Publicly funded private school choice programs save taxpayers billions of dollars when students leave government schools, a study reports.
“Depending on the assumptions applied, the 10 programs analyzed in this report generated cumulative net savings worth between $1.7 billion and $3.4 billion from when they were launched to 2014,” the report concludes. “These savings represent between $1,650 and $3,000 per scholarship student. Total cumulative savings from the 10 programs analyzed in this report grew every year as programs have expanded.”
Martin F. Lueken, director of fiscal policy and analysis at EdChoice, analyzed the fiscal impact of 10 tax credit scholarships in seven states, representing 93 percent of all scholarships awarded in tax credit scholarship programs today.
“In general, tax-credit scholarships allow taxpayers to receive full or partial tax credits when they donate to nonprofits that provide students with private school scholarships,” states the report, titled “The Tax-Credit Scholarship Audit: Do Publicly Funded Private School Choice Programs Save Money?”
The study was released in October 2016.
Pennsylvania Is Biggest Winner
Pennsylvania’s Educational Improvement Tax Credit Program (EITC), one of two tax credit scholarship programs in the state, saved taxpayers the most of any of the programs analyzed in the study.
EITC “saved taxpayers between $720 million and more than $1.7 billion dollars, or up to $5,800 per scholarship awarded, between 2002 and 2014,” the report says.
Lueken says one reason states such as Pennsylvania enjoy big savings is because their programs have few restrictions.
“Many factors can affect the level of savings that we observe among programs,” Lueken said. “Generally, what we see is that programs that experience significant savings tend to be substantially less restrictive than others with lower levels of savings, in terms of restrictions placed on program eligibility. And our report shows that these programs generate more savings the longer they exist and the more that they expand. One reason why Pennsylvania, in particular, has realized substantial savings is because the cost of educating students in district schools is very high relative to many other states.”
‘Non-Fiscal Benefits,’ Too
Lueken says school choice programs offer advantages beyond saving money.
“The way that these programs are usually funded, district schools actually end up with more resources on a per-student basis,” Lueken said. “But while there are fiscal benefits to these programs, we shouldn’t lose sight of all the non-fiscal benefits linked to school choice.
“The benefits attached to tax-credit scholarship programs are the same benefits that materialize in many other kinds of school choice programs like voucher programs, ESAs, and charter schools,” wrote Lueken. “A substantial body of rigorous research exists showing that not only do participants in these programs benefit in terms of academic outcomes and instilling civic values, but the students who remain in district schools also benefit when schools compete to educate them. Parents want many different things for their children’s education. A nice thing about private school choice programs is that they increase opportunities for families to find the best matches between their children and the education they receive.”
James Paul, a senior policy analyst at Pennsylvania’s Commonwealth Foundation, says children and their families are the true beneficiaries of school choice.
“I have seen the benefits of Pennsylvania’s tax credit scholarship program firsthand,” Paul said. “The results are impressive. EITC scholarship organizations such as the Joshua Group are changing lives in the City of Harrisburg. Private schools like the Logos Academy in York, which rely on EITC contributions, are providing alternatives to one of the lowest-performing school districts in the state. These scholarship programs play a vital role in increasing opportunity for all children in the commonwealth.”
Barriers to School Choice
Lueken says despite the clear benefits of school choice, many factors stand in the way of expansion.
“Three big reasons are the political challenges surrounding school choice, misinformation, and who has influence over our schools,” Lueken said. “I think a major obstacle is that parents have less influence on K–12 education than other groups, particularly bureaucrats and teacher unions, who have traditionally enjoyed immense political influence over K–12 education. While bureaucrats and unions have incentives to block or limit school choice, we know from our research that parents want more choice and that they are overwhelmingly happy when they are able to choose. We also know that lawmakers listen more to parents than lobbyists or interest groups. The key to expanding school choice is continuing to connect those who want to use choice programs with those who can design them.”
Paul says politics is standing in the way of children gaining access to the schools of their choice.
“The EITC has grown steadily since its enactment in 2001, but there is certainly room to grow,” Paul said. With the EITC “currently capped at $125 million, politics are the only thing stopping Pennsylvania from doubling or tripling the program to serve thousands more students. Critics wrongly claim that EITC ‘drains money’ from public schools. That’s why the report from EdChoice is so important; it dispels a pesky myth and conclusively proves that school choice actually saves taxpayer funds.”
Teresa Mull ([email protected]) is a research fellow in education policy at The Heartland Institute.
Martin F. Lueken, “The Tax-Credit Scholarship Audit: Do Publicly Funded Private School Choice Programs Save Money?” EdChoice, October 2016: https://heartland.org/publications-resources/publications/the-tax-credit-scholarship-audit-do-publicly-funded-private-school-choice-programs-save-money-1