by (in alphabetical order) John Garrett Clawson, Cassie Davis, Reynaldo De La Garza, Katie Floyd , Sarah Pollock

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However, consumables (e.g., pens and paper), transportation, and technological equipment would NOT be eligible expenses under SB 1178.

Program Size and Fiscal Impact

While no fiscal note was prepared for SB 1178 in the 2015 Texas legislative session, the budget implications in other states with ESA programs can, to some extent, be used as proxies. To date, just two ESA programs - Arizona and Nevada - permit students without disabilities or an IEP to participate. These programs have the capacity to become much larger than other state programs and best resemble the proposed Texas program.

Arizona’s ESA program, known as the Empowerment Scholarship Program, did not produce any long-term savings for the state in 2014 (SB 1363 Fiscal Note, 2013) and may produce budget deficits similar to those seen in other voucher states if lawmakers continue to expand eligibility for the program (O'Dell and Sanchez, 2016). Despite awarding voucher amounts worth as little as half of the state subsidy sent to local school districts, some states are experiencing program budget deficits due to an substantial number of private school students enrolling in their choice programs.  Because Nevada’s ESA program was temporarily halted due to concerns about the program’s constitutionality, no historical budget data currently exists. However, the fiscal note attached to the original legislation suggests the state may need to find an additional $85 million to guarantee true universal access if 75 percent of existing private school parents participate during the first school year (SB 302 Fiscal Note, 2015).

Like the Arizona program, the version of SB 1178 introduced in 2015 would have created enrollment caps, limiting the growth of the program over time. If enacted, the number of new students allowed into the program each year would have been capped at “one-half of one percent of the total number of students in average daily attendance in grades 1 through 12 in the state during the previous year (SB 1178, 2015).” If more students applied to participate than allotted under this provision, the Texas Education Agency would give first priority to children with disabilities or “education disadvantages” (SB 1178, 2015).

Because universal ESAs resemble vouchers, evidence on the fiscal impacts of voucher programs can help policymakers to anticipate the fiscal impacts of ESAs. A review of the fiscal impact of vouchers is forthcoming on a separate Wiki page.

Eligibility Standards, Participation Rates, and State Expenditure Estimates

During the 2014-15 school year, 5,232,065 students were enrolled in Texas public schools (TEA 2016). Approximately 6.6 percent of school-aged children in Texas currently attend some kind of private school. However, this figure varies substantially depending on the metro area examined. While San Antonio has a private school enrollment rate similar to that of the state at large, nearly one in ten (9.5 percent) of children in Dallas attend a private school. TEA does not actively track private school enrollment and relies on private schools to report accurate numbers (McDonald 2015). Using McDonald’s 6.6% figure, we estimate that 345,316 students attend private schools statewide. The Children's Defense Fund estimates that between 150,034 and 200,045 Texas students were homeschooled in 2013. In the calculations below, the average of these two numbers is utilized, a figure equal to 175,040 (Coalition for Responsible Home Education 2013).

An estimated 26,160 students would be eligible if using the same one-half of one percent cap outlined in SB 1178. Many states with ESA/school voucher programs have loosened their eligibility requirements over time, allowing a greater number of students from a greater number of backgrounds to access state funds for private education expenditures. As mentioned above, Nevada’s program allows any student eligible to attend a public school to receive an ESA allotment.

This can exacerbate the expenses associated with the program as the state must increasingly bear new education costs associated with children whose parents never intended to send them to public school in the first place. Today, taxpayers are not liable to pay for the private education of students electing to leave the public system, but an ESA program could compel the state to award them public funds as well. SB 1178 stipulated that participants in the hypothetical ESA program would have to be enrolled in a public school the year prior or eligible to enter first grade for the first time in the upcoming school year. Initially, this would suppress the number of existing private school parents eligible for state dollars. However, this “safeguard” would only be temporary in nature as all students in Texas would have access to eligibility within 12 years of the law’s passage (as most students in the education system at that time would have entered first grade after implementation). In fact, all students could obtain eligibility two years after program implementation if all current private school students and homeschool students enrolled in public schools for one year then requested an ESA to return to his/her non-public education.

TALK ABOUT EFFECTS ON LOCAL GOVERNMENTS - MAY BE SIMILAR TO HOUSTON SITUATION AND FORCE DISTRICTS INTO RECAPTURE

A variety of scenarios can be analyzed to better understand the fiscal impacts of different eligibility requirements and take-up rates. While levels of per-student spending vary between Independent School Districts, the estimates below utilize the anticipated 2017 state average of $10,371 (Villanueva, 2016). This figure is comprised of both state and local spending per student; the proportion of the total per-student spending coming from the state also varies between districts as poorer ISDs receive a greater fraction of their funds from state disbursements.The state would expect to save 20% of this total for each public school student that left the system with an ESA (given that they do not participate in special education, in which case the state saves no money). However, the state would lose money for every student that participated that would have never enrolled in a public school without the presence of the program. The figures below are produced by multiplying the number of non-public school students by $8,296 (80 percent of the average per-student expenditure). The estimates assume that the hypothetical Texas program is similar to the Nevada program and has no enrollment cap.

 Legal Issues

States that have passed legislation adopting ESAs include Arizona, Florida, Mississippi, Nevada and Tennessee (EdChoice, 2016). Legislation is typically challenged on a constitutional basis; 40 states have constitutional amendments or provisions that prohibit public funding of "religious worship, exercise or instruction" (DeForrest, 2003). Referred to collectively as "Blaine Amendments," in reference to the original failed amendment to the United States Constitution, these state laws are part of the legal landscape in all states that currently have ESAs, with the exception of Tennessee. Plaintiffs argue that because money diverted from public schools to fund ESAs can be spent on tuition at religious private schools, such laws are unconstitutional in states with a Blaine Amendment. Similar forms of school choice, such as vouchers, have also been challenged on this basis in a larger number of states (Burke & Butcher, 2016; Healy & Rich, 2015).

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Sandra Chereb. “Nevada Supreme Court Strikes Down School Choice Funding Method.” Las Vegas Review-Journal. September 29, 2016.

S.B. 1178, Texas 84th Cong. (2015).

S.B. 1363 Fiscal Note, Arizona 51st Cong. Schimpp, Steve. (2013).

S.B. 2695, Mississippi 114th Cong. (2015).

S.B. 302, Nevada 302nd Cong. (2015).

S.B. 431, Tennessee 431st Cong. (2015).

S.N. 850, Florida 116th Cong. (2014).

Villanueva, Chandra. "It's Time to Renovate our School Finance System." Center for Public Policy Priorities. 18 October 2016, University of Texas-Austin, TX. 

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