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Three percent of Utah students currently attend private schools. In the Netherlands, the figure is 75 percent. The difference? The Dutch enacted their universal school voucher program in 1917, and Utah’s passed just last week.

In a nail-biting 38-37 vote, Utah’s heavily Republican House of Representatives passed the nation’s first universally available school choice program. The Senate followed, by a vote of 19-10, and Governor Jon Huntsman signed the bill into law.  Under the program, every family in Utah will receive a voucher worth between $3,000 per child (for the lowest income families) and $500 (for those with the highest incomes).  Parents will be able to redeem these vouchers at whatever private school they deem best for their kids.

Without a doubt, this is the most significant school choice legislation ever passed in the United States. But before school choice leaders start retiring or sending out their resumes, there are several important caveats to keep in mind.

The maximum value of Utah’s school vouchers is only about half of what the state’s public schools spend per pupil. This puts the private sector at a considerable disadvantage, particularly in its efforts to serve poorer families. In the Netherlands, all schools, public and private, are equally funded by vouchers, producing a level educational playing field.

One obvious effect of this financial discrimination against parents who choose private schools is that fewer new schools will be created. Fewer schools means less competition and fewer choices for parents, consequently undermining the market forces that school choice is meant to create.

The funding discrimination inherent in Utah’s voucher bill will also limit research and development spending, and curtail the ability of successful schools to pay for the expansion of their operations. This could end up inhibiting innovation and the dissemination of best practices.

Perhaps the biggest danger is that both supporters and critics of Utah’s voucher program may expect too much, too soon. In other nations that have adopted universal school choice programs — Chile and Sweden, among others — it has taken at least five or ten years for large numbers of new private schools to enter the marketplace, and for the bad entrants to be separated from the good.

Part of the reason for that lag is that would-be school founders are reluctant to move forward until they know that a new school choice program rests on firm legal and political ground. And Utah’s voucher bill is sure to be challenged.

Some opponents of the law have already conceded that it conforms to the U.S. Constitution, based on the Supreme Court’s 2002 decision upholding Cleveland’s school voucher program. But state courts are the new front line for voucher battles, and they have, on occasion, proven fatal. Almost exactly one year ago, Florida’s Supreme Court struck down that state’s small Opportunity Scholarships voucher program on state constitutional grounds.

Utah, however, lacks the "uniformity clause" that formed the basis for the Florida ruling. These clauses, which appear in the constitutions of 15 states, stipulate that the public school system must be "uniform." Though Wisconsin’s supreme court did not find the uniformity requirement in conflict with Milwaukee’s voucher program, Florida’s justices took the view that it did. But Utah has no uniformity clause, and the broader legal prospects for its bill seem promising.

The greatest government threat to Utah’s voucher program is not a sudden coup-de-grace from the court, but death by a thousand regulatory cuts.

Historically, state regulation of education has tended to follow state funding. The U.S. has some of the least regulated private schools in the industrialized world, largely because it has not offered those schools the government subsidies that are extended to them in so many other nations. Though Utah’s voucher bill is relatively free of such entanglements today, it will take eternal vigilance to keep it so.

When the Dutch first enacted their national voucher program nearly a century ago, it was minimally regulated. Today, the government sets a national curriculum, controls teacher certification, sets teachers’ salaries, decides when and where new schools can open, forbids voucher-accepting schools from charging tuition, and prohibits profit-making.

Because of all these regulations, the Dutch voucher program now rates only 31 out of 100 on the Cato Education Market Index, which measures how closely school systems resemble free markets. Utah’s school voucher program receives an almost identical score due to a combination of opposing factors: it imposes much less regulation on voucher schools, but handicaps them by funding government schools at twice the voucher amount.

But while the Utah voucher program won’t create a truly free market, its score is still substantially higher than the state’s current education market rating, which is brought low by Utah’s minuscule private education sector and the lack of parental choice and competition in its public school system.

In spite of these limitations, it would be difficult to overestimate the significance of Utah’s school voucher program. Salt Lake City’s legislation could very well become the domino that tips all other states into the camp of educational freedom. Let’s hope so.

Andrew J. Coulson is director of the Cato Institute’s Center for Educational Freedom, and author of Market Education: The Unknown History. He blogs at Cato at Liberty.  A version of this previously appeared in the American Spectator.