« Home | Six ways (and counting) to understate government s... » | New state government growth figures » | Individual income tax changes » | Significant increases in education spending? » | Day 45 - Nearly done » | Day 43 - Responding to former state senator Karl S... » | Day 38 - Differential pay for teachers » | Day 35 - Reducing telephone taxes » | Day 32 - R&D Tax Credit » | Day 31 - Tax Expenditure Report? »

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 However, some elements of HB148 would be repealed, particularly so-called mitigation funds for school districts.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.

Conclusion
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?

One other point about costs:

School districts have argued that they can't reduce costs when they lose one student. However, we are not talking about one student. Vouchers will divert thousands of students to the private sector. This allows districts to spend less than they otherwise would.

A second point about costs:

When students transfer to private schools, the local school district keeps the property taxes that were being spent on that student. Property taxes are not contingent upon enrollment. This means there are more property tax dollars per student for those students that remain.

The principle applies to state income tax dollars as well, but this impact occurs statewide, not just at the local school district level.

OK, one (hopefully) last point:

Voucher opponents have argued that vouchers can only reduce costs if 30 kids from the same grade and same school leave for private schools. This is not true.

Keep in mind a couple of things:
1. As mentioned in the post, districts can deal with enrollment reductions or reduced enrollment growth by adjusting school boundaries, consolidating schools, or simply building fewer (or smaller) schools in growing areas.

2. Enrollment diversions due to vouchers are coupled with diversions due to charter schools and, in declining enrollment areas, diversions due to natural demographic changes.

Interestingly, voucher opponents insist that savings only occur when a group of students from the same grade and same school leave, but schools insist on receiving additional funding or each additional student, not for each additional 30 students in the same grade and in the same school.

So you're telling me that if the education establishment gets it way and HB 148 is repealed, we'll just end up with a better voucher program that doesn't pay districts extra money for losing a student??

That's amazing. Where do I go to sign the petition??

This comment has been removed by the author.

Oh wait, how could I forget...My kid's school has become a signature gathering factory ever since that referendum was filed.

Do you think if I called up the school office they would send a petition home with my kid? That way, I wouldn't have to waste a half hour of my day to drive over to the school and sign it in person. That would be awesome.

And don't you think it's great how our public schools have been turned into political machines? What better way to teach our children about the realities of politics than for them to witness first-hand how easily public employees can take advantage of tax-funded resources to mobilize against any perceived threat to their power structure.

Why waste time reading about politics when you can see it unfold before your very eyes in the teacher's lounge!

All of your figures depend on thousands of students leaving our successful public schools so they can experience private schooling. What evidence do you have to support your contention that this will happen? I put my kid into public school this year and am overjoyed with her progress and experience there. Are there really that many parents who will remove their kids from public school so they can spend a voucher and a significant portion of their own money to pay for private school? I can't imagine that there are...but like you...I don't have any real evidence to back up my contention. The difference is I'm not advocating the gambling of taxpayer money on the success of this dubious program.

Have you done the math to see what happens if only a few hundred students switch? I do hope we end up saving money in the long run but I have my doubts and I don't think vouchers were worthy of Utah Taxpayer's Association support.

Jeremy,

Opponents of charter schools used the same argument. In the first couple of years, only a couple hundred students switched. According to USOE data, there were over 19,000 students in Utah charter schools as of last fall. Charter enrollment would be even higher if the Legislature hadn't imposed a cap on charter enrollment.

Btw, taxpayers pay more for charter school students than they do for students who switch because of voucher.

Now, are charter schools and private schools/vouchers identical? No, of course not. Charter schools are "free". However the high demand for charter schools demonstrates that many parents are not satisifed with the education their children are receiving in their local district school.

Most students, like yours, receive a good eduation in Utah public schools so there won't be an incentive for those to switch. However, many are not. This is not intended as criticism towards public schools. It's unrealistic to expect a given school -- public, private, or charter -- to be the best solution for every student.

There is one other interesting point about your comments. Voucher oppponents have always argued that vouchers would take the best students. However, if most parents are satisfied with the education their children are receiving in public school, the already successful students will stay in public schools and the less successful will be the most likely to transfer. So much for private schools "creaming the crop".

Finally (if you've gotten this far, thanks for reading this), when legislators and policy makers propose a new education program for public schools many people don't ask "will this program work". They just spend the money. Some programs have worked, but obviously many have not. Otherwise 12th grade NAEP scores would not be stagnant over the past couple of decades despite per student spending more than doubling in past thirty years after adjusting for inflation.

That's why we pointed out the worst case scenario. Even if no one switches, the fiscal impact will be a lot less than most of the other education programs (successful as well as failed) that taxpayers have funded over the years.

Post a Comment