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Education choice generates massive cost savings for taxpayers, according to new study

Education choice generates massive cost savings for taxpayers, according to new study

Kaitlyn Shepherd
January 19, 2022

Policymakers and taxpayers no longer have to wonder whether passing and implementing an education choice program could generate fiscal benefits for citizens. A recent study by Martin F. Lueken, director of the Fiscal Research and Education Center at EdChoice, shows that education choice programs from around the country have generated between $12.4 billion and $28.3 billion in savings for state and local taxpayers.

Lueken’s study, “Fiscal Effects of School Choice: Analyzing the Costs and Savings of Private School Choice Programs in America,” analyzes 40 private education choice programs in operation across 19 states and the District of Columbia. The programs surveyed include three Education Savings Account programs (ESAs), 18 tax-credit scholarship programs, and 19 school voucher programs. Together, these programs saved taxpayers between $3,300 and $7,500 per participating student. 

Implementing education choice programs entails short-term costs for taxpayers because they must pay to implement ESAs and vouchers and the programs disbursing tax credits reduce tax revenue. However, the cost savings that result when students use a choice program instead of the public school system far exceed the costs of program implementation.

In fact, the total cost of 40 choice programs was only 1% of K-12 public education funding. Operating the K-12 public school systems required over $238 billion, while the choice programs cost taxpayers just $2.4 billion.

These massive savings are generated by students who would have attended public schools in the absence of a choice program. On average, the dollar value of a choice program, which typically allocates only a percentage of state spending per student, is less than the cost of educating these students in public schools. Therefore, when students switch to alternative education providers using a choice program, taxpayers spend less money on those students. The value of education choice programs through fiscal year 2018 was approximately $5,000 per student, while the average costs of educating these students in public schools was about $14,000 per student.

For these cost savings to be realized, Lueken estimates that in the short run, at least 50% of students using choice programs would need to switch from public to nonpublic settings. This rate may be as low as 32% for programs that have operated longer. 

It is important to note that cost savings from education choice programs may not be realized immediately, particularly when students who attend private schools are eligible to participate. Students who would have enrolled in nonpublic educational settings represent an added cost because the state does not normally pay to educate them. However, as the program matures and greater numbers of students use it to transfer to alternative education providers, cost savings will increase.

Parents, taxpayers, and policymakers can use this study to arm themselves with the facts and data to debunk myths about education choice programs and encourage the passage of programs that will empower families and save taxpayer dollars, which could be reallocated for other purposes or returned to citizens in the form of tax cuts. Further, policymakers who support families and students can use this data to implement choice programs that accomplish these goals.

Last year was billed as the “Year of Educational Choice,” and with good reason; 19 states passed 32 new or expanded choice programs. While this progress is encouraging, more can be done for students, families, and taxpayers. 

Lawmakers in Idaho have an opportunity to compete with other states to prioritize school choice in 2022, reduce the costs of public education, and ensure that the education system best serves the needs of students and families.

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