In 2014, we calculated the cumulative savings generated by America’s K–12 school voucher programs over two decades. This year, we continued that study by doing the same for seven states’ tax-credit scholarship programs, which cover 93 percent of total scholarships awarded to date. These types of school choice programs differ from school vouchers in how they’re funded, however. Flip through this Slideshare to learn how tax-credit scholarships are different from school vouchers and what the fiscal effects of these programs have been for state governments, school districts and taxpayers. For the full Tax-Credit Scholarship Audit report, visit http://www.edchoice.org/ScholarshipAudit.

1. THE TAX-CREDIT
SCHOLARSHIP
AUDIT
edchoice.org/ScholarshipAudit
BREAKING DOWN

2. EDCHOICE.ORG
School choice advocates have always
used the savings potential of choice
programs as a positive selling
point for policymakers.

3. EDCHOICE.ORG
Since the creation of the first
modern school choice program in
1990, 30 empirical studies have
examined the fiscal impact of
school choice on taxpayers.

4. EDCHOICE.ORG
Of those studies, 27 find school
choice programs save money.
SAVE MONEY

5. EDCHOICE.ORG
Three find the programs they
studied were revenue neutral.
SAVE MONEY NEUTRAL

6. EDCHOICE.ORG
No empirical study ever
conducted has ever shown
negative fiscal effects.
SAVE MONEY NEUTRAL LOSE MONEY
ZERO

7. EDCHOICE.ORG
But still, that wealth of evidence hasn’t
stopped school choice critics from
claiming otherwise.
...in many states, including Pennsylvania and South Carolina, the wealthy
can reap millions, while public schools continue to face deep cuts.
The research on Neovouchers says, A) They don’t save states money and B)
They don’t increase achievement.
These and other state tax subsidies collectively funnel more than $1 billion
in public funding toward private schools every year.
- Randi Weingarten, AFT
- Professor, California State Sacramento
- ITEP

8. EDCHOICE.ORG
They say, simplistically, that school
choice drains money from the public
school system.

9. EDCHOICE.ORG
Context is helpful for
evaluating such claims.

10. EDCHOICE.ORG
For all the controversy around school choice programs, the reality
is that their costs amount to drops in a bucket when compared
with states’ budgets for K–12 education.
AZ FL GA IA IN PA RI
$30,000
$25,000
$20,000
$15,000
$10,000
$5,000
0
Total Tax Support in SY 2014 Total Revenue, All Sources
Millions
$121M
Total Tax Support as Percent of State’s Total K–12 Educational Costs, SY 2014
$286M $58M $12M $7M $68M $2M
$2,289M
$27,647M
$12,150M
$6,195M
$17,818M
$26,073M
$8,294M
1.5% of
Total
Revenue( )
1.1% of
Total
Revenue( ) 0.3% of
Total
Revenue( )
0.2% of
Total
Revenue( )
0.1% of
Total
Revenue( )
0.2% of
Total
Revenue( )
0.1% of
Total
Revenue( )

11. EDCHOICE.ORG
But that rhetoric
obscures an important
fact: A public school
is also relieved of
costs for any student
switching to private
school.
$
$ $ $
$ $
Variable
Cost Savings

12. EDCHOICE.ORG
By not acknowledging such
variable cost savings, opponents
implicitly argue that all public
school costs are fixed.

13. EDCHOICE.ORG
By that logic: If
there were no
savings when a
public school’s
enrollment
declines…
NO CHANGE
IN COST

14. EDCHOICE.ORG
…then when
public schools
take on more
students, their
costs wouldn’t
increase either.
NO CHANGE
IN COST

15. EDCHOICE.ORG
Of course, that is
not the case.

16. EDCHOICE.ORG
Indeed, school officials will
argue in front of their state’s
appropriations committee
for more funding when their
enrollment increases.

17. EDCHOICE.ORG
The truth is, the reduction in a school district’s funds
when kids leave using school choice programs is usually
similar to the reduction in that school district’s funds
when kids move from one public school district to another.
OLD DISTRICT
NEW DISTRICT
PUBLIC SCHOOL
PRIVATE SCHOOL
CHANGE
IN FUNDS( ) CHANGE
IN FUNDS( )

18. EDCHOICE.ORG
Also, when school
choice students
leave their district,
that district keeps
federal and local
funds.
FEDERAL
LOCAL
(No Change)
FEDERAL
LOCAL
$
$
$
$

19. EDCHOICE.ORG
Colleges and
universities do
not keep any
funds—public
or private—when
students transfer.
PELL
GRANTS
PELL
GRANTS
TUITION
REVENUE
TUITION
REVENUE
STATE
APPROPRIATIONS
STATE
APPROPRIATIONS
$
$
$
$
$
$

20. EDCHOICE.ORG
You read that right.

21. EDCHOICE.ORG
Public K–12 education is the only
known enterprise in American
society where service providers keep
a portion of people’s money even
after those people have determined
they no longer want those services.

22. EDCHOICE.ORG
Whether school choice critics want
to admit it or not…

23. EDCHOICE.ORG
School choice programs
save money.

24. EDCHOICE.ORG
But how much?

25. EDCHOICE.ORG
In 2014, we estimated the cumulative
savings generated by America’s school
voucher programs over two decades.
Source: www.edchoice.org/research/the-school-voucher-audit
$1.76 BILLION

26. EDCHOICE.ORG
This year, we continued that analysis
by doing the same for seven states’
tax-credit scholarship programs,
which cover 93 percent of total
scholarships awarded to date.
1.2 MILLION
SCHOLARSHIPS

27. EDCHOICE.ORG
These types of school choice programs
differ from school vouchers in
how they’re funded.

28. EDCHOICE.ORG
Tax-credit scholarships programs
allow individuals and businesses
to reduce their state tax liability
by making a private donation to a
nonprofit organization that provides
students scholarships to attend
private schools of their choice.

29. EDCHOICE.ORG
For a tax-credit scholarship program to
result in savings, this must be true:
DISTRICTS'
VARIABLE
SPENDING PER
STUDENT
NET
SAVINGS
PER STUDENT
DISTRICTS'
TAX REVENUE
LOST PER
STUDENT( () )>

30. EDCHOICE.ORG
There are two other factors we took into
account, which are explained in more
detail in the report:
The proportion of scholarship students who switched
(or were likely to switch) out of public schools vs. those
who already were in (or were likely to attend) private
schools even without the assistance of the scholarship
Some programs allow students to receive
multiple scholarships.

31. EDCHOICE.ORG
To determine a tax-credit scholarship
program’s net fiscal impact, use the
following equation:
Net Fiscal Impact = (p x C x E) - (t x E)
p = percentage of scholarships given to public-to-private school switchers
C = average variable cost to educate a student in public school
E = total number of program participants
t = average amount of tax credits awarded per program participant
So (p x C x E) represents the total savings to the state and
districts because students left public schools, and (t x E)
represents the total cost to operate the program.

32. EDCHOICE.ORG
We did the math.

33. EDCHOICE.ORG
Our low-end estimate* reveals students
have saved states and districts
$1.7 billion, or $1,647 per student,
using tax-credit scholarships to
attend private schools.
*assuming a very conservative 25 percent of scholarships
went to multi-scholarship students and a fixed 60 percent of
recipients were public-to-private switchers

34. EDCHOICE.ORG
Yep, that’s the low end.

35. EDCHOICE.ORG
The high-end estimate* shows tax-credit
scholarships have saved $3.4 billion, or
$2,974 per student.
*assuming 10 percent of scholarships went to
multi-scholarship students and state-specific rates for
public-to-private switchers

36. EDCHOICE.ORG
These savings are most commonly
captured by either the public school
districts or the state treasury, which can
use them to do any number of things:
invest in other priorities such as law enforcement
or healthcare,
reinvest in public schools,
build reserves, and/or
lower taxes.
lower total state spending,

37. EDCHOICE.ORG
But what actually happens to those
savings is anyone’s guess.

38. EDCHOICE.ORG
State governments don’t do
much, if anything, to track
where those savings go.

39. EDCHOICE.ORG
But that doesn’t mean that
savings aren’t there.

40. Wondering about your state’s education
spending? Check out individual program
breakdowns and more in the full report at
EDCHOICE.ORG/ScholarshipAudit
To contact the author,
EdChoice's Director of Fiscal Policy and Analysis
Marty Lueken, email marty@edchoice.org.