Last Wednesday, the Arizona Republic ran a complex story with an unfortunately oversimplified headline: Tuition tax credits drain state money. The headline is all the more unfortunate given the fact that by the Republic reporter's own estimation the program results in a $3 million savings to taxpayers. I wish someone would "drain" my bank account in a similar fashion.
While the headline left something to be desired, the reporter made a serious effort to bean count the individual and corporate tuition tax credit programs. The corporate tax credit, which is only eligible for students switching from public to private schools, was designed to generate savings, and obviously does so. The individual credit does not have the same eligibility requirements, and thus is a good deal more complex.
For starters, there are varying estimates of private school attendance in Arizona. Republic reporter Robert Hansen's estimation technique is highly dependent on this. The Arizona Private School Directory lists more than 3,000 more private school students than the National Center for Education statistics Hansen used in his research. It would not shock me if they both underestimate the true number, which would generate larger savings.
Second, there are more than 100,000 students attending Arizona charter schools. In the absence of the tax credit program, there would have been a substantial overall decline in private school enrollment. Whether those kids went to charter or district schools, they would have cost taxpayers money. More to the point, they will have led the Republic to seriously underestimate the number of private school children who would otherwise be attending public schools without the tax credit program.
If private school choice opponents are scandalized by the thought that the credit might cost the state money, I'd like to call their bluff. Arizona lawmakers can create a personal-use tax credit for students switching from a public to a private schools (i.e. if my kid switches from a public to a private school, I take a tax credit). We can set the maximum credit at $3,000, and taxpayers will save thousands of dollars every time a kid switches. Such a program would definitely help close the state's yawning structural budget deficit.
Dr. Matthew Ladner is vice president for research at the Goldwater Institute.
Goldwater Institute: Fortune Favors the Bold: Reforms for Results in K-12 Education
Arizona Republic: 'Republic' analysis: Tuition tax credits drain state money