Finances of tuition credits argued

Tuition tax credits will save the state $3.4 million in the first year but cost $133,800 the second year, a long-awaited fiscal impact statement released Friday shows.

The State Office of Education insists the state will lose millions more.

Sound familiar?

It should: The arguments have played out five years running.

The real issue comes down to assumptions number crunchers choose to work with.

"It's the same disagreement we've had in every version of the tuition tax credits bill there has been," state associate superintendent Patrick Ogden said. "We don't think there will be as many children leave public schools as the fiscal analyst estimates. We don't believe they will save as much money as the fiscal note is saving. And we believe there will be a greater loss in income tax revenue."

Second Substitute HB39, sponsored by Rep. Jim Ferrin, R-Orem, offers parents choosing private schools a tax credit worth $500 to $3,750, scaled by income and based on federal reduced-price school lunch guidelines.

The credit would be open to public school students. Current private school students could be eligible only if they qualify for reduced-price school lunch.

The bill, co-sponsored by Rep. Steve Mascaro, R-West Jordan, also includes $1.5 million for schools financially hurt by the credits.

The Legislative Fiscal Analyst's Office estimates the bill next year would save the state $3.4 million in would-be education costs by shuffling students off to private schools instead of schooling them on the public dime. The bill would cost the state $133,800 in the second year, the fiscal note says.

Here's the rationale: Next school year, the analyst believes parents of 3,734 students would apply for the credit. The following year, the number would increase to 8,352.

Next year, the credit would cost $6.4 million, plus the $1.5 million bail-out money, but save $11.3 million in would-be education costs. The net savings: $3.4 million.

The following year, the revenue loss would be $24.2 million with savings of $24 million, resulting in a $133,800 loss.

Elisa Clements Peterson of Parents for Choice in Education believes far more students would choose private schools under the credit.

"We consider the assumptions by the fiscal analyst very conservative," she said. "The charter school example (of exponential student growth) is clear evidence (private school enrollment) will only increase over time."

The State Office of Education's analysis, however, shows the bill would cost $6.4 million but save $7 million next fiscal year, state associate superintendent Patrick Ogden said. Add to the mix the $1.5 million the state would spend in the "bail out" fund, the bill would result in a $900,000 loss.

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