Day 22 - Finally!
Last Friday, the Utah House of Representatives finally passed a broad-based voucher bill (HB148). Fortunately, the House did not buy the doom and gloom that voucher opponents were preaching. The Senate will pass HB148 sometime within the next week or so, and Governor Huntsman will sign the bill. Then the UEA or one of their designees will challenge the law in court. Once the Utah Supreme Court approves the law, there will most likely be an attempt within the state education apparatus to obstruct the law’s implementation. The battle for education reform is never ending, but taxpayers made significant progress last week.
As the intensity of the voucher debate fades, we’ll be spending less time on this issue. We’ve already addressed several of the issues that voucher opponents have cited:
- fairness for taxpayers without children
- alleged subsidies for private schools
- so-called fixed costs and fiscal impact of vouchers on public education
We briefly address a couple more objections.
Will private schools raise tuition?
Voucher opponents have argued that private schools will raise tuition by thousands of dollars because the average voucher amount will be about $2,000.
This argument is flawed because the largest voucher amounts will go to the poorest students while the smallest voucher amounts ($500) will go to students from higher income families. According to voucher opponents’ arguments, current private school students come from high income families. Therefore, private schools will have minimal opportunity to raise tuition since the existing private school client base will be eligible for vouchers of small amounts. If private schools raise tuitions by thousands of dollars, they will price out existing customers and some of the low income students receiving vouchers and other forms of financial assistance.
Moreover, if voucher opponents are correct, they should also be arguing that elimination of Pell Grants will cause universities to lower tuition.
What about vouchers for other government services?
Voucher opponents argue that vouchers are bad policy because home owners do not have the opportunity to opt out of paying taxes to the local police department if they buy their own security system nor do they have to option of choosing which fire department will respond if their house catches fire.
As we’ve noted previously, some government services are not easily “voucherized” or suited for choice and competition, just as some private sector endeavors like electricity and natural gas distribution are not suited for competition. Diverting public school enrollment to the private sector at less than half the cost of educating those students in the public sector without harming those who remain in the public school system clearly benefits taxpayers. If someone figures out a way of diverting existing customers of government public safety services to the private sector while saving tax dollars and benefiting those that continue to receive government public safety services, we’ll support that also. However, just because choice and competition are not practical in some areas of government services, does not mean it is not practical in K-12 education.
Some additional comments on the fiscal impact
We’ve already commented on the fiscal impact of vouchers, but we would like to add a few more observations.
The absolute worst case fiscal scenario would be that only current private school students would use the voucher and no existing or future public school students would switch to private schools because of the voucher. Since all existing private school students come from high income families – that’s what voucher opponents tell us – existing private school students would receive a $500 voucher per student. Since there are about 16,000 private school students in Utah (plus or minus a couple hundred), the worst case fiscal impact would be about $8 million, and that assumes that ALL current private school students would be eligible for vouchers in year one.
In FY2008, Utah public schools will be spending more than $4 billion, and that includes capital and debt service that are excluded in most media reports on public education. Therefore, even in the worst case scenario, the voucher impact would be 0.2% of total spending.
Of course, this is the worst case scenario, and it’s an unrealistic scenario. The actual fiscal impact will be much less than the $8 million. In fact, if enough low income students use a voucher, the fiscal impact will be positive. For example, if a student switches to a private school because of a $3,000 voucher, taxpayers save more than $3,300 because the state spends more than $6,300 per student (FY2005) to educate students in public schools. In FY2008, the per student amount -- including capital and debt service -- will be more than $7,000, which means the savings would be at least $4,000.
If 2,000 students receive vouchers of $3,000 each, the savings to taxpayers in FY08 would be $8 million, which offsets the $8 million impact of current private school students receiving vouchers.
But are there really any savings if education costs are fixed?
Education costs are not fixed. In growing areas, additional schools have to be built, additional teachers need to be hired, and new equipment needs to be purchased. There are no capital or operating fixed costs associated with schools that haven't been built yet. Diverting a portion of enrollment growth to the private sector at a lower cost per student saves tax dollars.
Education costs are not fixed in areas with declining enrollment either. In recent years, enrollment and enrollment-related funding have shifted from districts like Salt Lake, Granite, Murray, and Provo and shifted to districts like Alpine, Nebo, and Tooele. Have these growing districts "harmed" declining enrollment districts? No, in fact we'll present data that show
- declining enrollment districts spend more on instruction per student than growing districts (even after adjusting for poverty-driven federal dollars)
- instructional spending per student has grown at similar rates in declining enrollment districts as in growing enrollment districts
- growing districts have had much higher property tax increases than declining enrollment districts.