Would HB148 repeal hurt taxpayers?
Question: would repeal of HB148 (education vouchers) harm taxpayers? Maybe, maybe not.
We've always supported means-tested education vouchers because they are a good deal for taxpayers, parents, and students.
- Choice allows parents to find education options that are best suited for their children.
- Competition improves the quality of public schools.
- Diverting a portion of public school enrollment to the private sector at a lower cost than taxpayers would have to spend to educate these children in district schools is a benefit for school districts and taxpayers, including those taxpayers whose children stay in public schools and those who don't have any children.
By promoting a referendum to repeal HB148 (education vouchers), the National Education Association's local affiliate is trying to undo the good work that Gov. Huntsman and the Utah Legislature have done for the taxpayers of the state.
However, even though vouchers are good policy, would a repeal of HB148 be a bad thing for taxpayers? That depends. Repealing HB148 would not repeal vouchers because HB174 supersedes HB148. However, some elements of HB148 would be repealed, particularly so-called mitigation funds for school districts. This would actually make the voucher law better.
Are "mitigation" funds justified?
Vouchers will not financially harm public schools which means so-called "mitigation" funds won't be needed. In FY2008, school districts will be spending about $7,500 per student, including capital and debt service. Nearly all of this cost is variable. That is, as enrollment growth is slowed in growing districts or enrollment decreases in declining districts due to vouchers, district costs would be less than they otherwise would be. Growing districts won't have to hire as many teachers or build as many schools as they otherwise would. Clearly, so-called "fixed costs" are not an issue with growing districts. Instead of spending $7,500 per student, taxpayers would be spending on average about $2,000 per voucher student that is diverted to the private sector.
Declining districts can also reduce so-called fixed costs by shifting school boundaries and/or consolidating schools (which they are already doing). Also, if enrollment declines, districts won't need as many teachers. Don't worry about teachers losing their jobs. The growing districts will make sure that there will be plenty of jobs for teachers, even if enrollment growth in growing districts is slowed due to vouchers.
Bottom line: by diverting students to the private sector at an average cost of $2,000 per student, districts will have more money to spend per student for those students remaining in the public system.
But didn't the legislative fiscal analyst say this would cost $450 million over thirteen years?
The Legislature's projected fiscal impact included only the costs of providing vouchers, but the projection did not include the other half of the equation: the school districts' reduced costs due to diverting enrollment to the private sector. The legislative fiscal analyst admits that there are significant variable costs but did not include these costs in the model.
But what about students already in private schools? Where are the savings for districts when these students get vouchers?
The ultra worst case scenario would be that only existing private school students would use the voucher, and maybe a small amount of switchers on top of that. Under HB148 and HB174, voucher eligibility for existing private school students is phased in over thirteen years. However, even if all current private school students were immediately eligible for the voucher, the fiscal impact would be small.
According to the Utah State Office of Education, there are currently (FY2007) 16,386 students in private schools. Opponents of vouchers have always argued that private school students come from rich families, which means that they would only be eligible for a $500 voucher. Therefore, 16,386 students multiplied by $500 equals $8.2 million. We'll round this up to $9 million to account for the worst case possibility that a handful of public school students switch but not enough students to allow school districts to reduce costs.
In FY2008, Utah school districts will spend at least $4 billion (again, including capital and debt service). A $9 million reduction in revenues would be 0.22% of total costs, and this is the ultra-worst case scenario.
Realistically, thousands of students will switch to the private sector, and the private sector currently has the capacity to increase their enrollment by several thousand students without having to build more facilities. If 3,000 students switch, taxpayers will save about $5,000 per student, or about $15 million in total, which more than offsets the $8.2 million cost of providing all current existing private school students with a $500 voucher.
As demand for private schools increases, the private school supply will also increase. Expanding private school capacity is not difficult, and much of the expansion will come from existing private school providers.
Fiscal conservatives are in a bind. How do we support the repeal of HB148 -- which improves the voucher law by getting rid of the so-called and unnecessary mitigation funds -- without sounding like we oppose vouchers?