A controversial tuition tax credits bill could change now that number crunchers are examining its financial impact, the sponsor hinted Wednesday.

"I think it's appropriate to tailor policy around (the bill's) fiscal impact," said Rep. Jim Ferrin, R-Orem, and sponsor of Substitute HB39. "And we're tailoring it."

Ferrin would not say whether early analyses determined the bill would be too costly.

But that's what a cost analysis for the State Board of Education shows. That analysis, which the board is expected to discuss Friday, indicates the bill would cost the state $16.2 million next fiscal year, and $29.7 million the year after.

And it could be worse, State Associate Superintendent Patrick Ogden said. "All our (numbers) are conservative."

Substitute HB39 would give tax credits between $500 and $3,750 to families choosing private schools. The credits would be scaled based on federal reduced-price school lunch guidelines, and favor lower-income residents.

The idea is to ease costs of educating 145,000 new students by 2013. Giving parents a credit worth less than what the state spends to educate each child is good fiscal policy that empowers them with an array of educational options, supporters say.

The credits would extend to everyone, including families of some 14,000 current private school students. Those families have been left out of past bills because they would cost the state millions. But Ferrin believes the scaled credit would have minimal impact because many of those families probably are too well off to even qualify for credits.

Public school officials have opposed such bills as draining public school dollars (all income tax revenues fund schools and colleges). They also say schools can't downsize staff or close buildings because a few students leave and instead will keep the same overhead with less money to pay it.

Lawmakers last year hired two Utah State University professors to determine whether credits would save, or cost, the state money.

The study found likely savings under a different bill.

But economists recruited by the State Office of Education said the study inflated private school demand, indicating losses were more likely.

The latest State Office of Education analysis on substitute HB39 uses some of the USU professors' methodology, including average tuition costs and the national average demand elasticity (which the USU professors estimated as low but education officials call high), state finance and budgeting specialist Patty Murphy said.

But it put marginal costs below $4,000 per student — less than half the USU professors estimate — because Murphy says adult education, food services, preschool and building costs the professors included "really don't belong there."

The upshot: Next fiscal year, the state would lose about $25 million in tax revenues but save $8.7 million in would-be education costs, for a total loss of $16.2 million, Murphy reported. The following year would result in $40.8 million in lost revenue but an $11.1 million savings, for a total $29.7 million loss.

The substitute bill includes $1.5 million to bail out districts losing money under tuition tax credits.

The legislative fiscal analyst typically seeks education office input on fiscal notes. But fiscal notes on past tuition tax credits bills have not reflected the education office's numbers.

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