Wednesday, January 31, 2018

Revenue Neutral for Who?

During the legislative session last year, expansion of school choice was a topic that was brought up during the General Assembly. However, it didn't get a lot of traction largely because the price tag for implementation was far too expensive, particularly in light of the strain it would place on the state budget. The estimated price tag for expansion: a whopping $260,000,000. That's because students who currently attend non-public schools do not receive the per pupil funding that is based on a blend of property taxes and state aid. The basic premise of the plan would have been to allow students who attend non-public schools to receive a voucher or educational savings account equal or close to the amount of dollars received by the public school student. So to suddenly include non-public students in the formula would have been a very tough hill to climb from a budgetary standpoint. 

A bill establishing Educational Savings Accounts, or vouchers
for non-public schools was introduced in the Senate last week.
Touted as revenue neutral, for local public school districts it
will actually be revenue negative, siphoning funds away
from local public schools.
This year a new idea has emerged that is being touted as revenue neutral. In this bill, vouchers or educational savings accounts are being proposed only for students who currently attend public schools. The claim is made this is revenue neutral due to the fact the students eligible for an educational savings account or voucher are already in the public school system. From the standpoint of the state, no additional funding is needed because those students already receive the state per pupil allocation for attending their public school district. The trouble is, when that student leaves the public school, those funds would travel with them, thus reducing the revenue flowing into the public school. Advocates argue that with the student no longer attending the public school; so goes the expense of educating that student. No big deal, right? To believe expenses can be offset by a per pupil ratio is nonsensical. Let's assume a school district has 22 students that opt to utilize the voucher system. Since 22 is the typical size of an elementary classroom, would it stand to reason the school could reduce one teaching position? I think we all know that is not how it works. The fact is, losing 22 students across the broad spectrum of a K-12 system is unlikely to create a scenario where this kind of budget reduction is going to be popular or even possible. After all, it's just 1.69 students per grade level.

From a state budgetary standpoint it is revenue neutral. From the standpoint of the public school, it is revenue negative. So how revenue negative would it actually be? Well, it depends on how many students we are talking about.

Based on the governor's recommendation of a 1.5% increase to the state cost per pupil for next year, 22 students at Hudson would generate $152,658. By the same token, that 1.5% would generate $56,281 in budget growth. So if this scenario were to play out here, we would be net negative in new revenue approximately $100,000. We would also be in a position where it wouldn't be possible to reduce a teaching position, or in the case of a $100,000 loss in revenue, two teaching positions. While indicating that it is important to give parents a choice, Governor Reynolds also stated in the Des Moines Register Thursday that it's important we have a strong public school system. Creating a system that siphons off revenue from public schools certainly won't do anything to strengthen our public school system. 

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