A modest schooling reform that would save state taxpayers billions
A recently published school reform study in New York promises timely tax and educational benefits, not just for the Empire State. Some brief background information will help us understand the important implications of the study for Connecticut.
In 2011, Arizona became the first state to introduce an education savings account (ESA). The ESA plans provide an annual budget that can be spent on a variety of accredited options – not just traditional private or parish schools, but also for parents who believe their child is not receiving adequate care from the local public school Tutoring, online academies, special education services, microschools, and so on.
In the years since, Florida, Indiana, Kentucky, Mississippi, Missouri, Nevada, New Hampshire, North Carolina, Tennessee, and West Virginia have followed Arizona with similar programs. A legal challenge from the local teachers’ union has kept the Nevada plan pending, but grateful parents in the other states have used ESAs to teach their children at home or in small groups during the COVID-19 pandemic.
ESAs were originally developed as a classroom reform to provide K-12 children with more learning opportunities. However, since the amount of an educational savings account can be well below the cost per student in a school district, ESAs always had the potential to be a financial plus.
For example, consider the situation in Hartford, where the cost of a public school per student is nearly seven times that of a typical K-8 church school in the same area. The fascinating question in a fiscally troubled state like Connecticut is how much a statewide ESA policy could save all taxpayers.
In 2017, Marty Lueken, director of financial policy and analysis at the EdChoice Foundation, and I took the first steps to find out. The time seemed right when all three of Wall Street’s major credit rating agencies had just downgraded our state’s debt.
The results of our research, published by the Yankee Institute for Public Policy, surprised even us. We found that the net savings for taxpayers would be just over $ 385 million if only 10 percent of Connecticut students received an independent education with an ESA grant of $ 5,000 annually. As it turned out, this was almost exactly the amount of additional revenue for the government at the time. Dannel Malloy had said it was required annually to save Nutmeg State’s teacher retirement plan, which was the fourth weakest in the country at the time.
Of course, someone could always argue that our data was a coincidence for a year or that it was the misleading result of studying the school population of a relatively small state. The question to be answered was whether ESAs could offer the same financial relief if re-examined in a much larger jurisdiction like New Jersey or New York.
Well, now we know. With the support of New Jersey-based E3: Excellent Education for Everyone and the Manhattan Institute, Lueken has just completed the second of two studies: “Fiscal Analysis of an Education Savings Account Program in New Jersey” and “How ESAs Can Promoteal Educational Freedom for New York families and improving state and local finances. ”He calculated how much both the Garden and Empire states could individually save if, as in the Connecticut scenario, only a small percentage of public school students took advantage of an ESA – this time valued at $ 6,500.
It turns out that if only 10 percent of New Jersey students used ESAs, combined local counties would save $ 854 million a year while the state itself would save an additional $ 103 million in school grants. When these numbers are put together, New Jersey is saving nearly a billion a year.
In New York, just one percent of students leaving their districts with an ESA of $ 6,500 could save state taxpayers over a quarter of a billion annually. And since 10 percent of New York students use an ESA, the savings soar to nearly $ 3 billion a year – while families with K-12 children get a vastly expanded educational opportunity.
Improving education in Connecticut will always be a controversial issue, but at least we can abandon the old myth that school choice adds an extra cost to taxpayers and local counties. Offering families more educational opportunities is not a cost factor. It’s a saving – a very big saving.
Lewis M. Andrews is the chairman of the Connecticut Children’s Educational Opportunity Foundation.