smerel > However from a frum perspective government funding of private schools would be bad news. There will almost certainly be rules attached that will exclude Yeshivas.
For the majority of Jewish people, who want some combination of Jewish and general education, the current system is totally unmanageable. It makes no sense to lose $10K/child to send him to a totally private school. So, it is either sacrificing quality in one of those areas, or a great financial burden that causes parents to be at work full day and stressed on shabbos. For many, other attractive options cause people move to non-Jewish suburbs, etc.
If you prefer to keep your schools as is, then you can keep them. Or, more likely, take government money for minimal secular education, equivalent to bad public schools. Ideally, government should pay at different tiers depending what your school wants.