Shortly after the state of Florida announced it would be expanding its voucher program to give students around $8,000 to offset private school tuition, a private school in St. Petersburg, FL announced it would be raising its tuition for the next school year. Many are upset and others wonder if more schools would follow. Prior to expansion of the voucher program, tuition at St. Paul’s Catholic School was $6,000 for parish members and $7,000 for non-members. After the expansion those tuitions were raised to $10,000 and $12,000, respectively.
While some parents and policymakers are upset about the tuition increases, others contend that the increases were entirely predictable. For their part, the school is arguing that increasing the tuition would allow them to leverage the full amount of the voucher (they would not receive the full $8,000 at the old tuition levels), and that parents would still be receiving a substantial savings on their tuition bill. Furthermore, the school argues that they could then use the extra revenue, estimated at around $1 million per year, to increase teacher pay and make capital improvements.
Discussion Questions:
- Use a supply and demand model to illustrate the effect of the vouchers on the market for private school students, identifying the pre-voucher equilibrium price, and the post-voucher price that students pay and price that schools receive. Do this separately for parish members and non-members. Does the voucher benefit one group of students more than the other?
- Based on your answer above, explain why some would claim that the price increases were not only predictable, but even necessary. (Hint: What happens to the equilibrium quantity of students?)
Sources| Orland Sentinel: https://www.orlandosentinel.com/2023/05/31/a-florida-school-raised-tuition-because-of-vouchers-will-more-follow/; Photo by Neil Mewes on Unsplash