The Tax Credits Program for School Choice

Policy Reports | Education

No. 213
Sunday, March 01, 1998
by Linda Morrison

The Program in Action

Figure II - Increased Per Pupil Spending in Three Pennsylvania School Districts If 5% of Students Transferred

How might the Tax Credits Program for School Choice work? Even though the credits, including those for pupils already in nongovernment schools, would be deducted from the appropriate school district's budget, per pupil spending would rise in almost all cases if as few as 5 percent of those now in government schools transferred. This is because no more than $1,000 per pupil would be deducted - far less than the amount now being spent.
In a few districts, large numbers already attend nongovernment schools. If the full credit were claimed for all those pupils and only a small percentage transferred from government schools, per pupil spending might fall. In those rare instances, the state government could make up any lost revenues.

This section examines the results in some Pennsylvania districts if 5 percent of pupils transferred from government to nongovernment schools. It also looks at two large districts often cited for the problems of their schools, New York City and Washington, D.C.

Case Study: Three Pennsylvania School Districts. Figure II shows the effects of the program on local school operating budgets in three selected districts in Pennsylvania. [Details of the calculations are in Appendix Table I.] If 5 percent of government school students moved to nongovernment schools and all current nongovernment school students claimed the full tax credit:

  • Per pupil spending for government schools in Erie, a low-income district, would increase by 2.5 percent without increasing total spending.
  • In Abington, a suburban district, per pupil spending would increase 0.2 percent.
  • In Wellsboro, a rural district, per pupil spending would increase 1.8 percent.

The per pupil spending increase would be higher still if more than 5 percent left for nongovernment schools.

"Twenty-five percent of Philadelphia school children already attend nongovernment schools."

Case Study: Philadelphia. Philadelphia is probably one of the few exceptions in Pennsylvania. There, slightly more than 5 percent would have to leave government schools to increase per pupil spending. Because of parental dissatisfaction with troubled government schools, 25 percent of schoolchildren in the Philadelphia school district already attend nongovernment schools. As Figure III shows:

Figure III - Change in Per Pupil Spending in Philadelphia Government Schools
  • If only 5 percent of the 211,658 students in government schools moved to nongovernment schools and all nongovernment students claimed the full tax credit, per pupil spending would decrease 1.2 percent, from $6,374 to $6,296.
  • If 7 percent moved, per pupil spending would increase 0.6 percent, from $6,374 to $6,410.

It seems likely that at least 7 percent of current government school students would leave if credits were available. If more did so, per pupil spending for children remaining in Philadelphia's government schools would rise further:

  • If 10 percent of the students in the Philadelphia government schools left, per pupil spending would increase by more than 3 percent.
  • If 15 percent left, per pupil spending would increase almost 9 percent.
  • And if 20 percent left, the increase would exceed 14 percent.

[The calculations for Philadelphia can be found in Appendix Table II.]

"In Philadelphia, per pupil spending would increase if slightly more than 5 percent of students left government schools."

Case Study: Other Large City School Systems. New York City, the nation's largest public school system, and Washington, D.C., arguably the nation's worst, could increase per pupil spending if as few as 5 percent of students moved to nongovernment schools, even if the tax credit were expanded to $1,200. This would be true even if the credit went to the 20 percent of all schoolchildren in New York who are already in nongovernment schools. Only 12 percent are in nongovernment schools in Washington, so per pupil spending in government schools there could go up almost 2 percent if 5 percent of government school students transferred to nongovernment schools. [See the sidebars, "School Tax Credits in New York City" and "School Tax Credits in Washington, D.C."] [Appendix Table III] [Appendix Table IV]

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