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ICFP’s analysis of SB1038 doesn't add up

ICFP’s analysis of SB1038 doesn't add up

Idaho Freedom Foundation staff
February 22, 2023

Editor’s note: This article was written by Martin Leuken, Director of Fiscal Policy and Analysis at EdChoice, in response to a study by the Idaho Center for Fiscal Policy. Republished with permission.

Based on experiences of states that have had choice programs operating for decades, Idaho Center for Fiscal Policy’s analysis does not make sense.

First, educational choice programs have been operating in more than 30 states, many for more than a decade. Participation in choice programs tend to start very small and grow at a slow, steady pace. This generally holds true for both targeted programs and broader eligibility programs.

Many choice programs nationwide are open to both public and nonpublic school students, and many of these programs have expanded eligibility over the years. Overall, these programs start small and grow slowly.

In light of recent events like the Covid pandemic and political battles about education-related topics such as curriculum and parental rights, the popularity of and awareness of choice programs, especially ESAs, has increased. It remains to be seen if interest in participating in these programs rises to the level that ICFP predicts. Based on states’ experiences with current programs, however, ICFP projections are overblown.

In recent years, Arizona, New Hampshire, and West Virginia passed education savings account programs. Arizona’s program is open to all K-12 students. New Hampshire’s program is limited to students below 300% of the federal poverty level. West Virginia’s program is open to almost all K-12 students in the state (93% of all students).

These programs recently enrolled students for the first time. The take-up rates for these programs in AZ, NH, and WV are 2.56%, 5.52%, and 0.68%, respectively. See table below.[1]

Second, it is unlikely that 100% of newly eligible non-public and homeschool students will take up an ESA at any point in the life of the program, let alone in the first year. Based on the experiences of government social assistance programs, it is highly unlikely that all nonpublic school students will participate in the ESA program. Take-up rates for well-known programs that have been around for decades are not 100 percent.

  • The take-up rate for the Temporary Assistance for Needy Families (TANF) in 2016 was 24.9 percent.[2] Its predecessor, the Aid to Families with Dependent Children (AFDC) was established in 1935.
  • The Earned Income Tax Credit was created in 1975. EITC participation in 2005 was 75 percent.[3]
  • The Supplemental Nutrition Assistance Program (SNAP) was preceded by the Food Stamp Program created in 1939. The take-up rate in 2014 was 83 percent.[4]  

Third, many homeschool students will likely not take an ESA. In some states, homeschool organizations even oppose choice programs and do not want to be part of them because of regulations and testing requirements. The same goes for some private schools – they will not accept an ESA for the same reason homeschoolers refuse. Louisiana is an example where most private schools elect not to participate in the state’s voucher program largely because of strong regulations.

Finally, the ICFP’s analysis ignores any potential savings from public school students who switch into the ESA program. Random assignment research on choice programs indicates that, on average, 90% of students who applied to oversubscribed voucher programs and lost a lottery enrolled in public schools.[5] These student “switchers” would help offset the cost of the ESA program because taxpayers would not have to support them in public school systems. Although the programs in these studies are targeted to students with disadvantaged backgrounds, they indicate that even broad choice programs will likely have a portion of participating students who would enroll in public schools without any choice programs in place.

It would be a win for Idaho if the ICFP’s projections become reality, but that’s unrealistic based on what we know about current choice programs. Here are a few plausible explanations why we tend to observe low participation rates:

  • A large portion of families are unaware of school choice programs. Survey work indicates that, when parents were asked why their children did not participate in their state’s education choice programs, 36 to 53 percent of parents with children in public schools in Arizona, Indiana, North Carolina, and Ohio indicated that they were unaware of them. In Indiana, program awareness was lowest among parents with children in district schools and significantly lower among rural district parents than urban district parents.
  • Program design includes low funding levels and limits placed on participation. On average, choice programs receive just one third of the funding that private-school systems receive. Thus, eligible families who desire other options may not be able to access alternative settings at current choice-program funding levels. Moreover, some programs limit participation by capping program enrollment, and most tax-credit scholarship programs cap tax-credit disbursements, which can limit program participation.
  • Families are satisfied with existing options and do not desire change. Public opinion polling indicates that about half of parents would prefer options outside the public-school system if financial costs or transportation were not factors in their decisions. A large disconnect remains between what families want for their children’s education and what they actually receive. We doubt, however, that this fully explains the low take-up rates we observe.

Although it is possible that ICFP’s projections materialize, it will likely require considerably more time and resources than portrayed in the analysis.

Martin Leuken is the Director of Fiscal Policy and Analysis at EdChoice

[1] Table is copied from “Participation in Private Education Choice Programs,” Fiscal Research and Education Center, EdChoice, https://www.edchoice.org/wp-content/uploads/2023/02/Participation-in-Private-Education-Choice-Programs.pdf

[2] Linda Giannarelli (2019). What was the TANF Participation Rate in 2016? Urban Institute, https://www.urban.org/sites/default/files/publication/100521/what_was_the_tanf_participation_rate_in_2016_0.pdf

[3] Dean Plueger (2009). Earned Income Tax Credit Participation Rate for Tax Year 2005, Internal Revenue Service, https://www.irs.gov/pub/irs-soi/09resconeitcpart.pdf

[4] “SNAP participation rates,” USDA Economic Research Service, https://www.ers.usda.gov/topics/food-nutrition-assistance/supplemental-nutrition-assistance-program-snap/charts/snap-participation-rates/

[5] : Martin F. Lueken (2021), The Fiscal Impact of K-12 Educational Choice: Using Random Assignment Studies of Private School Choice Programs to Infer Student Switcher Rates, Journal of School Choice, 15(2), pp. 170-193, https://doi.org/10.1080/15582159.2020.1735863

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