SACRAMENTO – According to Governor Arnold Schwarzenegger, California faces a combined $14 billion budget deficit for this fiscal year and the next. In response, the governor has resorted to conventional remedies such as a 10-percent across-the-board spending cut. He should have remembered his original “blow-up-the-boxes” battle cry and proposed reforms such as school choice, which also save tax dollars.
Research on school-choice programs such as tax-credit scholarships, personal tax credits and deductions, and vouchers have shown significant savings to taxpayers. For instance, a just-released Show-Me Institute study by Dr. Michael Podgursky, one of the nation’s top education economists, examined a proposed tuition tax credit program in Missouri. The study notes that under this proposal, “Missouri taxpayers would receive credits against their state income tax bills for contributions made to scholarship-granting organizations (SGOs) — not-for-profit education groups recognized by the state that provide private-school scholarships to grade-school students who meet eligibility criteria set by the Legislature.” A 2007 bill introduced in the Missouri Legislature would have provided $40 million in annual tax credits to fund scholarships to low-income students in three school districts.
Podgursky found that Missouri would actually save money from the plan if enough students switch from public to private schools, “because the per-student cost of educating those students in public schools is greater than the loss in revenues from the tax credits.” After calculating the fiscal effects under various scenarios, Podgursky concluded: “The cost to the state from such a program would be much lower than the size of the tax credit, and could actually save Missouri taxpayers money.” He estimated that the savings for this limited, targeted proposal to be as much as $17 million. States that have implemented school-choice programs validate Podgursky’s conclusion.
John Hopkins University researcher Susan Aud analyzed nine tax-credit-scholarship and voucher programs in operation between 1990 and 2006. Aud found that all nine programs saved state and local school districts significant amounts of money. For example, Pennsylvania’s tax-credit-scholarships saved $143.6 million; Cleveland’s voucher program saved $61.2 million; and Florida’s voucher for disabled students saved $138.7 million, while its tax-credit-scholarships saved nearly $42 million. In all, Aud found that these nine programs saved taxpayers nearly half a billion dollars from 1990 to 2006.
Aud concluded that these programs “allow students to attend the school of their choice at a lower cost than they would incur in the public system.” The programs she studied are limited and targeted, so the savings would be much larger if the programs were expanded to the general student population. Consider the fiscal impact of a universally available voucher.
The Pacific Research Institute’s recent book Not as Good as You Think: Why the Middle Class Needs School Choice notes that in 2004-05, the state’s contribution to per-pupil funding in California was about $5,600 per student. If vouchers worth $4,000 were available, the per-student savings would be $1,600 for every student who used a voucher to attend a private school instead of a public school. The authors observe that those savings “could be directed toward the transferring student’s school district or the state general fund, if saving money is the primary goal of a state parental-choice program.”
As Hoover Institution fellow Herbert Walberg has recently noted, the best research evidence available has shown that school-choice programs produce better results than the government schools. The added benefit is that they save money as well. That’s a pretty good combination for a state like California, with low student achievement and an out-of-control overspending habit.