Efforts to reform public management through the introduction of market forces and non-government service providers, known broadly as both reinventing government (Osborne and Gaebler, 1993) and new public management (Kettl, 2005), can be traced to the late 20th century (Thompson, 2002). When initially proposed, new public management reforms spurred much debate over their effectiveness and possible long-term impacts on public service delivery (Kaboolian, 1998; Stillman, 1999). Thompson (2002), for example, highlighted the need to understand both the impacts of the implementation of new public management reforms, as well as the long-term "opportunity costs" of such reforms (365). Stillman (1999) expressed concern about the "hyperimpermanence" of institutions resulting from the growth of the shadow-state, but there has been limited research on the measurable impacts of government funding of impermanent nongovernment service providers (102). In this article, the research gap is addressed by using the 25 year-old Milwaukee private school voucher program as an example of a mature new public management reform. Specifically, the common occurrence of school closure in the voucher program is used to quantify one long-term effect of new public management reforms: the funding of impermanent institutions.
Donald Kettl (2005) provided a concise overview of the common characteristics of new public management reforms. The Milwaukee voucher experience exhibits all six of Kettl's (2005) "core components" (1). The first component, productivity, states that government is being asked to provide more services for less tax revenue. The Milwaukee voucher program, formally known as the Milwaukee Parental Choice Program (MPCP), was designed to increase productivity by obtaining similar or increased educational outcomes for students for substantially less taxpayer support (See Witte, 2000; Savas, 2000; Costrell, 2009; 2011; DeFour, 2011). The second component, marketization, is the introduction of market-forces into public service delivery for purposes of changing bureaucratic incentives. This idea too is core to the premise of school voucher programs like the MPCP. Milton Friedman (1955) originally articulated that education vouchers would force public schools to improve in response to parental demands. Indeed, a sizable body of school voucher research focused on the impacts of vouchers on public schools (Hoxby, 2003; Carnoy et al., 2007). The third component, service orientation, is the prioritizing of customer service and empowerment in service delivery. The original MPCP was borne of a coalition including low-income minority parents who viewed school vouchers as a means of empowerment (Dougherty, 2004). Accordingly, parental satisfaction is frequently included in voucher program evaluations, and used as justification for their existence (Witte et al., 2008; Wolf et al., 2010; Wolf & Stewart, 2012). The fourth component, decentralization, is also core to the voucher school idea. The providers of voucher-funded education in Milwaukee are not centralized systems, but rather independent or religiously networked schools connected only by their participation in the MPCP.
Kettl's (2005) fifth and sixth components relate less directly to the operations of the MPCP, but are present in the political debates surrounding its implementation. Policy refers to improving government's "capacity to devise and track policy" (Kettl, 2005 p. 2). In voucher programs generally, and the MPCP specifically, this manifests in debates over whether to administer programming in a state's education agency, or house administration of voucher programs outside of agencies overseeing traditional modes of public education. The final component, accountability, is an ongoing subject of debate for the MPCP, and voucher programs in general (Van Dunk & Dickman, 2003; Ravitch, 2010). Voucher advocates argue that such programs increase accountability by being responsive to customers, a position firmly in the new public management framework (Savas, 2000; Witte, 2000). Voucher skeptics, however, argue the absence of democratic governance makes it impossible for school voucher programs to be truly accountable (Ravitch, 2010), a position consistent with hollow-state skeptics (Stillman, 1999; Williams, 2000).
Much of the research on the MPCP focused on its academic impacts on individual public school pupils and program users (Carnoy et al., 2007; Chakrabarti, 2008; Greene and Marsh, 2009; Cowen et al., 2012; Cowen et al., 2013). However, as the preceding discussion indicates, the MPCP is not just an attempt to reform education, but also a longstanding example of a new public management reform whose experience can enrich the public administration literature on public governance reforms and their impacts. Specifically, the author examines the lifecycles of schools participating in the MPCP to quantify the financial impact of organizational failure in a new public management reform, and its implications for measuring productivity (Witte, 1999; Ford, 2011; Kisida, Jensen & Wolf, 2011 Andersson & Ford, 2014; Ford, 2014). As mentioned, increased productivity is a key goal of new public management reforms, and voucher programs like the MPCP have been cited for their perceived positive impacts on productivity (Savas, 2000; Wolf & McShane, 2013). However, though research indicates the MPCP is obtaining similar academic results for less taxpayer funding than the Milwaukee Public Schools (MPS) (Costrell, 2011, Carlson, Cowen & Fleming, 2013), the funding of failed institutions, which John Witte (1999) described as negative attribute of school voucher programs, has never been included in the discussion of voucher program impacts on public productivity. This article addresses the research gap by:
1) Quantifying the number of schools that have left the MPCP since 1991;
2) Identifying the direct reasons why schools left the MPCP, in particular focusing on school closure; and
3) Quantifying the total inflation adjusted public payments made to closed voucher schools.
The results of this analysis provide an example of the potential long-term costs of mature new public management reforms (Thompson, 2002), bringing context to the scholarly and practitioner understanding of the productivity and fiscal impacts of such reforms (Stillman, 1999).
BACKGROUND AND LITERATURE REVIEW
The MPCP has, for over two decades, enabled mostly low-income Milwaukee pupils to attend private schools at state expense. Inflation-adjusted numbers show that $1.6 billion in public funds was sent to private schools in Milwaukee between 199I and 2013 via the MPCP. The program began in the 1990-1991 school year as a limited experiment allowing up to 1,000 low-income pupils to attend lightly regulated non-sectarian private schools in the City of Milwaukee (Witte, 2000; Kava, 2013). The program was created in reaction to persistent low-levels of academic achievement in the Milwaukee Public Schools (MPS), and dissatisfaction with MPS among certain leaders of Milwaukee's African-American community (Witte, 2000; Dougherty, 2004). Since 1991, the program has changed in significant ways. In the 2013-2014 school year, over 25,000 students with household incomes at or below 300 percent of the federal poverty level are using a voucher to attend over 100 mostly religious schools at state expense (Kava, 2013; Staff, 2014). Program participation is uncapped, and given the large concentration of low-income pupils in MPS, the vast majority of Milwaukee's K-12 students are eligible to apply for a voucher (Cowen et al., 2012). Program applicants apply directly to the school they wish to attend. If program income and residency requirements are met, participating schools must accept students via random lottery (Evers, 2014). Participating schools are required to administer the Wisconsin Knowledge and Concepts Exam to all voucher students, and release the results publicly (Cowen et al., 2013). In addition, schools must obtain accreditation from an approved agency, and meet a variety of health, fiscal, and policy disclosure requirements (Kava, 2013).
Once enrolled, a student generates a payment equal to the lesser of a school's audited per-pupil cost, or the maximum voucher payment ($6,442 in 2013). The payment is delivered directly to the school from the Wisconsin Department of Public Instruction (DPI) in four equal installments over the course of the school year (Kava, 2013). (1) If a student leaves a school prior to the official January count date, the second half of the payment is not delivered (Kava, 2013).
A five-year state-mandated evaluation of the program, finished in 2012, found the MPCP had no significant academic effects on the math achievement levels of program users, and a small positive effect on reading achievement caused by a change in state accountability policy (Witte et al., 2012; Carlson, Cowen & Fleming 2014; Witte et al., 2014). The study also found positive graduation rate effects for voucher users, however the authors caution that their panel had a 56% attrition rate for MPCP high school users over the course of the study (Cowen et al., 2013). (2) Research on the competitive effects of vouchers in Milwaukee has consistently shown relatively small public school efficiency gains attributable to competition from the MPCP (Carnoy et al., 2007; Chakrabarti, 2008; Greene and Marsh, 2009). Together, the competitive effects literature and academic impact evaluations indicate that the aggregate student achievement effect of voucher policy on K-12 education in Milwaukee is substantively small. MPS students continue to fare poorly compared to their urban peers on the National Assessment for Educational Progress, and racial gaps between African-American and White students are among the largest in any urban area in the United States (National Center for Education Statistics, 2011). The most recent Wisconsin...