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Day 16 - Voucher fiscal impact

Voucher opponents argue that Rep. Steve Urquhart’s voucher bill (HB 148) is bad policy because the official fiscal impact is about $9 million. Some opponents argue that the fiscal impact would be even higher.

Here’s what they are not telling you
The fiscal analyst’s methodology has one serious omission: when calculating costs to educate students in public schools, the model does not include costs covered by local property tax dollars. The fiscal analyst has always argued that his/her job is to calculate costs and savings to the STATE budget, which excludes property taxes. (However, the legislative fiscal analyst includes local fiscal impacts when a bill is proposed that would cut local taxes).

As a result, the fiscal analyst’s model excludes a very large portion of taxpayer savings when students transfer from public schools to private schools because of vouchers. In FY2005, expenditures from local sources (primarily property taxes) were $2,237 per student. In FY2008, the first year the voucher will be available, the amount will be much higher, probably around $2,500. By understating taxpayer savings by $2,500 per student, the official fiscal note severely overstates the impact of the proposed voucher bill.

We don’t know how many students the fiscal analyst is projecting will switch to private schools because of a voucher. If the amount is 3,600 students or higher, the voucher fiscal note turns positive if the $2,500 savings per student is accounted for.

Are there other problems with the fiscal note methodology? Maybe, but unless we get a chance to look at the model and the assumptions underlying the model, we’ll never know.

But what about fixed costs?
Voucher opponents argue that there will be no savings because education costs are fixed. Let’s start off by acknowledging that fixed costs are not an issue in areas experiencing enrollment growth. There are no fixed costs associated with buildings that have not yet been built, teachers that have not yet been hired, and equipment that has not yet been purchased.

Regarding districts with declining enrollment, we’ll cover that next week.

Once again the Utah Taxpayer is critizing someone else as, "Here's what they are not telling you." It is disappointing to me when the Taxpayer also refuses to tell the whole story. I appreciate their acknowledgement of the fact that the costs and or savings are unknown until it is determined how many students actually leave public schools (switch). What the Taxpayer is "not telling you " is that every year for 13 years an additional group of students becomes eligible for a voucher and over time "switchers" will basically not exist. Using the legislative analyst's estimate, the additional group will cost $3,100,000 each year for the next 13 years. What the Taxpayer is "not telling you" is that the actual eventual fiscal note for this voucher bill approximates or most likely exceeds $50,000,000 and thier argument about potential savings from "switchers" disappears. I continue to find it interesting that a group for "lower taxes and sound tax policy" supports a bill that unnecessarily grows government and contains an automatic $3,100,000 escalator for the next 13 years.

I wonder what else "they are not telling you!"

What Utah Taxpayer is not explaining is how the Utah vouchers are going to be any different then other voucher programs in the nation. All the studies and reports have shown no evidence of the claim that public schools do better off because of "fewer" students.

Here’s what they are not telling you

The fiscal analysis from http://www.sltrib.com/ci_5116988

Based on average family size and income, the average voucher could be roughly $2,000, said Johnathan Ball, the Legislative Fiscal Analyst Office's deputy director who prepared the fiscal note.

Which quality private schools can you go to for only $2,000? Plus factor in the simple economics of vouchers and no child in this state will be able to afford to go to a decent private school on vouchers alone. What we will have is a subsidy for the rich people in this state that don't want their kids hanging out with our kids.

Utah Taxpayer stop advocating bad policy, I thought you were suppose to be looking after our hard earned money not some special interest group experiment.


Vouchers in Florida improve failing public schools
• A 2004 Manhattan Institute study published in the journal Education Next found that low-performing schools facing the threat of vouchers made significantly greater test-score gains than similarly low-performing schools not facing the voucher threat. Schools where vouchers were actually offered showed the biggest improvements, outpacing other Florida schools by a full 15 points.
• A Cornell University study published in the same issue of that journal found that schools given F grades under the A+ system made greater-than-average gains, while F schools under Florida’s earlier system (with no vouchers) made no gains relative to other schools.
• A 2005 Harvard University study confirms that students in failing schools under the A+ program made superior test score gains.

Milwaukee’s voucher program has also improved public schools
• A 2001 Harvard University study found that public schools more exposed to voucher competition had test score gains that outpaced other public schools by 10.2 percentile points in math and 9.3 points in language over three years.
• A 2003 Manhattan Institute study found that fourth grade test score gains were much bigger in schools where more students were eligible for vouchers, such that a school where 100% of students were eligible would have test score gains 15 points higher than a school with only 50% eligible.

Other voucher programs improve public schools
• A 2002 Friedman Foundation study found that under century-old “town tuitioning” voucher programs in Maine and Vermont, public schools closer to tuitioning towns had better test scores. If a town one mile away from a school decided to tuition its students, the percentage of its students passing the state test would increase by 12 percent.
• A 2003 Manhattan Institute study found that a San Antonio school district facing competition from a privately funded voucher program outperformed 85% of Texas districts in its achievement gains.

Anon #1,

You're not telling us how you came up with a $50 million fiscal note. It looks like you are just multiplying the maximum voucher amount times the number of private school children. Of course, that would be inconsistent with the claim that "private schools are for the rich" since the rich won't qualify for $3,000 vouchers.

Are you claiming that there will be ZERO cost savings from current or would-be public students transfering to private schools?


First of all, while the average voucher amount is $2,000, the maximum amount is $3,000.

Second, in addition to vouchers, parents can get scholarships from Children First Utah. Several private schools also offer financial aid.

Third, many private schools have tuition less than $5,000 per year, several even lower than $4,000. Voucher opponents assume that all private schools charge Rowland Hall type tuitions. Most don't.

Fourth, your "simple economics of vouchers" ignores one thing: since the credit is means-tested, most of the benefit goes to low income students. Therefore, private schools will not be able to raise tuitions, certainly not by the amounts you claim, without pricing out existing students who will get no more than $500 (remember, all current private school students, are rich, right?)


You falsely argue that vouchers don't improve performance.

So how do you advocate for additional taxes and spending for education when 12th grade NAEP scores have been flat for the past couple decades despite inflation-adjusted per student spending increases of more than 100% since 1970?

From Anonymous #1

I did claim there is ZERO savings!!! I acknowldeged some savings initially from those leaving public schools.

I apologize for confusing you with addition in arriving at the $50,000,000. The fiscal analyst list the cost in FY 2008 of $9,300,000 and the cost in FY 2009 as $12,400,000. An increase of $3,100,000. The difference between FY 2008 and FY 2009 in that an additional grade level of students now qualify. With 13 grade levels (K-12) you simply add $3,100,000 to $9,300,000 12 times to arrive at $46,500,000. If you assume an increase in the value of the WPU of 5%, you mulitply each of those years by 1.05 and now the fiscal note in 2020 is $67,723,244. Is there something here I do not understand?

Anon #1,

Without seeing the LFA's actual methodology, I don't know if you can take that leap of logic. The $50 million is too high. Here's why.

Currently, there are approximately 16,000 private school students in Utah. If we assume most or all private school students are rich (that's what anti-voucher people tell us), then the cost of giving 100% of these students a $500 voucher would be $8 million. If we add inflation of 3% (assuming the voucher amount increases with inflation) and private school enrollment growth of 2%, the $8 million ends up being $15 million in year 13.

So $15 million in year 13 is the worst case. Then we factor in the students who switch because of the voucher. This is where the savings come in and ultimately reduces the fiscal note from $15 million to some lower number.

The amount of savings depends on the average voucher amount and the number of students. While we can debate how much this would be, whatever it ends up being would be deducted from the $15 million to arrive at the net impact.

“Gains in F-rated schools in Florida have little or nothing to do with vouchers. We have found comparable patterns of gains in the low-performing schools in North Carolina” (without vouchers). Duke University study comparing the performance of low-performing schools in North Carolina and Florida, 2001.

“There is no empirical support for the view that competition enhances the quality of teaching and learning in schools” Duke University Study of vouchers, 2000.

"Low-performing schools in Texas (without vouchers) show achievement gains comparable to similar schools in Florida (with vouchers)." University of Texas study comparing the performance of low-performing schools in Texas and Florida, 2001.

A five-year study done by the University of Wisconsin found that “there is no reliable evidence that voucher students achieved more than comparable public school students. The research of the Milwaukee-based Public Policy Forum found that the voucher program is not causing either public or private schools to improve. (Milwaukee Journal-Sentinel, Jan. 21, 2004)

“76 cents of every tax credit dollar appears to have gone to families whose children were already enrolled in private schools. With 5 cents going to administrative expenses, only about 19 cents went to students who moved from public to private schools.” Arizona State University study of the Arizona tuition tax credit program, March 2002

“Those who already have children in private school are the largest group of beneficiaries of tuition tax credits” National Center for the Study of Privatization in Education, Columbia University, 2001

This paper reviews the economics of tuition tax credits (TTCs). Such tax credits can be described in terms of ‘finance’ and ‘regulation’. There are few economic studies of tax credits, but they stress two questions: (A) What is the loss/gain in revenues to the state? (B) Who benefits? There is some evidence on both these questions, and the evidence in the main points to the following answers: (a) state revenues fall; (b) those who already have children in private schools are the largest group of beneficiaries. This paper also looks at how to evaluate TTCs using a comprehensive framework.


Trying to "out-study" us? Here are some more pro-voucher studies.

Milwaukee’s voucher program improves academic achievement

• A 1998 Harvard random-assignment study found that after four years, Milwaukee voucher students gained 11 points in math and 6 points in reading compared to the control group.
• A 1998 Princeton random-assignment study found that in four years Milwaukee voucher students improved more than the control group by 8 points in math.
• In a 2004 study, Jay Greene of the Manhattan Institute found that in 2003, private schools participating in the Milwaukee voucher program had a graduation rate of 64%, while Milwaukee’s public high schools had a graduation rate of 36%.

Privately funded voucher programs also improve academic achievement

• A 2002 Harvard random-assignment study found that after three years, African-American voucher students in New York improved more than the control group in combined reading and math scores by 9.2 percentile points.
• A 2003 random-assignment study by researchers from Harvard, Columbia and Johns Hopkins found that after only one year in the program New York voucher students improved more than the control group by 4.7 percentile points in math.
• A 2002 Harvard random-assignment study found that after three years, African-American voucher students in Dayton improved more than the control group in combined reading and math scores by 6.5 percentile points.
• A 2001 Manhattan Institute random-assignment study found that after only one year, voucher students in Charlotte improved more than the control group in combined reading and math scores by 6 percentile points.

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