EdChoice and Reason Foundation Launch School Choice Calculator

Design your own ESA program, and learn the fiscal effect on taxpayers

As legislators across the country again head to their respective statehouses on the heels of a blockbuster year for education reform, it’s clear the momentum around school choice isn’t slowing down.

To help state policymakers, analysts, and other stakeholders better understand the potential fiscal effects of these programs on taxpayers and public-school districts, we created the K-12 School Choice Calculator (SCC). This tool represents a collaborative effort between EdChoice’s Fiscal Research and Education Center and the Reason Foundation.

It is a tool for policymakers, legislators, fiscal analysts, and other citizens who are interested in learning about the potential fiscal impact of education savings account programs on taxpayers in their states. The SCC allows users to design an ESA program for any state and provides a range of estimates for the fiscal effects of an education savings account (ESA) program on state and local taxpayers combined.

The SCC can be accessed at schoolchoicecalculator.com, and details about the methodology are found here.

Inputs

Users can choose a state and select from four different kinds of ESA programs:

• Universal program, where eligibility is open to all K-12 students in the state (Arizona’s Empowerment Scholarship Accounts program is an example)
• Income-based program, where eligibility is open to all public and private school students meeting the household income requirements set by users (New Hampshire’s Education Freedom Account Program is an example of this model)
• Grade level-based program, where all public school students are eligible, and users select the grade levels for nonpublic school students who can also participate (West Virginia’s Hope Scholarship Program is an example of this model)
• Special education program, where eligibility is open to students with special needs only (Indiana’s Education Scholarship Account Program is an example of this model)

In addition to the program type, users may toggle three key inputs:

• ESA amount is the average value of the ESA for each student participating in the program.
• Take-Up Rate (Public) is the percent of all eligible public school students in the state who participate in the ESA program.
• Take-Up Rate (Non-Public) is the percent of all students previously educated in private and homeschool who select to participate in the choice program.

Data in this analysis of participation in private education choice programs can provide some guidance for the public take-up rate. The overall average take-up rate during the initial years of education choice programs that operated between 1990 and 2021 was 0.46%. The take-up rates for programs in their second and third years were 0.86% and 1.12%, respectively. By Year 10, the overall average take-up rate for programs in the analysis was 2.62%. Because many of the programs in this analysis are targeted and have public school prior enrollment requirements, these take-up rates are likely reflective of take-up among public school students. As such, the SCC’s default for the “Take-Up Rate Public” input is 1%.

For the “Take-Up Rate Non-Public” input in the FEC’s Select Program Inputs box, the default is set to 20%. This is based on recent experience with New Hampshire’s Education Freedom Accounts (EFA) program. Benjamin Scafidi and Jonathan Butcher used data from this program to approximate the percentage of eligible students from outside the nonpublic school system participated in the program. They estimate that 21.1% of eligible students who were enrolled in private and home school settings accessed the EFA program during its first year. In contrast, some media reports citing data from Arizona’s universal ESA program on new students suggest a notably higher take-up rate among eligible students currently enrolled outside the public school system, about 60%. Context matters, and users may want to use a different participation rate instead of the default rate.

Output

After a user sets the parameters for an ESA program, the calculator summarizes results by reporting the following information:

• Short-run net fiscal effects on state and local taxpayers combined (total and per ESA student)
• Long-run net fiscal effects on state and local taxpayers combined (total and per ESA student)
• Eligibility rate (% of all K-12 students statewide who are eligible for the program you design)
• Overall ESA program switcher rate (% of ESA students who switched from the public school system into the ESA program)
• Downloadable chart comparing the ESA amount with the short-run and long-run average variable cost
• Downloadable chart comparing the total program cost with total current funding for the state’s K-12 public school system
• Downloadable chart comparing participation in the ESA program with public school enrollment

Limitations

It’s also important to understand what the tool can and cannot do. This calculator generates lower bound (short-run) and upper bound (long-run) estimates for the fiscal effects of educational choice programs that accrue to state and local taxpayers combined. It does not provide projected impacts on a state’s budget, as a fiscal note usually does – such an endeavor to isolate a state impact would require applying the state’s school funding formula, a significant undertaking for just one state, let alone a 50-state project such as this. Furthermore, because taxpayers in each state pay both state and local taxes, taxpayers may care about the overall fiscal effect on state and local taxpayers combined. For these reasons, the SCC’s approach is appropriate for a 50-state calculator.

We hope this tool can be useful for lawmakers and stakeholders and help inform program design. Got questions or suggestions for how we can improve this tool? We welcome all feedback, feel free to reach out to us at marty@edchoice.org.