ESA Fiscal Analysis 2-26-17

ESA Fiscal Analysis (SB1431):
·    ESAs provide another option for parents to choose the best education for their child
·    ESAs save taxpayer money (See A below)
·    ESAs cost less to the State General Fund than if a student moved from a district school to a charter school.  (See B below)
·    The savings to the state general fund from special needs students moving to an ESA from a public school help offset state general fund costs. (See C below)
Evidence:
1.    The JLBC fiscal note on my ESA bill only covers the effect on the State General Fund. But, the state general fund is only one portion of taxpayer $ spent on schools.
2.    Avg. total $ spent per student in public district school = $9,529/yr.
3.    ESA for a non-special needs child = $5,600/yr.
4.    District Schools get taxpayer $ from the state general fund, federal $, Prop. 301 sales tax $, plus override, bond & other local property taxes.
5.    Charter Schools get taxpayer $ from the state general fund, federal $, Prop. 301 sales tax $.  Charters get more $ from the state general fund since they cannot issue overrides & bonds, but get less total overall $ per student than district schools.
6.    Cost/ (Savings) to State General Fund if:
a.    District student moves to a charter school = $1,400/student/year more
b.    District student moves to an ESA = $800/student/year more
c.    Charter student moves to an ESA = $(600) savings per student/year
d.    Special Needs student moves from district to ESA = $(1,400) savings per student/year
e.    Special Needs student moves from charter to ESA = $(2,700) savings per student/year
7.    Avg. Override taxes (only district schools receive) = $585/student
8.    Avg. Bond taxes (only district schools receive) = $981/student
Analysis:
A.    ESA’s save taxpayer $:
a.    $9,529-$5,600 = $3,929/student/year is quick math (Savings include all taxes including federal)
b.    But let’s say that we don’t account for the $1,000/student in federal $ savings, there is still a taxpayer savings.  Example: If a District student moves to an ESA it will cost the state general fund $800/student, but saves override taxes of $585/student immediately because that amount is linked to student count and bond taxes of $981/student over time due to the lack of need to build additional space.  If a charter student moves to an ESA it saves the state general fund $600/student.

B.    ESAs are LESS costly to the state general fund than Charter Schools.  If the same # of students estimated to leave district schools in the JLBC fiscal note moved to a charter school instead of using an ESA, it would cost the state general fund $600/student/yr MORE than using an ESA.  Per the JLBC memo attached, it would cost the SGF $1.4 M more in FY18, $3.4M more in FY19, $7.3 M more in FY20, and $12.5M more in FY21 if the same # of students moved to a charter school instead of using an ESA. In addition, charter School enrollment growth is not capped and have continued to grow between 6% and 10% each year.  ESA enrollment growth is capped at about 5,500 students/yr.

C.    Savings to the State General Fund from Special Needs students using ESA’s help offset costs of non-special needs students using ESAs.  Savings to state general fund is $1,400/student/yr. if moving from a district school and $2.700/student/yr. if moving from a charter school.  Since special needs students already qualify for ESAs those savings were not included in my bill’s fiscal note, but are important to consider when analyzing the entire program.

D.    Prop. 301 $ = $300-$450/student/year.  IF the student count in public schools decreases as a result of ESAs it leaves more Prop. 301 $ per student in district and charter schools.
(All $ figures from JLBC and Senate staff)

AZ Senator Debbie Lesko
Senate President Pro-Tempore
602-926-5413, Dlesko@azleg.gov

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