Research is clear that expanding school choice — empowering parents to choose educational options for their children outside traditional district schools — provides benefits for families, communities and society. But these programs have an ancillary benefit beyond improving schools, one that New York’s political class isn’t in a position to pass up: saving state and local governments money.
With the Empire State in the throes of a budget disaster — a problem that’s sure to get worse if rich Manhattanites continue to leave the state — policymakers should ask themselves what they could do with an extra nest egg to the tune of hundreds of millions of dollars. That type of money is exactly what expanding school choice could provide.
Specifically, a new paper looks at the savings New York could generate by creating an education savings account (ESA) program, a school-choice mechanism by which families withdraw their children from public schools in exchange for public funds they can then spend on education. The money — often distributed via debit card — can be applied to a variety of pre-approved pursuits such as private and parochial school tuition, online learning programs, tutoring services or other approved customized learning services and materials, depending on what families decide is best for their child’s needs and goals.
An ESA program would be a win for the parents of New York, who have already signaled their desire for alternative education options for their children beyond what traditional district schools can offer. (Consider that enrollment in the city’s charter schools and Jewish schools, for example, is way up from fall 2019 to fall 2020.)
And, of course, it would be a win for state legislators and taxpayers, generating much needed fiscal benefits which could be applied to more urgent needs.
What types of savings are we talking about here? For instance, if 1 percent of public-school students leave their district school via an ESA program and receive an ESA worth $6,500 (a fraction of the $27,000 per-year average funding for each New York public-school student), taxpayers would experience between $159 million and $282 million in estimated benefits, given the likely scenario that at least 70 percent of ESA students would have otherwise attended district schools. An even larger ESA worth $9,900 would still generate savings for taxpayers — an overall worth between an estimated $94 million and $236 million.
Policymakers, of course, have plenty of productive ways in which they could spend that type of money.
New York City, for example, faces a $150 billion liability for future pension and retiree healthcare benefits, endangering public-sector retirees’ income and healthcare security. The city and state also face a multi-billion-dollar shortfall in infrastructure funding for roads, bridges, dams and wastewater treatment, gaps that won’t be fully addressed even with President Biden’s proposed $1.2 billion infrastructure bill.
These types of savings may sound too good to be true, but the reality is they’re just par for the course when one considers broader funding disparities between choice programs and public school systems.
Students participating in educational choice programs, on average, receive about two-thirds less of the per-pupil funding that their residentially assigned public school would get (about $5,000 vs. $14,000).
Moreover, districts don’t lose every dollar of a student’s per-pupil funding when they leave, because not all funding, like local property-tax revenue, is based on the actual student. Therefore, whenever students leave an assigned school via these programs, savings accrue to taxpayers, and school districts usually end up with more resources on a per-pupil basis. (Impressive projected savings in the rest of the tristate bear this out; New Jersey and Connecticut policymakers should take note.)
Of course, opponents will predictably decry that providing ESAs for New York families will siphon resources from public schools and leave students who remain worse off. While it’s true that revenue for school districts will decrease when student leave via such a program, it’s also true that costs to educate fewer students will also decrease.
Besides, a large body of research demonstrates that academic outcomes of students who remain in public schools actually improve because of such programs. Schools face stronger incentives to better serve their students in response to increased competitive pressure, classrooms end up with better matches made between students who remain and their teachers, class sizes may become smaller, and there are more resources distributed among fewer students. Although these gains on test scores are modest, these are real benefits, not harm.
It’s been a banner year for school-choice advocates. The pandemic has driven 18 states to expand educational options for families by introducing new educational choice programs or expanding currently existing ones. New York is not one of those 18 states — yet. But with high support from parents, and growing budget constraints to address a variety of problems from infrastructure needs to poorly funded local pensions, the Empire State should urgently consider implementing ESAs and realizing instant savings.
Martin Lueken is director of fiscal research and the education center at EdChoice, as well as author of a new Manhattan Institute report on educational savings accounts in New York.
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