New ASU Research Report Misleading

Posted on March 25, 2002 | Type: Press Release
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Researcher Tallies Only Costs, Ignores Savings, from Scholarship Tax Credits

 

Phoenix, AZ-The Arizona Republic proclaimed in its lead story Saturday, March 23, that "School tax credits fail poor." But that claim is based on a misleading report released today by the Education Policy Research Unit at Arizona State University.

 

In "The Equity Impact of Arizona's Education Tax Credit Program: A Review of the First Three Years," author Glen Wilson claims that "Arizona's private school tuition tax credit program is expensive and does little to help poor students." Wilson is wrong on both counts.

 

By tallying only costs, and ignoring savings, Wilson presents an incomplete-and hence inaccurate-portrayal of the fiscal impact of the scholarship tax credit. Wilson correctly notes this credit has cost the state an estimated $33 million between 1998 and 2000. Yet, when the scholarships facilitate the transfer of public school students into private schools, the state and local budgets save money. Both figures must be accounted for to arrive at the total fiscal impact.

 

In reality, state and local budgets benefit by the difference between the cost of the scholarships and the roughly $5,000 annual cost of educating a student in the public schools. A thorough fiscal analysis of the tax credit published by the Cato Institute shows that the credit is already revenue neutral, and by 2015 savings could reach $100 million annually.

 

Although only an estimated 20 percent of scholarships have been used to help students transfer into private schools, an estimated 80 percent of scholarships are given to students on the basis of financial need, according to Cato Institute researchers who interviewed Arizona scholarship providers. More than 19,000 scholarships have been granted to date.

 

Therefore, while many scholarships are granted to children who are already enrolled in private schools, those children come from lower-income families struggling to afford tuition payments. Scholarships sometimes assist middle-class children, but research shows scholarship tax credits primarily assist lower-income children.

 

In a new study that will be released March 26, Goldwater Institute Executive Director Darcy Olsen finds that expanding the scholarship credit to businesses could send more than 22,000 disadvantaged students to private schools at an annual savings of $53 million.

 

To learn more about how scholarship tax credits can benefit students and taxpayers, attend the Goldwater Institute's forum, Tuesday, March 26, featuring Darcy Olsen, the Honorable Jon Kyl, Superintendent of Public Instruction Jaime A. Molera, and scholarship recipient Marcia Alexander.  The event will be held 9:00 a.m. at the Goldwater Institute, 500 East Coronado in Phoenix (one block north of McDowell and one block west of 7th Street).

 

For a copy of the new Goldwater study, contact Tom Jenney at tjenney@goldwaterinstitute.org or (602) 744-9611. 

 

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