School choice can help ease Georgia’s looming fiscal issues

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By Marty Lueken and Benjamin Scafidi

The COVID-19 recession is leading to sharp reductions in tax revenues. State and local governments need to conserve funds for urgent priorities – aid to the unemployed, hungry and sick – in addition to longstanding priorities like education, public safety, transportation and the environment.

The recession also is making it tougher for many families to afford tuition at private K-12 schools, and many will not be able to stay; private school enrollments in Georgia fell by over 12% during the economic downturn between 2007 and 2011.

If those private school students have to go back to the public school system – or to a public school for the first time – it will further magnify the fiscal challenges facing state and local governments as a result of the pandemic.

What would a significant migration of private school students to public schools in Georgia look like? More than 166,000 students in Georgia are enrolled in private schools today. Two years ago, public school districts in Georgia received from taxpayers, on average, about $12,800 per student. Of this amount, almost $11,500 in revenue per student comes from state and local taxpayers, with the state bearing around $5,700 of the cost.

Consider if private school enrollment drops by 10%, or roughly 17,000 students – a plausible estimate, given the severity of the current economic downturn and the experience in 2007-2011. The cost to Georgia taxpayers to absorb these children back into the public system and hold the level of services constant is cautiously estimated to be $142 million, plus recent increases in public school spending.

Given that state leaders already are preparing for significantly reduced revenue and a strained economic recovery post-pandemic, this additional cost is staggering.

If the Georgia Legislature does nothing, state and local taxpayers will be on the hook for at least $142 million to educate 17,000 more children in public schools in upcoming years, in addition to all the increased needs of unemployed Georgians.

But there is a clear way to significantly lower this fiscal cost. Private schools can serve as a release valve to budgetary pressures for governments because they are able to educate students for less than the per-pupil cost in public schools. Policies that expand educational options for families will lessen the fiscal burden on Georgia taxpayers, especially during challenging financial times like these.

The easiest way to keep private school students in private schools – and to save state and local taxpayers additional costs – would be to expand the state’s current tax credit scholarship program by $85 million. That would provide the equivalent of $5,000 scholarships for 17,000 children.

The authors have separately conducted fiscal analyses of Georgia’s tax credit scholarship program. The findings: The program already saves both state and local taxpayers money. The cost of $5,000 scholarships is lower than the $5,700 state taxpayers have been paying to educate students in public schools. Those savings add up.

If the goal is to save taxpayers money, it comes down to easy math: $85 million to expand school choice will cost taxpayers far less than the $142 million it would take to absorb those students back into Georgia’s public school system.

[This commentary was written for the Georgia Public Policy Foundation by Martin Lueken, director of fiscal policy and analysis with EdChoice, and Benjamin Scafidi, a Friedman Fellow with EdChoice, a Senior Fellow with the Georgia Public Policy Foundation, and a professor of economics at Kennesaw State University. The Georgia Public Policy Foundation is a trusted, independent resource for voters and elected officials. Established in 1991, the Foundation provides actionable solutions to real-life problems by bringing people together.]

2 COMMENTS

  1. I understand the policy position, and take no personal position on it presently, but I am concerned with the way you present some numbers. Specifically, you compare the increased costs of the scholarships – $85 million- to the increased cost of all those students in public schools- $142 million. But– the 142M represents the total theorized new costs of the new students to state and local sources, while the 85M represents the lost revenue to the state. You are therefore comparing state-level figures against state-plus-local figures. What is then omitted is the true theoretical savings in by the state ($700 per student X 17,000 students = $11.9M) The remainder (142M- 11.9M = 130.1M) may arguably be saved by local governments in their totality, and that may be its own incentive. However, state-level numbers should be compared with state-level numbers.
    Also omitted is the increased administrative costs that could come with program expansion. That may not amount to much, but as with any program, there will be a cost with necessary administration, and full disclosure compels at least a mention. Also omitted: a link to your existing research, which would be helpful, especially as it may address some of the questions I raise.
    Thanks for the article.