Economist says school choice saves money for state, school district budgets

May 29, 2014

Some forms of school choice that would allow tax dollars to follow a child leaving a public school could actually help ease public school budgets.

Writing in this month’s issue of Perspective, economist Benjamin Scafidi notes that not all tax dollars assigned to educating a child would follow that child to another school under school choice programs, such as vouchers or Education Savings Accounts (ESAs).

Dr. Scafidi says his research has shown that “both the large school districts and the small ones were able to reduce a combination of instructional and support expenses at a higher rate than the losses in students.”

ESAs, which were proposed in Oklahoma this year and will be considered again during next year’s legislative session, would allow parents to move a child from a public school and receive a portion of the tax dollars assigned to educate that child for use in enrolling the child in a private school or for other costs associated with educating that child. Scafidi says under most ESA proposals, on average only about 36.6 percent of student funding would actually follow the child, leaving up to 63.4 percent of those dollars with the original school, which would no longer be responsible for educating the departed child.

Under Oklahoma’s school funding system, an average of 47.7 percent of total school dollars comes from the state, apportioned on a per-pupil basis. Some 38.6 percent is derived from local property taxes, while some 13.6 percent of school dollars comes from federal sources.

Under an ESA, the state aid funds apportioned to that child would follow the child, but none of the property tax money would do so unless the family actually moved out of the school district and sold their home. Some of the federal dollars might also be student-specific, but in even the worst case scenario, most schools would retain half or more of the dollars attached to that student.

Even if a school is forced to close a school site due to declining enrollment — something that happens occasionally due to demographic trends — that is hardly a financial disaster. In 2011, for example, Bartlesville Public Schools closed one elementary school site and shifted those students to a second school within the district. They projected one-year savings as $600,000, according to former school board member Charlie Daniels.

We encourage you to read Dr. Scafidi’s entire analysis here.