In March 2018, the Nevada Policy Research Institute (NPRI) released a fiscal analysis of the Nevada Educational Choice Scholarship Program (ECSP), a tax-credit scholarship (TCS) program for low-income students. NPRI found the program saves $1.14 in state education funding in fiscal year 2018 for every dollar in Modified Business Tax revenue lost from scholarship contributions. This could rise to $1.92 as increasingly more families begin to make use of the scholarships.
Under ECSP, the Silver State allows corporations to claim a 100 percent tax credit for donations to state-approved, nonprofit scholarship granting organizations (SGOs), who, in turn, grant private school scholarships to children from Nevada families whose income is at or below 300 percent of the federal poverty level ($73,800 for a family of four in 2017–18). The maximum scholarship amount was $7,934 in 2017–18, and it increases each year in line with the Consumer Price Index. Launched in 2015, 54 percent of Nevada children meet ECSP’s income requirement, and 1,692 scholarships were awarded in 2017–18.
NPRI also found that current participation in ECSP has increased K–12 per-pupil funding by $4, but that this could rise to $27 as more scholarships are awarded. “We further assess that expanding student participation to 25,000 (approx. 5 percent of statewide public school enrollment) could increase available per-pupil funding by as much as $235. An increase in per-pupil funding of this magnitude mimics the effects of an additional $116 million in annual education funding.” [Emphasis included in original.]
The fiscal analysis also concludes the state’s universal education savings account program, which has yet to be funded, could save the state between $1.50 and $2 for every dollar spent financing the program.
NPRI’s analysis is not out of line with other fiscal analyses of TCS programs conducted nationwide. A study released in October 2016 by EdChoice “estimates the fiscal effects” of 10 of the nation’s 21 TCS programs (comprising 93 percent of all awarded scholarships). It found TCS programs have saved “state governments, state and local taxpayers, and school districts” between $1.7 billion and $3.4 billion through 2014. This comes out to between $1,750 and $3,000 saved per student. The savings in the 2013–14 school year alone, the last year available for study, were between $320 million and $580 million.
The EdChoice audit also found the cumulative savings of the programs studied grew every year with the expansion of the programs, with the three largest programs accounting for close to 75 percent of all savings. The savings in the 2013–14 school year alone, the last year available for study, were between $320 million and $580 million.
TCS programs aren’t just fiscally beneficial to states, they also provide strong academic benefits to participating students. A September 2017 Urban Institute study determined the Florida Tax Credit Scholarship Program (FTC), the largest TCS program in the country, has led to significant college enrollment gains for its students. The study compared 10,000 students who participated in FTC at some point in their academic careers between 2004 and 2010 with non-participating peers with similar characteristics. According to the data, FTC participation is associated with a 15 percent increase in college enrollment. Of students who participated in FTC for at least four years, the college enrollment rate was 46 percent higher than their non-FTC peers.
Based on what we know about the educational benefits of school choice programs in general and the cost-saving benefits of TCS programs in particular, it is not out of bounds to say a universal expansion of the ECSP is well-deserved. TCS programs like ECSP allow families to have access to much greater opportunities, helping them to meet the particular education needs of their children.
It is also finally time to fully fund the state’s education savings account program. The goal of public education in Nevada today and in the years to come should be to allow all parents to choose which schools their children attend, require every school to compete for every student who walks through its doors, and make sure every child has the opportunity to attend a quality school.
The following documents provide more information about tax-credit scholarship programs and school choice.
Nevada’s Opportunity Scholarship Program: A Win for Students and Taxpayers
https://www.npri.org/docLib/20180320_OpportunityScholarships.pdf
This Nevada Policy Research Institute study finds the Educational Choice Scholarship Program produces a net savings to taxpayers while simultaneously increasing per-pupil funding for traditional public schools. The savings are derived from the difference between the value of the average scholarship and per-pupil spending levels. The study shows that while the average scholarship costs taxpayers about $4,500 in foregone revenues, the state simultaneously foregoes the burden of educating a student at a cost greater than $9,000 per year with each scholarship awarded. Increasing the number of participating students to 25,000 would produce a net savings to taxpayers greater than $100 million per year, while increasing available per-pupil funding levels by about $235 per public school student.
School Choice Fallacies: Disproving Detractors’ Allegations Against Tax-Credit Scholarship Programs
https://www.edchoice.org/wp-content/uploads/2017/08/2017-7-Tax-Credit-Brief.pdf
This report from Martin Lueken and Michael Shaw at EdChoice examine tax codes to address claims alleged by school choice detractors, such as: Tax-credit scholarship programs lead to “profit,” “double-dipping,” “get-rich schemes,” and “tax shelters” for donors.
The Tax Credit Scholarship Audit: Do Publicly Funded Private School Choice Programs Save Money?
https://www.edchoice.org/wp-content/uploads/2017/03/Tax-Credit-Scholarship-Audit-by-Martin-F.-Lueken-UPDATED.pdf
In this audit, EdChoice Director of Fiscal Policy and Analysis Martin Lueken updates previous work examining the fiscal effects of private school choice programs on state governments, state and local taxpayers, and school districts. Lueken’s report analyzes savings from tax credit scholarship programs, which allow individuals and businesses to reduce their state tax liability by making a private donation to a nonprofit organization that provides scholarships for children to attend private schools of their choice. This audit looks at 10 tax credit scholarship programs operating in seven states between 1997 and 2014. These 10 programs serve 93 percent of all students participating in tax credit scholarship programs nationwide.
The Effects of Statewide Private School Choice on College Enrollment and Graduation: Evidence from the Florida Tax Credit Scholarship Program
https://heartland.org/publications-resources/publications/the-effects-of-statewide-private-school-choice-on-college-enrollment-and-graduation-evidence-from-the-florida-tax-credit-scholarship-program
This study from Urban Institute scholars Matthew Chingos and Daniel Kuehn shows Florida’s Tax Credit Scholarship Program boosted college enrollment for participating students by 15 percent, with students enrolled in the program for four or more years seeing a 46 percent hike.
A Win-Win Solution: The Empirical Evidence on School Choice (Fourth Edition)
http://www.edchoice.org/wp-content/uploads/2016/05/A-Win-Win-Solution-The-Empirical-Evidence-on-School-Choice.pdf
This paper by EdChoice details how a vast body of research shows educational choice programs improve academic outcomes for students and schools, saves taxpayers money, reduces segregation in schools, and improves students’ civic values. This edition brings together a total of 100 empirical studies examining these essential questions in one comprehensive report.
Ten State Solutions to Emerging Issues
https://heartland.org/publications-resources/publications/ten-state-solutions-to-emerging-issues-2018
This Heartland Institute booklet explores solutions to the top public policy issues facing the states in 2018 and beyond in the areas of budget and taxes, education, energy and environment, health care, and constitutional reform. The solutions identified are proven reform ideas that have garnered significant support among the states and with legislators.
Education Savings Accounts: The Future of School Choice Has Arrived
https://heartland.org/publications-resources/publications/education-savings-accounts-the-future-of-school-choice-has-arrived
In this Heartland Policy Brief, Policy Analyst Tim Benson discusses how universal ESA programs offer the most comprehensive range of educational choices to parents; describes the six ESA programs currently in operation; and reviews possible state-level constitutional challenges to ESA programs.
The Public Benefit of Private Schooling: Test Scores Rise When There Is More of It
https://object.cato.org/sites/cato.org/files/pubs/pdf/pa830.pdf
This Policy Analysis from the Cato Institute examines the effect increased access to private schooling has had on international student test scores in 52 countries. The Cato researchers found that a 1 percentage point increase in the share of private school enrollment would lead to moderate increases in students’ math, reading, and science achievement.
2017 Schooling in America: Public Opinion on K–12 Education, Parent Experiences, School Choice, and the Role of the Federal Government
https://www.edchoice.org/wp-content/uploads/2017/11/2017-Schooling-In-America-by-Paul-DiPerna-Michael-Shaw-and-Andrew-D-Catt.pdf
This annual EdChoice survey, conducted in partnership with Braun Research, Inc., measures public opinion and awareness on a range of K–12 education topics, including parents’ schooling preferences, educational choice policies, and the federal government’s role in education. The survey also records response levels, differences, and intensities for citizens located across the country and in a variety of demographic groups.
Nothing in this Research & Commentary is intended to influence the passage of legislation, and it does not necessarily represent the views of The Heartland Institute. For further information on this subject, visit School Reform News, The Heartland Institute’s website, and PolicyBot, Heartland’s free online research database.
The Heartland Institute can send an expert to your state to testify or brief your caucus; host an event in your state; or send you further information on a topic. Please don’t hesitate to contact us if we can be of assistance! If you have any questions or comments, contact John Nothdurft, Heartland’s director of government relations, at [email protected] or 312/377-4000.
Tim Benson joined The Heartland Institute in September 2015 as a policy analyst in the Government Relations Department.
