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School Choice Saves Students and Taxpayer Money

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School Choice Saves Students and Taxpayer Money

January 29, 2014

During National School Choice Week 2014, it is important to set the record straight on school choice programs. Empowering students to choose their own schools is not only academically beneficial, but fiscally valuable for taxpayers and public schools.

The most up-to-date research on the fiscal effects of school choice comes from Benjamin Scafidi, director of the Economics of Education Policy Center. Scafidi published a March 2012 paper with the Friedman Foundation for Educational Choice examining whether it was feasible for schools to reduce their expenditures in the event public schools lost enrollment because of school choice.

Scafidi analyzed the finances of large and small school districts that lost students to schools of choice. He found both types of school districts were able to reduce variable expenses by more than the amount lost. This was true despite Scafidi’s cautious overestimate of fixed expenditures on interest, administration, operations, maintenance, and more. As a result, public schools can boost per pupil spending when other students leave for schools of their choice. The school loses all responsibility for the costs of educating the student, but still retains some of the funding.

The most thorough study of school choice’s fiscal effects was conducted by Susan Aud in 2007. In “Education by the Numbers,” Aud examined the fiscal effects of every school choice program in existence from 1990—2006. All school choice programs produced at least $1 million in savings - except for those designed to be revenue-neutral. She writes, “In nearly every school choice program, the dollar value of the voucher or scholarship is less than or equal to the state’s formula spending per student.” Aud’s findings fall in line with those of Scafidi’s: the state spends less on students when they attend schools of choice, allowing public schools to spend more dollars per pupil.

Most studies of school choice’s fiscal effects occur at the state level, since state spending is most sensitive to student enrollment and school choice programs are implemented most often at the state level.

The Commonwealth Foundation used Pennsylvania government data to examine the fiscal effect of the state’s school choice programs – most notably, charter schools and the Educational Improvement Tax Credit. The results were significant. All combined, students attending schools of their choice in 2009-10 saved Pennsylvania taxpayers $4.3 billion – 15 percent of the state’s General Fund budget. Students at private schools were responsible for 88 percent of the savings, but home-schooled students had the highest savings per student.

Arizona introduced Empowerment Scholarship Accounts in the 2011-12 school year. Originally reserved for special needs children, the program has since been expanded for children in failing schools. The program is groundbreaking in its flexibility for how the account can be used. Money in the accounts, awarded by the state, can be used for tuition, textbooks, tutors, online classes, homeschool materials, and more. Analysis from the Goldwater Institute shows the state saves $12.25 million per year for every 5,000 students who utilize the Empowerment Scholarship Accounts.

A common concern is that school choice programs allow taxpayer money to fund curricula the public opposes. For instance, atheists are concerned that their tax dollars fund non-secular institutions. This view comes from the belief that church and state should be separated. However, students are not required to attend religious schools. Furthermore, some religious institutions benefit from their tax-exempt status in the tax code.

School choice programs allow families to reclaim some of their earnings paid to the government for education and use their tax dollars for greater benefit. Funding should go wherever students want to learn, not to schools they are forced to attend.

Data do not support claims that school choice programs drain resources from public schools. Instead, the evidence shows school choice programs increase per-pupil spending at public schools. When families are allowed to choose the best school for their children, all students and taxpayers win.

Jason Russell is a research associate at Economics21, a center of the Manhattan Institute for Policy Research. You can follow him on Twitter here.

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