The Education Savings Account (ESA) Program created by HB 1222 would save the state money because officials at the Department of Finance & Administration have to follow state law

DeAngelis, Corey A.

Trivitt, Julie R.

Wolf, Patrick J.

English

ScholarWorks@UARK

University of Arkansas, FayettevilleScholarWorks@UARKSchool Choice Demonstration Project Education Reform3-1-2017How & Why The Arkansas ParentalEmpowerment For Education Choice Act of 2017(HB 1222) Saves the State MoneyPatrick J. WolfUniversity of Arkansas, Fayetteville, pwolf@uark.eduJulie R. TrivittUniversity of Arkansas, FayettevilleCorey A. DeAngelisUniversity of Arkansas, FayettevilleFollow this and additional works at: https://scholarworks.uark.edu/scdpPart of the Education Policy Commons, Public Policy Commons, and the Social PolicyCommonsThis Report is brought to you for free and open access by the Education Reform at ScholarWorks@UARK. It has been accepted for inclusion in SchoolChoice Demonstration Project by an authorized administrator of ScholarWorks@UARK. For more information, please contact scholar@uark.edu,ccmiddle@uark.edu.Recommended CitationWolf, Patrick J.; Trivitt, Julie R.; and DeAngelis, Corey A., "How & Why The Arkansas Parental Empowerment For Education ChoiceAct of 2017 (HB 1222) Saves the State Money" (2017). School Choice Demonstration Project. 36.https://scholarworks.uark.edu/scdp/36How & Why The Arkansas Parental Empowerment For Education Choice Act of 2017 (HB 1222) Saves the State Money  Dr. Patrick Wolf, Dr. Julie Trivitt & Corey DeAngelis University of Arkansas - Fayetteville  The Education Savings Account (ESA) Program created by HB 1222 would save the state money because officials at the Department of Finance & Administration have to follow state law.  The operation of the current state education funding formulas will automatically result in fiscal savings under all but the most unlikely scenarios, because:   Public school district funds are distributed based on formulas;  The formulas multiply the per-pupil funding amounts established by law times the number of students who were enrolled in the school district the previous year;  Therefore, the first year after a student leaves a public school to use an ESA the state realizes no savings, because the student is still counted as enrolled in public school, but the state also incurs no expense, because the Year 1 ESAs are funded by charitable donations;  Thus the fiscal impact of HB 1222 in its first year must be 0;  The second year after a student leaves a public school to use an ESA the state realizes savings because (1) that student no longer is counted in the public school funding formulas; and (2) the state only has to pay 65 cents in tax credits for every $1 raised for the ESA;  The average student coming off of the public school rolls in the second year relieves the state of $7,584 in education funding obligations but costs the state $4,320 in tax credits, for a net fiscal benefit of $3,264 per student;  Since current private school students do not come off the public school enrollments, those ESA participants cost the state $4,320 from Year 2 on;  The bill mandates that at least 2 current public school students must be served for every 1 current private school student, guaranteeing that twice as many participating students will generate savings for the state as will generate costs;  The result, assuming nearly full participation and a 25% annual program attrition rate, is a state taxpayer benefit of $1.1 million in the second year that will grow in future years.     Year 1 (FY2018) Year 2 (FY2019)  Maximum # Fiscal impact per student Total Fiscal Impact Maximum # Fiscal impact per student Total Fiscal Impact Old public school switchers 0 0 0 750  $       3,264   $2,448,000  New public school switchers 1000 0 0 250  $       3,264   $   816,000  Old Non-public school students 0 0 0 375  $     (4,320) $(1,620,000) New Non-public school students 500 0 0 125  $     (4,320)  $  (540,000)        Totals 1500 0 0 1500   $ 1,104,000   

How & Why The Arkansas Parental Empowerment For Education Choice Act of 2017 (HB 1222) Saves the State Money

UARK (University of Arkansas )

University of Arkansas, Fayetteville ScholarWorks@UARK School Choice Demonstration Project Education Reform 3-1-2017 How & Why The Arkansas Parental Empowerment For Education Choice Act of 2017 (HB 1222) Saves the State Money Patrick J. Wolf University of Arkansas, Fayetteville, pwolf@uark.edu Julie R. Trivitt University of Arkansas, Fayetteville Corey A. DeAngelis University of Arkansas, Fayetteville Follow this and additional works at: https://scholarworks.uark.edu/scdp  Part of the Education Policy Commons, Public Policy Commons, and the Social Policy Commons Citation Wolf, P. J., Trivitt, J. R., & DeAngelis, C. A. (2017). How & Why The Arkansas Parental Empowerment For Education Choice Act of 2017 (HB 1222) Saves the State Money. School Choice Demonstration Project. Retrieved from https://scholarworks.uark.edu/scdp/36 This Report is brought to you for free and open access by the Education Reform at ScholarWorks@UARK. It has been accepted for inclusion in School Choice Demonstration Project by an authorized administrator of ScholarWorks@UARK. For more information, please contact scholar@uark.edu. How & Why The Arkansas Parental Empowerment For Education Choice Act of 2017 (HB 1222) Saves the State Money  Dr. Patrick Wolf, Dr. Julie Trivitt & Corey DeAngelis University of Arkansas - Fayetteville  The Education Savings Account (ESA) Program created by HB 1222 would save the state money because officials at the Department of Finance & Administration have to follow state law.  The operation of the current state education funding formulas will automatically result in fiscal savings under all but the most unlikely scenarios, because:   Public school district funds are distributed based on formulas;  The formulas multiply the per-pupil funding amounts established by law times the number of students who were enrolled in the school district the previous year;  Therefore, the first year after a student leaves a public school to use an ESA the state realizes no savings, because the student is still counted as enrolled in public school, but the state also incurs no expense, because the Year 1 ESAs are funded by charitable donations;  Thus the fiscal impact of HB 1222 in its first year must be 0;  The second year after a student leaves a public school to use an ESA the state realizes savings because (1) that student no longer is counted in the public school funding formulas; and (2) the state only has to pay 65 cents in tax credits for every $1 raised for the ESA;  The average student coming off of the public school rolls in the second year relieves the state of $7,584 in education funding obligations but costs the state $4,320 in tax credits, for a net fiscal benefit of $3,264 per student;  Since current private school students do not come off the public school enrollments, those ESA participants cost the state $4,320 from Year 2 on;  The bill mandates that at least 2 current public school students must be served for every 1 current private school student, guaranteeing that twice as many participating students will generate savings for the state as will generate costs;  The result, assuming nearly full participation and a 25% annual program attrition rate, is a state taxpayer benefit of $1.1 million in the second year that will grow in future years.     Year 1 (FY2018) Year 2 (FY2019)  Maximum # Fiscal impact per student Total Fiscal Impact Maximum # Fiscal impact per student Total Fiscal Impact Old public school switchers 0 0 0 750  $       3,264   $2,448,000  New public school switchers 1000 0 0 250  $       3,264   $   816,000  Old Non-public school students 0 0 0 375  $     (4,320) $(1,620,000) New Non-public school students 500 0 0 125  $     (4,320)  $  (540,000)        Totals 1500 0 0 1500   $ 1,104,000   

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How & Why The Arkansas Parental Empowerment For Education Choice Act of 2017 (HB 1222) Saves the State Money

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