"I suspect we'd have a lot of parents with plasma TVs and a lot of uneducated kids."
Maybe I should have elaborated a little. How about this idea?
If a public school was spending $10,000 per pupil, per year, then the parents of that child could use the $10,000 to keep their kid at his/her current public school or spend it on any other school they wish. They can only spend this money on the education of their child and don't have access to the account; they just dictate to an Administrator which school receives the money. Any money unspent is returned to the government as general revenue. The current public schools retain their full funding as long as parents choose to continue their children's education there. There is no accreditation needed to open a Charter school. Charter schools may be registered as nonprofit (like the public schools), or for-profit. There is no limit on the number of students that may be accepted to any one Charter school, no limit on the amount of profit a Charter school can make, and no conditions on how they spend their money. Charter schools have full discretion to pay their teachers whatever salary they wish and free reign to hire and fire whoever they wish, regardless of background or qualification. Charter schools that falsely advertise or mislead parents about any aspect of their school, from the qualifications of their teaching staff, to the test scores of their students, will be considered in breach of contract and can be sued by the parents and/or prosecuted by the state in a court of law. To prevent fraud and abuse, a parent who homeschools cannot qualify as a Charter school. All private schools are reclassified as Charter schools and may receive the maximum per child funding. So a Private/Charter school that charged $20,000/year tuition would receive the regular $10k from that child's government account and the parents would continue to pay the remaining $10k out of pocket.
The 10,000 dollars is a shared cost, borne by other taxpayers as well. With the refund, the rest of the taxpayers pick up the tab. Someone does pay for it.