Education

Report shows ‘the rich’ get tax subsidies through public schools

May 24, 2024

Ray Carter

Critics of school-choice programs often deride them as tax subsidies for the well-to-do, but a new report examining Arizona finds those families reap a far greater level of taxpayer subsidy by sending their children to public school.

Data in Oklahoma indicate the same thing is true in this state.

“The Anti-ESA Double Standard,” a new report issued by the Goldwater Institute, compares the amount of financial benefit families receive by using that state’s Education Savings Account (ESA) program, which allows families to use a portion of their child’s per-pupil school funding for private school tuition and similar uses, to the amount of taxpayer subsidy provided when families send those same children to a traditional public school run by state and local governments.

Researchers found that Arizona taxpayers “spend 10 to 20 times as much on ‘high income’ families through the public school system as on the universal ESA program, and families pursuing private and homeschool education options in Arizona through the ESA or other means come in large numbers from all income ranges.”

The report notes that over 80 percent of children from higher-income households enroll at taxpayer expense in public schools in both the United States overall and in Arizona, and that Arizona taxpayers spend between 10 and 20 times more money subsidizing public school instruction for children from households earning over $150,000 “than they do on similarly situated families who have joined the ESA program from a private or home-based school under universal expansion.”

The reality that far greater taxpayer subsidies are provided to families sending a child to public school than to those using school-choice programs for private school is not limited to upper-income families.

The report noted that Arizona taxpayers “spend more to educate virtually every single grade school student in the public school system than it would cost to educate that same student in the ESA program.”

The report’s findings were based in part on data from the U.S. Department of Education’s National Center for Education Statistics (NCES), which reported in 2022 that 87 percent of children in households earning between $100,000 and $149,999 attend a public school, as do 80 percent of children in households earning over $150,000. Likewise, among adults in households earning over $200,000, over 75 percent have children in public school.

While a comparable study has not been conducted in Oklahoma, publicly available data suggest the same trends exist here.

Taxpayer Subsidies in Deer Creek, Jenks, Bixby

The state law that created the Oklahoma Parental Choice Tax Credit Act provides refundable tax credits of $5,000 to $7,500 per child to cover the cost of private school tuition.

Families earning up to $75,000 can receive a $7,500 per-child refundable tax credit with the credit provided in two semester installments, while those earning $75,001 to $150,000 get a credit of $7,000 per child.

The tax credit gradually declines as income increases with the final tier providing a $5,000 credit for those earning $250,001 or more.

In Oklahoma’s public-school districts with a high share of upper-income earners, families receive far higher levels of taxpayer subsidy when a child is sent to public school than what they would receive through the Oklahoma Parental Choice Tax Credit program.

In some districts, the taxpayer subsidy for wealthy families who enroll a child in public school is roughly 100 percent greater than the maximum $7,500 benefit provided under the Oklahoma Parental Choice Tax Credit program—and sometimes far more.

According to Oklahoma State Department of Education data, public-school district expenditures in 2023 totaled $9,538,453,992 when student enrollment was 701,066, meaning the per-student expenditure was $13,605 that year, the most recent for which full data is available.

But in individual districts with a larger share of upper-income families, the per-pupil taxpayer subsidy is often even larger.

In 2023, the Deer Creek public school district, a suburb of Oklahoma City, reported having $120,251,985 in revenue. Based on Deer Creek’s reported enrollment of 7,923 students this year, that averages $15,177 in taxpayer subsidy per student.

In 2020, the most recent year for which data are available, the average household income in the Deer Creek district was $140,124, nearly double the statewide average of $72,695. While 59.2 percent of students in Oklahoma are considered economically disadvantaged, just 11.9 percent of Deer Creek students fall into that category and only 2.2 percent of people in the district live below poverty.

The Edmond school district reported $534,880,222 in revenue in 2023. That averages $20,666 per student based on a reported enrollment of 25,881 in the most recent school year.

Average household income in Edmond is 62 percent higher than the statewide average.

Similarly, the Jenks district, a Tulsa suburb, reported having $237,120,256 in revenue in 2020. That averages $18,771 per student based on reported enrollment of 12,632.

Average household income in Jenks is nearly 52 percent higher than the state average, and the share of economically disadvantaged students in the district is roughly half the state norm.

In another Tulsa suburb, the Bixby school district reported having $125,701,343 in total revenue in 2023. That averages $15,589 per student based on the district’s most recent reported enrollment of 8,063.

Average household income in Bixby is 64 percent higher than the statewide average.

In a nutshell, many families choosing to use the Oklahoma Parental Choice Tax Credit program are choosing to forgo significantly higher per-pupil taxpayer subsidies. They often do so because private schools produce better academic results and safer environments despite often having tuition rates far lower than the per-pupil funding available in many Oklahoma public schools.

The Goldwater report notes that school-choice opponents often ignore that reality when arguing against school choice, writing this is a “a major discrepancy in the logic of anti-school choice activists.”

“On one hand, they hold that scholarship assistance for children enrolled in private schooling options is too financially burdensome to the state,” the report notes. “At the same time, however, they hold that taxpayer spending on children from families of identical wealth in the public school system is to be celebrated—if not increased.” (Emphasis in original.)

Many families who have used Oklahoma’s program come from working-class backgrounds and would not have been able to afford private school without the program. As of May 20, children from families with $75,000 in income or less represented 29 percent of beneficiaries of the school-choice tax credit program.

Gov. Kevin Stitt, who noted the tax-credit program made private school a realistic option for “every single working family,” said many of those working-class beneficiaries have personally thanked him for the program’s existence.

“I’ve had police officers and fire(fighters) and moms and dads and single families come to me and just say, ‘Thank you so much, governor. We just got approved for the tax credit. We didn’t think we were going to be able to afford to keep our kid here or to put my first grader in this school, and we just didn’t know how we were going to do it,’” Stitt said.