don't get fooled - tn

Don’t Get Fooled!Defending the Fiscal Savings of School Choice

Presented by Jeff Spalding

OUR FOUNDERS“We have concluded that the achievement of effective parental choice requires an ongoing effort to inform the public about the issues and possible solutions, an effort that is not episodic, linked to particular legislative or ballot initiatives, but that is educational. This Foundation is our contribution to that objective.”

Rose D. FriedmanNoted Economist

1910-2009

Milton FriedmanNobel Laureate

1912-2006

1984-85

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2009-10$0

$2,000,000,000

$4,000,000,000

$6,000,000,000

$8,000,000,000

$10,000,000,000

$12,000,000,000

$14,000,000,000

$16,000,000,000

10%

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13%

$0.0$528,781,767.1

$1,051,853,474.5$1,155,075,273.9

$2,258,287,208.9

$1,197,626,328.5$1,473,059,312.5$1,893,163,402.6$1,600,586,666.7

$1,169,600,533.8

$2,020,278,261.1

$2,984,014,820.4$3,611,234,755.4

$4,114,786,098.9$4,420,300,444.7

$4,789,899,805.7$4,464,915,301.8

$4,120,625,532.4

$5,508,646,975.3

$6,946,809,864.7$7,658,815,771.2

$8,516,855,327.3

$9,956,646,297.9

$11,291,135,690.7

$13,386,233,607.4

$15,710,196,085.412.7%

Add’l Cost of Enrollment Shift to Public SchoolsU.S. Total

School Year

Priv

ate

Scho

ol S

hare

of K

-12

Enro

llmen

t

Private School Enrollment Share

$122 billion cumulative ad-ditional cost for public schools over 25 years

Huffington Post Blog Link: http://www.huffingtonpost.com/jack-jennings/proportion-of-us-students_b_2950948.html

When you pay LESS for something…

…you ALWAYS reduce costs!

It’s pretty simple..

Don’t let NOISE about fixed costs and school formulas obscure the facts, instead…

…be PREPARED to address them!

Opponents claim that school choice siphons money from public schools, but…

…that rhetoric ignores the fact that public schools are RELIEVED of cost burdens when students leave…

…whether they go to a private school or a different public school!

By not acknowledging any cost burden relief, opponents implicitly argue that ALL public school costs are FIXED.

By that logic: Public school costs wouldn’t rise as enrollment grows!

Instead: Opponents are arguing that the relationship between enrollment and operating costs looks like this.

Actually: The relationship between enrollment and operating costs looks like this.

While public schools can (and do) reduce costs as enrollment declines……it’s often not simple and it’s quite understandable why they don’t want to!

Schools do have some costs that are FIXED in the SHORT RUN, but…

…ALL costs are VARIABLE in the LONG RUN!

Any cautious fiscal analysis of school choice will allow for FIXED costs and focus on VARIABLE cost savings.

Fixed vs Variable Costs% Breakdown for Tennessee Public Schools

Share Category

67% Variable Costs – Instruction; Instruction Support; Student Support (e.g. counseling; social service; health; therapy)

24% Semi-Fixed Costs – Administration; Utilities; Maintenance; Transport; etc.

9% Fixed Costs – Construction & Repair; Capital Equipment; Debt Obligations

100% Total Costs per StudentSource: National Center for Education Statistics, U.S. Department of Education

Fixed vs Variable Costsfor $10,000 Total Costs per Student

Amount Category

$6,700 Variable Costs – Instruction; Instruction Support; Student Support (e.g. counseling; social service; health; therapy)

$2,400 Semi-Fixed Costs – Administration; Utilities; Maintenance; Transport; etc.

$900 Fixed Costs – Construction & Repair; Capital Equipment; Debt Obligations

$10,000 Total Costs per Student

If a school’s revenue loss per departing student is LESS than their VARIABLE costs per student, then……arguments about covering FIXED costs are baseless!

Available at: http://www.beacontn.org/tag/saving-education/

False Premise #1:Rising K-12 Spending = No Savings

Opponents will argue: If K-12 spending rises AFTER school choice is implemented, then NO SAVINGS occurred. Growing overall K-12 enrollment Rising funding per student Increasing funding to growing schools while protecting funding of

shrinking schools

Just because savings are re-spent, does NOT mean the money was never saved!

School Funding Formula Effects

School Funding Formula Effects

Most state school funding formulas PROTECT declining enrollment schools…which is EXPENSIVE!• Minimum Guarantees• Enrollment Funding Phase-out• Local Funds De-linked from Enrollment

Such provisions are policy choices, not unavoidable costs!

* Many states could fund a decent voucher program from the monies spent protecting shrinking public schools.

False Premise #2:Not Enrolled = Not Diverted

Opponents will argue: If a voucher student was NOT PREVIOUSLY ENROLLED in a public school, then they were NOT DIVERTED from public school. Miscategorizes students entering K-12 at the bottom end (e.g.

incoming kindergarten students) Assumes low-income families can continue to pay private school

tuition if their voucher is eliminated

Trigger point is when student accepts FIRST voucher

* States MUST track this accurately to estimate the fiscal effects

Baseline Private School Enrollment Share

National: ≈10%Tennessee: ≈7.6%Source: National Center for Education Statistics (NCES), U.S. Department of Education

Whenever someone claims that the share of voucher students NOT DIVERTED from public schools is higher than the state’s baseline……you need to start asking more questions!

Baseline Private School Enrollment ShareReasons why voucher students not diverted public schools might be HIGHER than the baseline suggests:• Families applying for school vouchers are more interested in private

education (selection bias)• More private school options are available in areas where voucher-eligible

students live (supply differential)

Reasons why voucher students not diverted from public schools should be LESS than the baseline suggests:• Income limits on voucher eligibility (a powerful factor)

*You will need to find a cautious consensus for the “private school propensity” of school choice recipients in your state.

School Choice Fiscal Effects Checklist

Average Variable Cost Burden per Student• Adjusted for programs targeting narrower student populations (e.g. geographic; special needs)• Setting variable costs may require some compromise

Average Voucher CostNumber of Voucher Recipients

• Estimating the take-up rate for a new program is difficult…but it’s typically very low

Share of Voucher Recipients Diverted• The most elusive and controversial data point…so err on the side of caution

From these 4 data sets, the UNDERLYING fiscal effect of any school voucher program can be approximated.

School Choice Fiscal Effects Checklist

To calculate a detailed fiscal impact for any school choice proposal requires some modeling with the state school funding formula.

Such calculations will overlay all of the policy choices “baked in” to your existing K-12 school finance laws.

Remember, these policy choices DO NOT change the UNDERLYING fiscal effects!

Available at: http://www.edchoice.org/Research/Reports/The-School-Voucher-Audit--Do-Publicly-Funded-Private-School-Choice-Programs-Save-Money-.

aspx

Final ThoughtsSchool choice is NOT education reform……it’s marketplace reform!

School choice is about more than opening access to existing choices……it’s about EXPANDING the array of choices!

Jeff SpaldingDirector, Fiscal Policy & Analysis

317-681-0745 | jspalding@edchoice.org