Policy Documents

Texas Taxpayers’ Savings Grants: Q&A No. 1 - Effect on Texas Rank

August 24, 2012

Taxpayer Savings Grants Program
Questions and Answers

by Joseph L. Bast
President, The Heartland Institute
Last updated: August 2012

Q1: How would the TSGP affect the state’s ranking on per-pupil spending?

Answer in brief: The Taxpayer Savings Grant Program (TSGP) could raise per-pupil spending for students still in public schools by about $473, improving Texas’ ranking among the 50 states by between 3 and 8 places, from as low as 48 to as high as 35.
The longer answer: It depends on whether the savings generated would be returned to the school system or be used to help finance other state expenses. If the state’s share of savings is “recycled” or returned to the school system, the TSGP would increase per-pupil spending for students still in public schools by about $473, and improve Texas’ ranking among the 50 states by between 3 and 8 places, from as low as 48 to as high as 35. If the state’s share of savings is not recycled, per-pupil spending would still increase by about $208.

Background and Analysis

1.  TSGP could increase per-pupil spending by $473.

The version of the Taxpayer Savings Grant Program (TSGP) introduced in 2011 as HB33 read,

Any parent or legal guardian of a school-age child who resides in Texas and is entering kindergarten or attended a public school for all of the academic year prior to their participation in this program ... may receive reimbursement from the state for tuition paid for enrollment of said child at a private school in the amount of actual tuition or sixty percent of the state average per-pupil maintenance and operations expenditure, whichever is less....

State average per-pupil maintenance and operations (M&O) expenditure, according to the Legislative Budget Board, was $8,801 in 2011. The savings grant would be a maximum of 60 percent of that amount, or $5,280. 

Average total per-pupil spending in Texas is $11,567. Total savings to Texas taxpayers would therefore be the difference between total spending and the amount of the grant, or at least $6,287 ($11,567- $5,280) for each child who uses a savings grant to pay tuition at a private school.

The Heartland Institute estimates that approximately 350,000 students would use savings grants to enroll in private schools in the second year of the program. The public funds that would be freed-up to be spent on students who remain in the public schools would equal $6,287 x 350,000 = $2.2 billion, divided by the number of students still in public school (5,000,000 - 350,000 = 4,650,000) = $473 per student.

2. TSGP would increase per-pupil spending by $208 even if the state “keeps” its share of the savings.

If the Texas legislature chose to use its share of the savings to help finance services other than education, the amount freed-up to be spent on students who remain in the public schools would be less, but still considerable.

The state’s share of total savings would be the state average per-pupil maintenance and operations (M&O) expenditure minus the average savings grant ($8,801 - $5,280 = $3,521), times the number of students who would use a savings grant (350,000), or $1.2 billion. Divided by the number of students still in public schools (4,650,000) = $265 per student. 

If the state allocates the savings from the TSGP to non-education purposes, per-pupil spending would increase by total possible savings ($473) minus the state’s share ($265), or $208.

3. TSGP could improve Texas ranking by between 3 and 8 places.

Several research and advocacy organizations rank the 50 states by their per-pupil spending on public school students. These rankings vary considerably based on what they include or exclude from spending estimates. Three such rankings are:

(1) EPE Research Center has produced a ranking of per-pupil spending that is supposedly adjusted for regional cost of living. It ranks Texas 48. Adding $473 would raise the state’s ranking to being tied with Idaho for 43rd place, an improvement of ranking of 5 places.

(2) The US Census Bureau’s “Public Education Finances 2007,” published in 2009, ranked Texas 43rd. Adding $473 would raise the state’s ranking to tied for 35th place, an improvement of ranking of 8 places.

(3) The National Education Association ranked Texas 41st in “revenue per pupil.”Adding $473 would raise the state’s ranking to 38, an improvement of ranking of 3 places.

4. These estimates are conservative, but subject to change.

The Heartland Institute is working with experts in and outside of state government in Texas to more accurately forecast the number of students who would participate in the TSGP and its likely financial impact. So these estimates are subject to change. However, we believe they are conservative estimates based on the following assumptions:

We base enrollment estimates partly on the history of two school choice programs (the Milwaukee Parental Choice Program and the CEO Horizon Edgewater Tuition Voucher Program) that limited participation to low-income families and had other restrictions that the TSGP would not have; and

We assume that every child would qualify for the maximum available grant of $5,280, whereas tuition for private elementary schools in Texas is less than this amount, meaning these children would qualify for smaller grants.

Relaxing these assumptions could increase savings considerably, and thereby increase the funds available to increase spending on students remaining in public schools.

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Sources

All of the following sources are available online at www.heartland.org/ideas/taxpayer-savings-grants:

John Merrifield and Joseph L. Bast, “Budget Impact of the Texas Taxpayers’ Savings Grant Program,” Policy Brief, E.G. West Institute for Effective Schooling and The Heartland Institute, April 2011.

Joseph L. Bast, “Corrections to Fiscal Note for Taxpayers’ Savings Grants Programs,” Policy Brief, The Heartland Institute, June 8, 2011.

Joseph L. Bast, “Making Texas Public Education More Efficient: Taxpayer Savings Grant Program,” Testimony to the Texas Senate Committee on Education, August 24, 2012.

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For more information, contact Joseph Bast, Joy Pullmann, or John Nothdurft, The Heartland Is Institute, at 312/377-4000 or by email at jbast@heartland.org, jpullmann@heartland.org, or jnothdurft@heartland.org.