place in practice? Second, to escape an F grade, the schools needed to pass the minimum criteria in only one of the three subject areas of reading, math, and writing. Did this induce the threatened schools to concentrate more on one subject, rather than equally on all? If so, which subject area did the schools choose to concentrate on? One alternative would be to concentrate on the subject area closest to the cutoff. (3) But subject areas differ in the extent of difficulties, so it is not immediately obvious that it is easiest to pass the cutoff in the subject area closest to the cutoff. Rather, schools are likely to weigh the extent of difficulties of the different subjects and their distances from the cutoffs, and choose the subject that is least costly to pass the cutoff. In addition to analyzing the above questions, this study also tries to look at a broader picture. If the threatened schools concentrated on students expected to score just below the high stakes cutoffs, did their improvements come at the expense of higher performing ones? Using highly disaggregated school-level Florida data from 1993 through 2002, and a difference-in-differences analysis as well as a regression discontinuity (RD) analysis, I investigate the above issues. The schools that received the first "F" grade in 1999 were directly threatened and hence constitute my treated group of schools. …