Virginia Can Improve Schools and Save Money

Issue Brief

With the General Assembly back in session, a major worry will be how to make tough budget-balancing cutbacks without disrupting Virginia’s progress toward raising student achievement in elementary and secondary schools.

A College of William and Mary economist who has done many a cost-benefit analysis in his career, believes there is a simple way the state could do both — save taxpayer bucks while accelerating education reform.

The answer is to provide incentives affording students what the U.S. Supreme Court has called “true private choice,” as opposed to expecting public schools to shoulder the whole load.

Start by looking at a basic set of facts, suggests Professor Carlisle Moody, chairman of W&M’s economics department.

Taxpayers in Virginia spend an average of $6,400 per pupil on public schools around the state. Average private-school tuition in Virginia is $4,500 per pupil.

“If we could somehow entice public schoolchildren into going to private school, we could save $1,900 a year (per pupil). That’s almost $2,000 a year for every kid who somehow found his or her way into private school.,” Moody told a pre-Christmas conference at the Capitol. “If 10 percent of public school kids (116,000 of them) migrated to private schools on 100 percent scholarships, Virginia taxpayers would save $220 million.”

In practice, Moody says, the state would not want to give rich kids a full free ride. So school-choice scholarships should be means-tested. Children from the lowest-income homes would receive the largest scholarships. Under such a system, the average scholarship could be around $3,000. The net savings for the state if about one-tenth of public school students shifted to private schools would be $350 million a year.

The 2003 General Assembly will have before it a proposed tax credit that would generate scholarships for needy or at-risk children to choose private schools or tutors. The prime legislative sponsor is Delegate Kirk Cox, a 19-year teacher at a Richmond area public high school.

Cox’s bill would provide a corporate tax credit to businesses donating money to nonprofit 501(c)3 scholarship-funding organizations (SFOs). The SFOs would award $500 tutorial scholarships or tuition scholarships of up to $5,000 to eligible students. A recipient’s income could not exceed $40,000 for a family of four. In addition, priority would go to students in public schools not rated “fully accredited,” or to students classified as learning disabled or who have failed one or more Standards of Learning tests.

Defenders of the education status quo contend school choice cherry-picks the best students and leaves public schools with the tough to teach. But like school choice programs in Cleveland, Milwaukee, and Florida, Cox’s measure plainly targets students who need help and who might benefit from a change of educational venue. Private schools receiving scholarship students would have to report scores on standardized or SOL reading tests to demonstrate results.

The other main line of attack is that school-choice tax credits “drain money” from public education — an argument likely to be raised all the more loudly as Governor Warner and the General Assembly work to overcome a $1 billion shortfall. However, as the Moody analysis indicates, government actually can save money by easing student transfers to lower-cost private schools. Choice is a drain only if one subscribes to the philosophy that public education and its vested interests, such as the teacher unions, should be all-controlling.

Cox says that he is “a bit puzzled why many of my (public school) colleagues aren’t for school choice.” Choice, he said, “will do nothing but help the public schools.” One example is overcrowding. Last year the state spent $126 million on reducing class sizes. Well, opening private choice to students would reduce class size. It also would lessen the need to build so many expensive new public schools. Current backlogged capital needs in public education are estimated at $6 billion. By utilizing available classrooms in the private sector, choice could reduce that backlog.

School choice works out to be a “benefit/benefit analysis” as opposed to a conventional cost-benefit calculation, Moody argues. “You allow people to go to the schools of their choice, which benefits them, and it saves the taxpayers millions of dollars. It doesn’t cost you anything to allow school choice in Virginia. It benefits us; it does not cost us.”

Granted, it could cost the teacher unions control of those jobs that shifted from the public to private sector. But how could the increased intellectual diversity be anything but a benefit to education?

Robert Holland is a senior fellow at the Lexington Institute.