Tuition tax credits would save Utah more than $5 million in education spending next fiscal year, and more than $2 million the year after, legislative budget crunchers say.
HB271's fiscal impact statement, released Wednesday, estimates the state would save $5.1 million if private schools were to take on the cost of educating 1 percent of the first- through 12th-graders in public schools today.
The fiscal note underscores what tuition tax credit advocates have been saying for years.
"HB271 is going to bring savings to the state and private investment into Utah education," said Royce Van Tassell of Parents for Choice in Education.
The fiscal note is likely to be central to the debate over tuition tax credits, contained in a bill sponsored by Rep. Jim Ferrin, R-Orem. The concept for four consecutive years has polarized Capitol Hill. One side contends the credits would drain public school dollars; the other is sure they'll save the state money and give parents more educational choice.
As in years past, the fiscal note is disputed by the State Office of Education even though it is based on that office's own data.
"It sounds like the difference is going to be in the estimated number of public education students who will transfer to private schools," associate superintendent Patrick Ogden said.
Ferrin's bill would offer two things.
Parents could receive a tax credit worth 50 cents on the dollar spent on private school tuition, with a maximum credit of $2,000. Currently private schoolchildren and next fall's kindergartners would be ineligible.
Also, the bill would give a dollar-for-dollar tax credit to people or businesses donating to a private school scholarship-granting organization (SGO). The scholarships would be made available to low-income families.
No one student could receive more than $3,000 from the tax credit and SGO scholarship combined.
Deputy Legislative Fiscal Analyst Mike Kjar said he used State Office of Education data to figure the bill's financial impact to the state. Data include: the state's average per-student expenditure ($3,157); the average private school tuition ($4,500 for lower grades and $8,000 for upper); and that each family would accept the $2,000 maximum tuition tax credit.
He assumed 1 percent of Utah's first- through 12th-grade students, or 4,536 pupils, would take advantage of the credit in the first year. The second year, he estimated that number would grow by one-half of 1 percent, or about 4,600 students.
The financial premise is this: If the state spends $3,157 to educate a child, but it only has to spend $2,000 to send the child to private school, the state saves $1,157 per child.
In all, tuition tax credits would reduce income tax revenue by just under $9.1 million next year; $2.7 million of it would go out for SGO donations, Kjar said. The loss would be offset by $14.3 million the state no longer has to spend when children go to private schools.
The overall effect: a $5.1 million savings.
The following year, the savings would drop to $2.1 million. The drop is based on the 1,482 new kindergartners private schools accept each year. If those children would already go to private schools, they never would have been counted in public school enrollment, and therefore, never had a per-student expenditure attached to them. So they'll just cost the state money.
Still, Kjar estimates about 4,600 would-be public school students would take the credit, too, keeping the state in the black.
The State Office of Education, however, assumes the public would show far less interest in private schools under the tuition tax credit.
Ogden estimates 3,000 students would take the credit the first year, saving the state just under $2.1 million. But just 51 students would transfer out of public schools the following year, creating a $2.9 million loss.
The enrollment projection is based on national studies on the demand for private education.The bill next will be assigned to a committee for its initial debate.