By Stephanie Simon

June 1 (Reuters) - Louisiana is embarking on the nation's boldest experiment in privatizing public education, with the state preparing to shift tens of millions in tax dollars out of the public schools to pay private industry, businesses owners and church pastors to educate children.

Starting this fall, thousands of poor and middle-class kids will get vouchers covering the full cost of tuition at more than 120 private schools across Louisiana, including small, Bible-based church schools.

The following year, students of any income will be eligible for mini-vouchers that they can use to pay a range of private-sector vendors for classes and apprenticeships not offered in traditional public schools. The money can go to industry trade groups, businesses, online schools and tutors, among others.

Every time a student receives a voucher of either type, his local public school will lose a chunk of state funding.

"We are changing the way we deliver education," said Governor Bobby Jindal, a Republican who muscled the plan through the legislature this spring over fierce objections from Democrats and teachers unions. "We are letting parents decide what's best for their children, not government."

BIBLE-BASED MATH BOOKS

The concept of opening public schools to competition from the private sector has been widely promoted in recent years by well-funded education reform groups.

Of the plans so far put forward, Louisiana's plan is by far the broadest. This month, eligible families, including those with incomes nearing $60,000 a year, are submitting applications for vouchers to state-approved private schools.

That list includes some of the most prestigious schools in the state, which offer a rich menu of advanced placement courses, college-style seminars and lush grounds. The top schools, however, have just a handful of slots open. The Dunham School in Baton Rouge, for instance, has said it will accept just four voucher students, all kindergartners. As elsewhere, they will be picked in a lottery.

Far more openings are available at smaller, less prestigious religious schools, including some that are just a few years old and others that have struggled to attract tuition-paying students.

The school willing to accept the most voucher students -- 314 -- is New Living Word in Ruston, which has a top-ranked basketball team but no library. Students spend most of the day watching TVs in bare-bones classrooms. Each lesson consists of an instructional DVD that intersperses Biblical verses with subjects such chemistry or composition.

The Upperroom Bible Church Academy in New Orleans, a bunker-like building with no windows or playground, also has plenty of slots open. It seeks to bring in 214 voucher students, worth up to $1.8 million in state funding.

At Eternity Christian Academy in Westlake, pastor-turned-principal Marie Carrier hopes to secure extra space to enroll 135 voucher students, though she now has room for just a few dozen. Her first- through eighth-grade students sit in cubicles for much of the day and move at their own pace through Christian workbooks, such as a beginning science text that explains "what God made" on each of the six days of creation. They are not exposed to the theory of evolution.

"We try to stay away from all those things that might confuse our children," Carrier said.

Other schools approved for state-funded vouchers use social studies texts warning that liberals threaten global prosperity; Bible-based math books that don't cover modern concepts such as set theory; and biology texts built around refuting evolution.

TEACHERS WEIGH LAWSUIT

The U.S. Supreme Court has ruled that vouchers can be used for religious education so long as the state is not promoting any one faith but letting parents choose where to enroll their children.

In Louisiana, Superintendent of Education John White said state officials have at one time or another visited all 120 schools in the voucher program and approved their curricula, including specific texts. He said the state plans more "due diligence" over the summer, including additional site visits to assess capacity.

In general, White said he will leave it to principals to be sure their curriculum covers all subjects kids need and leave it to parents to judge the quality of each private school on the list.

That infuriates the teachers union, which is weighing a lawsuit accusing the state of improperly diverting funds from public schools to private programs of questionable value.

"Because it's private, it's considered to be inherently better," said Steve Monaghan, president of the Louisiana Federation of Teachers. "From a consumer perspective, it's buyer beware."

To date, private schools have not had to give their students state standardized tests, so there's no straightforward way for parents to judge their performance. Starting next year, any student on a voucher will have to take the tests; each private school must report individual results to parents and aggregate results to the state.

The 47-page bill setting up the voucher program does not outline any consequences for private schools that get poor test scores. Instead, it requires the superintendent of schools to come up with an "accountability system" by Aug. 1. Once he does, the system cannot be altered except by legislative vote.

White would not say whether he is prepared to pull vouchers from private schools that do poorly on tests.

He pointed out that many kids applying for vouchers are now enrolled in dismal public schools where two-thirds of the students can't read or do math at grade level and half will drop out before they graduate high school. Given that track record, he argues it's worth sending a portion of the roughly $3.5 billion a year the state spends on education to private schools that may have developed different ways to reach kids.

"To me, it's a moral outrage that the government would say, 'We know what's best for your child,'" White said. "Who are we to tell parents we know better?"

That message resonates with Terrica Dotson, whose 12-year-old son, Tyler, attends public school in Baton Rouge. He makes the honor roll, but his mom says he isn't challenged in math and science. This week she was out visiting private schools. "I want him to have the education he needs," she said.

The state has run a pilot voucher program for several years in New Orleans and is pleased with the results. The proportion of kids scoring at or above grade level jumped 7 percentage points among voucher students this year, far outpacing the citywide rise of 3 percentage points, state officials said.

Studies of other voucher programs in the U.S. have shown mixed results.

In Louisiana the vouchers are available to any low- to middle-income student who now attends a public school where at least 25 percent of students test below grade level.

Households qualify with annual income up to 250 percent of the poverty line, or $57,625 for a family of four.

Statewide, 380,000 kids, more than half the total student population of 700,000, are eligible for vouchers. There are only about 5,000 slots open in private schools for the coming year, but state officials expect that to ramp up quickly.

NO FISCAL ANALYSIS

Officials have not estimated the price tag of these programs but expect the state will save money in the long run, because they believe the private sector can educate kids more cheaply than public schools.

Whether those savings will materialize is unclear.

By law, the value of each voucher can't exceed the sum the state would spend educating that child in public school -- on average, $8,800 a year. Small private schools often charge as little as $3,000 to $5,000 a year.

Yet at some private schools with low tuition, administrators contacted by Reuters said they would also ask the state to cover additional, unspecified fees, which would bring the cost to taxpayers close to the $8,800 cap. The law requires the state to cover both tuition and fees.

In the separate mini-voucher program due to launch in 2013, students across Louisiana, regardless of income, will be able to tap the state treasury to pay for classes that are offered by private vendors and not available in their regular public schools.

White said the state hopes to spur private industry to offer vocational programs and apprenticeships in exchange for vouchers worth up to $1,300 per student per class. Students can also use the mini-vouchers to design their own curriculum, tapping state funds to pay for online classes or private tutors if they're not satisfied with their public school's offerings.

State officials will review every private-sector class before approving it. They are still working out how to assess rigor and effectiveness.

The state has not done a formal fiscal analysis, but public school advocates say subtracting the costs of vouchers from their budgets is unfair because they have the same fixed costs -- from utilities to custodial services -- whether a child is in the building four hours a day or six. White responds that the state is not in the business of funding buildings; it's funding education.

While public schools fear fiscal disaster, many private school administrators see the voucher program as an economic lifeboat.

Valeria Thompson runs the Louisiana New School Academy in Baton Rouge, which prides itself on getting troubled students through middle and high school. Families have struggled to pay tuition, she said, and enrollment is down to about 60 kids.

"We're a good school," Thompson said, "but we've been struggling fiscally."

The vouchers have brought in a flood of new applicants and the promise of steady income from taxpayers. Thompson enrolled 17 new students in two days last month and hopes to bring in as many as 130. "I'm so grateful," she said. "You can't imagine how grateful."