Scholarly Review of Reports Deemed Claims of Fiscal Benefits to be Unsubstantiated and Inaccurate

Contact: William J. Mathis, (802) 383-0058; William.Mathis@colorado.edu

TEMPE, Ariz. and BOULDER, Colo. (May 16, 2010) -- A new report issued this week by the Friedman Foundation is part of a series of reports purporting to demonstrate that programs awarding tax credits to donors funding private school vouchers will reduce government expenditures and make the finance system more efficient. A scholarly review of the reports, however, was released last year and sharply criticized the reports, pointing out that they present unsubstantiated claims and fail to adequately consider short- and long-term costs of such tax-credit schemes.

The earlier reports were reviewed for the Think Tank Review Project by professor Luis Huerta of Teachers College, Columbia University.

Tax-credit voucher programs--dubbed "neovouchers" in a recent book by the University of Colorado's Kevin Welner--provide a non-refundable tax credit to individuals or corporations contributing to non-profit corporations, which then distribute the money to students attending private schools. These neovouchers (often called "scholarships" in the state laws) now exist in seven states--Arizona, Florida, Georgia, Indiana, Iowa, Pennsylvania, and Rhode Island. Last year, the first careful analysis of neovoucher outcomes was released--the official evaluation in Florida--and found that the students receiving the neovouchers performed no better (and perhaps worse) than comparable public school students.

The Friedman reports reviewed by Huerta claimed that implementing these programs would result in a net financial saving to the states. They base their conclusions, Huerta observes, on assumptions about the sensitivity of public school revenues and expenditures to enrollment declines, as well as assumptions about a pent-up demand for publicly funded private school choice and the nature and degree of supply and demand pressures. Professor Huerta tests all these assumptions and finds them to be largely groundless and frequently at odds with established research. In fact, Huerta notes that the reports' use of research is largely confined to work from advocacy groups like the Friedman Foundation itself. He observes that this "insular approach further calls into question the validity of the new reports' conclusions."

Professor Huerta's review hits particularly hard on the reports' assumptions about the prospect of private school supply and demand alike if a neovoucher program were to be implemented. These assumptions are crucial to the reports' analyses, and the review shows them to be highly problematic. Similarly, the reports fail to adequately account for the additional expenditures of a tax-credit program when it subsidizes families who were going to choose a private school anyway, making their expenditure calculations almost worthless.

"Policymakers should be cautioned to look beyond the seductive promises of increased fiscal savings and efficiency, which are unsubstantiated and inaccurately estimated in these reports," Huerta concludes. "Instead, policymakers should seek more balanced and empirically robust assessments that would allow them to make informed decisions about how to proceed with effective school reform polices."

Find the review by Luis Huerta on the web at:
http://epicpolicy.org/thinktank/review-tuition-tax-credits

Find the Friedman Foundation's Maryland report at:
http://www.edchoice.org/research/ShowResearchItem.do?id=10126

The Education and the Public Interest Center (EPIC) at the University of Colorado at Boulder and the Education Policy Research Unit (EPRU) at Arizona State University collaborate to produce policy briefs and think tank reviews. Our goal is to promote well-informed democratic deliberation about education policy by providing academic as well as non-academic audiences with useful information and high quality analyses.

Visit EPIC and EPRU at http://www.educationanalysis.org/

EPIC and EPRU are members of the Education Policy Alliance
(http://educationpolicyalliance.org).

###
**********