Two bills, SB1431 and HB2394, which would expand the Empowerment Scholarship Account program to all Arizona K-12 students by the 2020 school year would increase the State’s General Fund costs considerably. The increased costs are outlined in a report from the bipartisan Joint Legislative Budget Committee.
According to that report, “the bill would increase state General Fund costs by $2.1 million in FY 2018, $5.8 million in FY 2019, $12.9 million in FY 2020, and $24.5 million when all prior public school students are eligible in FY 2021.”
Despite this astronomical cost the bills will likely sail through to the governor’s desk due to the fact that the Democrats in both the House and Senate are less effective than ever before.
An Empowerment Scholarship Account (ESA) acts like a checking account in which the state deposits 90% of the state funding that would have been received by the public school the child previously attended.
The ESA program (A.R.S. § 15-2401) is currently open to Arizona resident students who meet at least one of the following requirements:
• A child with a disability.
• A child attending a failing school or school district.
• An incoming Kindergartner who resides within the boundaries of a failing school or school district.
• A child with a military parent or guardian on active duty or who was killed in the line of duty.
• A child who is a ward of the juvenile court and is residing in prospective permanent placement foster care.
• A child who is a ward of the juvenile court and who achieved permanency through adoption.
• A child who is the sibling of a current or previous ESA recipient or of a student eligible for an ESA.
• A child who lives on an Indian reservation.
• A child of a parent who is legally blind, deaf, or hard of hearing.The ESA participant also must meet at least one of a second set of conditions:
• A full-time Arizona public school student who attended at least the first 100 days of the prior year.
• A prior ESA participant.
• A student who received or was eligible to receive a displaced or disabled School Tuition Organization (STO) scholarship and previously attended public school full time.
• An incoming kindergartner.
• A child who currently is eligible to enroll in a public school program for preschool children with disabilities.The bill would add to the first set of conditions 3 grades per year (plus Kindergarten in the first year) in which public school students would become newly eligible for the ESA program. As a result, all incoming Kindergarteners and prior public school students in grades 1-12 would be eligible for an ESA by FY 2021.
The bill would also expand the definition of a student who previously attended public school to include any student who attended any 100 days of the prior year, rather than the first 100 days.
While there is no conclusive evidence that the vouchers are used by wealthier families more than other, there is evidence that the families that use vouchers already had their kids enrolled in private schools. In fact, Wisconsin’s Department of Public Instruction found that almost 75 percent of the Wisconsin students using taxpayer-funded vouchers to attend had already been enrolled in those schools before the State began offering them.
[Read the full JLBC report here]
The JLBC report reads in part:
The bill would expand the definition of a qualified student under the Empowerment Scholarship Account (ESA) program to effectively allow any Kindergarten student to begin participating in the ESA program in FY 2018 and phase in eligibility of prior public school students in grades 1 – 12 over 4 years.
Estimated Impact
Based on the estimated increases in ESA participation and the estimated fiscal impact of each student who opts into the ESA program, we estimate that the bill would increase state General Fund costs by $2.1 million in FY 2018, $5.8 million in FY 2019, $12.9 million in FY 2020, and $24.5 million when all prior public school students are eligible in FY 2021.
This estimate is highly speculative, and actual costs could vary substantially depending on the actual participation rates of newly eligible students, both among current public school students and among incoming Kindergarteners who would have enrolled in a private school even without an ESA. Among the latter, for example, ESA participation could depend heavily on families’ awareness of, and relative preference for, the ESA program versus the School Tuition Organization (“STO”) scholarships currently available (students may not participate in both programs).
The fiscal note assumes that participation among newly eligible “prior public” students would grow from 1.0% in FY 2018 to 2.6% in FY 2021. It also assumes that participation among newly eligible incoming private school Kindergarten students would roughly double each year. Based on estimates from the Catholic Dioceses of Phoenix and Tucson (which comprise nearly half of the state’s private school population), approximately 2.7% of private school students currently participate in the ESA program. We assume an increase to 5% among newly eligible incoming Kindergarteners in FY 2018, followed by continued doubling to 10% in FY 2019, 20% in FY 2020, and 40% in FY 2021.
There appears to be a financial incentive for private school Kindergarten households to apply for an ESA. The bill’s cost could increase to $35.4 million in FY 2021 if the participation rate among incoming Kindergarteners reaches 80%. Conversely, the bill’s cost could fall to $21.4 million in FY 2021 if the factors described above (e.g. lack of awareness, preference for STOs) limit participation to no more than 20% by FY 2021.
The cumulative costs of newly eligible private school students will also continue to rise as additional incoming cohorts replace those who were not eligible for ESA participation when they began as Kindergarteners. This increase would continue through 2030 until all K-12 cohorts were eligible as Kindergarteners. ADE does not have a fiscal impact estimate for this bill.