Taxpayer Funding for Religious Schools?

Jeffrey Miron

This article appeared on Substack on June 13, 2023

The state of Oklahoma has recently approved a charter for the St. Isidore of Seville Catholic Virtual School, whose curriculum will include religious teaching. Taxpayers will fund the school, so a battle will ensue over whether such funding is desirable or constitutional.

Economic reasoning suggests three possible justifications for government support of education.

First, one person’s education might benefit society more broadly. Economic productivity might be higher, for example, if everyone has mastered “the three Rs.” Some individuals, however, might ignore this “spillover” and therefore choose too little education relative to the social optimum.

Second, people for whom education would be productive (by raising their future income) might underinvest due to myopia, suggesting that even without spillovers, the laissez‐​faire level of education might be too low. Some parents, in particular, might choose too little education for their children unless policy makes education cheaper.

Third, people for whom education would be beneficial, with or without externalities, and even without myopia, might have insufficient income to pay for private education and face difficulty in borrowing to finance such an investment (credit constraints).

Reasonable people can debate whether these arguments are convincing. Each has some plausibility, yet each is easily overstated.

In Libertarian Land, governments play no role in education, whether via mandatory schooling, public schools, funding for vouchers or charters, state colleges and universities, or subsidized student loans.

The reason is that, while government support might have the benefits described, this support requires government to define what constitutes education, as the Oklahoma controversy illustrates. Government definition of education limits variety and innovation, and in the extreme facilitates thought control. It is no accident that totalitarian regimes exercise extreme control over their educational systems.

If one nevertheless takes as given that, for the foreseeable future, government will fund education, and have the power to determine what kinds of education receive this support, should taxpayer funding be available for religious schools?

Assuming such education meets the curricular standards that government imposes on all schools, public and private, the answer is yes.

Why? Because religious schools can generate the three benefits that potentially justify government support of education. This is the standard reasoning for allowing private religious schools (or home schooling) to satisfy mandatory schooling laws.

Stated differently, allowing taxpayer funding to religious schools that meet the criteria for funding under the state’s general rules (e.g., teaching the three Rs) is the neutral position for government with respect to religion. This neutrality is the natural interpretation of the Constitution’s establishment clause, which states that “Congress shall make no law respecting an establishment of religion, or prohibiting the free exercise thereof.”

Thus libertarians would prefer little or no government involvement in education. If government does fund education, however, it should not exclude religious schools a priori but instead determine funding based on the criteria that might justify such intervention in the first place.

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