Research & Commentary: Study: Louisiana Scholarship Program Saves Pelican State Tax Dollars

Published August 26, 2016

A study released in August 2016 by the School Choice Demonstration Project (SCDP) at the University of Arkansas, “Squeezing the Public School Districts: The Fiscal Effects of Eliminating the Louisiana Scholarship Program,” has found the Louisiana Scholarship Program (LSP) – the Pelican State’s voucher program for low-income students that launched in 2008 – is saving the state money, and SCDP says its cancellation would increase costs for four out of five local school districts.

“We conclude that the overall fiscal impact on districts will be negative; in other words, the overall additional variable costs incurred by the districts will be greater than the overall additional funding provided to the districts,” wrote the authors. “In fact, we find that only 2 to 7 of the 69 school districts would benefit from the elimination of the program. For the affected districts, the average outcome would be a financial loss of about $1,500 per returning voucher student in 2016. In each scenario, we find that over 80% of student transfers would result in a financial loss for the local district.”

To be eligible for the LSP, the average of which was worth over $5,800 in the 2015–16 school year, students must come from families earning under 251 percent of the federal poverty level and must have attended a school C-rated or below during the previous school year. Greater than 7,100 Louisiana children took advantage of the program in 121 different schools in the 2015–16 school year, and more than 7,900 are reportedly planning to use the program in 2016–17.

However, due to cuts in state government spending and lackluster returns from empirical research from the National Bureau of Economic Research (NBER) and SCDP itself, funding for the program will drop from the $42 million it received in 2015–16 to only $40.1 million in the fiscal year that started in July 2016.

The authors of the study say 442 students from 34 separate parishes who have already accepted vouchers for the 2016–17 school year will be forced onto a waiting list due to these budget cuts. By wait-listing these students, the state saves itself $2.61 million, but because the state must then have to cover these students in the traditional public school system, the state will have to provide $3.22 million. By reducing funding for LSP by $1.9 million, the state is set to cost itself $600,000.

The random assignment studies of LSP by NBER and SCDP were the first (out of 18 total studies) to find any negative effects on student achievement from school choice programs. However, the results were not entirely negative. The SCDP study, which looked at only the first two years of LSP after its statewide expansion in 2012, showed improvements in the program during the second year. Another SCDP study also found LSP was having positive effects on desegregation throughout Louisiana. Yet another SCDP study found Louisiana public schools “most affected by the competitive threat” caused by LSP were also most likely to see the benefits of competition between schools.

While the effectiveness of LSP has so far not been terribly impressive, the overwhelming majority of the gold-standard research on school choice programs shows they produce positive achievement outcomes for the students fortunate enough to be have access to them.

“It would be premature to proclaim the Louisiana program an educational market failure based on these initial data,” wrote EdChoice, formerly the Friedman Foundation for Educational Choice, “particularly given that researchers have yet to untangle the reasons for these findings, and it may turn out that some or all of the causes can be remedied. … It’s simply unreasonable to point to them as evidence that school choice doesn’t work when, in fact, a much larger body of other evidence suggests that it works in many other places.”

Based on what we know about the educational benefits of school choice programs in general and the cost-saving integrationist benefits of LSP, it is not out of bounds to say LSP deserves a return to full funding from Louisiana legislators in the 2017 legislative session.

The following documents provide more information on education choice programs.

Squeezing the Public School Districts: The Fiscal Effects of Eliminating the Louisiana Scholarship Program
This paper from the School Choice Demonstration Project at the University of Arkansas finds the beleaguered Louisiana Scholarship Program, a voucher program for low-income students in poor schools, is saving the state money and its cancellation would increase costs for more than four out of five local school districts.

Ten Principles of School Choice
Since the U.S. Supreme Court ruled in 2002 school vouchers are constitutional, grassroots activists around the country have been organizing to support the creation of school choice programs. Legislatures passed statewide programs in Colorado and Florida, and other states are expected to follow their lead. At least 35 cities have privately funded voucher programs. This booklet from The Heartland Institute provides policymakers and civic and business leaders with a highly condensed and easy-to-read guide to the debate. It presents the 10 most important principles of the school choice movement, explaining each principle in plain and precise language. It also contains an extensive bibliography for further research, including many links to documents available on the Internet, and a directory of the websites of national organizations that support school choice.

A Win-Win Solution: The Empirical Evidence on School Choice (Fourth Edition)
This paper by the Friedman Foundation for Educational Choice 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.

The ABCs of School Choice – 2016 Edition—2016-edition?source=policybot
The ABCs of School Choice, produced by the Friedman Foundation for Educational Choice, is a comprehensive, data-rich guide to every private school choice program in America. This annually updated publication may not reflect developments past January 25, 2016.

Taking Credit for Education: How to Fund Education Savings Accounts Through Tax Credits
This paper from the Cato Institute explains how legislators can design an education savings account (ESA) program that is privately funded through tax-credit-eligible contributions from taxpayers, which is similar to models used in many tax-credit scholarship programs around the country. Tax-credit-funded ESAs would empower families with more educational options while enhancing accountability and refraining from coercing anyone into supporting ideas they oppose. Because they are funded through voluntary contributions rather than public funds, tax-credit scholarships have a perfect record of constitutionality at the U.S. Supreme Court and at every state supreme court that has considered the issue. In states that have adopted a Blaine amendment, tax-credit ESAs could be a lifeline to families in need.

Pursuing Innovation: How Can Education Choice Transform K–12 Education in the U.S.?
This report by the Friedman Foundation for Educational Choice summarizes the state of competition in U.S. K–12 education. It pays particular attention to the prevalence and market penetration of charter schools, private school vouchers, and tax-credit scholarships. The effect of competition from charters, vouchers, and tax-credit scholarships on the performance of traditional district schools and education funding is examined using a survey of recent high-quality research on that topic. These summaries and analyses suggest enhancing educational competition using school choice programs would likely improve the productivity of district schools, subject to the effective design of school choice policies.

The Legal Landscape of Parental-Choice Policy
The U.S. Supreme Court decision in Zelman v. Simmons-Harris cleared away the most significant obstacle to the expansion of private school choice programs by ruling the First Amendment’s Establishment Clause does not preclude faith-based schools from participating in private school choice programs. These programs raise other important legal questions, which fall into four categories: the scope of students’ rights to an education and parents’ rights to choose their children’s schools; state constitutional obstacles to private school choice; the effect of laws governing racial integration and the inclusion of disabled students; and the religious liberty implications of faith-based schools participating in such programs. The American Enterprise Institute (AEI) writes the lack of clarity on these questions poses challenges, but AEI also says these questions create opportunities for proponents of private school choice to scale up existing programs and expand program options.

The Fiscal Effects of School Choice Programs on Public School Districts
In the first-ever study of public school districts’ fixed costs in every state and Washington, DC, Benjamin Scafidi concludes approximately 36 percent of school district spending cannot be quickly reduced when students leave. The remaining 64 percent, or approximately $8,000 per student on average, are variable costs, changing directly with student enrollment. This means a school choice program attaching less than $8,000 to each child who leaves a public school for a private school actually leaves the district with more money to spend on each remaining child. In the long run, Scafidi notes, all local district spending is variable, meaning all funds could be attached to individual children over time without creating fiscal problems for government schools.

How School Choice Programs Can Save Money 
This Heritage Foundation study of the fiscal impact of voucher programs notes Washington, DC vouchers cost only 60 percent of what the city spends per pupil in government schools. The study estimates if the states with the top eight education expenditures per pupil adopted voucher programs similar to the Washington, DC program, they could save a combined $2.6 billion per year.

The Effects of School Vouchers on College Enrollment: Experimental Evidence from New York City
In an experimental Brookings Institution study examining the long-term outcomes of school voucher programs, Matthew M. Chingos and Paul E. Peterson found the percentage of African-American students who enrolled part-time or full-time in college by 2011 was 24 percent higher for those who had won a school voucher lottery while in elementary school and used the voucher to attend a private school.


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