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Sunday, April 17, 2011

Check The Facts Before Deciding

Saturday's Rock Hill Herald (and State Newspaper) has a piece from State editor Cindi Ross Scoppe on real costs of the current school choice bill. Having talked with legislators who believe choice saves money, I know it is not a clear issue. I do know there are extra costs to the state of South Carolina that are unknown which go with any choice plan - and I've posted before that the issue we need to decide is what is government's role - should we be able to 'opt out' of any government service?

School 'choice' doesn't come cheap

Last year, horrified Republicans warned that the federal health care law would cost our state nearly $1 billion over a 10-year phase-in. This catastrophic cost would bankrupt us, we were told, so we had to sue the federal government and vote for lawmakers who would stop at nothing to reverse this calamity.
Last week, the state's conservative chief economist said a plan to pay parents to take their children out of public schools would cost our state ... nearly $1 billion over its 13-year phase-in. (The actual projections were $914 million and $832 million.)
Yet, I haven't heard even one of the stop-Obamacare hysterics demanding that we abandon this fiscal folly. Of course the private school plan's backers protest that the numbers from our Republican-controlled government are bogus - which is what they say, quite unconvincingly, every time the state calculates the cost of their tax scheme.
I don't know whether subsidizing a separate and unequal school system will indeed cost nearly as much as extending health coverage to every South Carolinian; there are a lot of assumptions built into both projections.
What is abundantly clear, though, is that the private school-choice plan is not the money-saver that supporters claim.
Nor is it designed to help poor children, as they claim. Nor is it modest. Nor is it typical of what other states are doing.
Instead, it would be one of the most expansive private-choice plans in the nation, second only to the Louisiana program that provides generous vouchers or tax credits to all parents, regardless of income.
According to my review of information from the Foundation for Educational Choice, which touts itself as "Advancing Milton & Rose Friedman's Vision of School Choice for All," most of the 16 states that subsidize private schools have fairly modest programs, providing subsidies only for poor kids, kids in underperforming schools or students with disabilities.
And part of the S.C. bill in a House budget subcommittee and the Senate Education Committee follows that model, by offering income tax credits for donations to private organizations that would give scholarships to poor children.
Under this model, parents whose children receive free or reduced-price lunches or Medicaid would get help to send their children to private schools only if 1) enough people donate money to the scholarship-granting organizations, and 2) their children happen to be granted a scholarship.
Each organization sets the criteria for its scholarships. That's one reason I find the idea of giving vouchers to all poor kids much less objectionable than this faux free-market plan.
Bill Gillespie, our state's chief economist, projects that enough donations would be made to provide scholarships to about 2 percent of eligible students, at a cost to the state of $22 million next year. The cost would climb to $38 million by 2023. We'll save for another day the discussion of how far those $2,400 scholarships would go toward the cost of good private schools, in the unlikely event that good private schools would even accept most poor kids.
What sets the S.C. bill apart from most states with private-school subsidies, and what drives up its cost, is the plan to give tax credits to all parents whose kids don't attend public schools. They'd be worth about $2,400 for private-school parents and $1,000 for home-school parents. (Parents couldn't initially claim the full credit for students already attending private schools or home-schooled, but eventually they could.)
This would make South Carolina only the fifth state to offer tax credits to all parents without regard to their income. The other states' tax credits are worth $250 in Iowa, $500 in Illinois, $1,000 in Minnesota and $5,000 in Louisiana. Unlike the S.C. plan, those tax credits cover any educational expenses, whether students attend public or private schools. Also unlike the S.C. plan, Minnesota offers refundable tax credits, which let parents get money back if their tax bill is less than the credit, and Louisiana provides vouchers for families who don't make enough money to benefit from tax credits, although the tax credits can be claimed for only 50 percent of education costs.
In South Carolina, Dr. Gillespie projects that the nonrefundable tax credit wouldn't be worth enough to families with taxable income of less than $35,000 to lure them out of public schools. (For similar reasons, home-school parents would claim on average less than half their $1,000 tax credit.) He projects that 5 percent of children in families with taxable income of $35,000 to $75,000, 10 percent with incomes of $75,000 to $200,000 and 5 percent with incomes of more than $200,000 would transfer to private schools as a result of the tax credits. Parents who transfer their children to private schools would claim $32 million in tax credits next year, and $53 million by 2023.
By far, the bulk of parents who would benefit from the tax credits are those who would have sent their kids to private schools without the subsidy: Once it's fully phased in, the bill is projected to cover 10,000 poor students receiving scholarships, 12,000 home-school students, 14,000 students who transfer to private schools as a result of the program and a whopping 58,000 who would attend private schools no matter what. Those private-school-regardless parents would claim $149 million of the projected $249 million in tax credits.
There are ways to structure private "choice" programs to target the poor kids whom advocates insist they want to help, but while most states do precisely that, the S.C. proponents are taking the opposite approach: They would guarantee a subsidy to well-off parents, while offering the possibility that some poor children might get indirect subsidies.
But then, who really believed that the goal here was to help poor kids?

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