During the 2013 budget session of the Indiana General Assembly, Joel Hand testified repeatedly on behalf of the Indiana Coalition for Public Education that the voucher expansion bill would add a major new fiscal cost to the state. The era when vouchers would save the state money would be over.
I and others gave similar testimony, but the General Assembly passed the huge voucher expansion bill anyway.
Now the data for 2013-14 are in and the Indiana Department of Education has reported that the voucher program cost the state $15.7 million dollars to pay for private school tuition. The savings of $4.9 million in the previous 2012-13 school year was transformed into a significant outright cost of $15.7 by Governor Pence’s voucher expansion bill.
Indiana is now spending more of your tax dollars to pay for private school tuition for students who have always been in private schools than programs for gifted and talented students ($12.8 million), for preschool ($10 million), for Non-English speaking students ($5.5 million) and for teacher professional development ($0).
How Did This Happen? Paying for Students Where the Choice was Already Made
In large part, the voucher bill was sold to legislators in 2011 on the argument that it would save the state money. Vouchers were set at a fixed amount for elementary students ($4500 in 2011-12 and then upped to $4700 in 2013-14), a level below the average state tuition support in most but not all public school districts. For secondary students the voucher was set at 90% of what the student’s public school was getting for that student.
Most importantly, vouchers were given only to students who had attended public schools in the previous two semesters. It was a formula to guarantee the state would save money when students transferred from public schools to private schools, a formula that worked for two years, saving $4.2 million and $4.9 million in the first two years of the program, according to the financial officials writing the IDOE report.
The projected savings even became a talking point in the historic 2011 debate on the original voucher bill. Rural legislators who did not expect that their schools would be impacted by vouchers were told that their schools would make money on the voucher bill because the savings would be distributed to all schools based on the school funding formula rather than going back to only the schools where the students had transferred out. Based on that belief, some legislators went along with the voucher bill to help their small districts back home.
A bill in the 2012 short session would have opened up the voucher system to high school students who had never been to public schools by allowing them a tax credit scholarship without first attending a public school, but the bill failed due to strong opposition by public school advocates and ICPE.
Then came the 2013 voucher expansion bill. Representative Behning, the bill’s sponsor, with the strong support of Governor Pence, Speaker Bosma and Senate President Pro Tem Long, went all out to dismantle the concept that students needed to go to public school first to qualify for vouchers. Governor Daniels had endorsed a “try public school first” philosophy and had even trumpeted that philosophy in a speech at Harvard as the right way to go. The Daniels philosophy was quickly thrown under the bus by Gov. Pence and Rep. Behning in HB 1003 in 2013.
Representative Behning’s original bill would allow kindergarteners with no public school experience to get vouchers. Senator Kenley contested that approach, questioning the fiscal cost. In a memorable debate in the Senate Education Committee, Representative Behning told Senator Kenley that he really wants universal vouchers, endorsing the concept that all private school students could get vouchers, despite the $500 million cost to taxpayers that Senator Kenley had projected.
It was clear in that debate that vouchers as a money-saver for the state was just a ploy to get a foot in the door. Vouchers for all private school students was the real goal. Taxpayers would eventually be asked to pay for all religious and private school tuition.
What were the Numbers for 2013-14?
The IDOE financial report has reported the number of vouchers and the costs for the first year after the voucher expansion bill was passed into law. In 2013-14, Indiana taxpayers paid for 19,809 vouchers to private schools, costing $81,066,786. Dividing these two figures shows that the average per voucher was $4092.
To understand how the savings has disappeared, it is best to break the voucher total into two groups. In Group 1, 12,030 vouchers went to students who transferred from public to private schools, the “choice” students the original bill was designed to help. In Group 2, 7,779 vouchers went to students who had always been in private schools and had never been in a public school. These “always been in private school” students were given vouchers based on four expanded pathways in the 2013 expansion law: (1) sibling vouchers, (2) vouchers for all special education students, (3) vouchers for students residing in the attendance area of an F school, and (4) expanded use of vouchers for students receiving a Scholarship Granting Organization scholarship for students who had never attended a public school.
Taking the 12,030 students in Group 1 who transferred from public to private school and multiplying by the $4092 average produces a total of $50 million for students of families who made a choice to leave the public school and transfer to a private school. This $50 million was diverted from public schools, so that meant $50 million less in resources available to the remaining public school students across the state. From the point of view of the state, however, this portion of the voucher program saved money, somewhere in the order of $15 million.
For the other 7,779 getting vouchers in Group 2, there was no money saving for the state. These students had never gone to a public school and had already chosen from the start of their schooling in Indiana to go to a private school. Thanks to the 2013 voucher expansion bill, they got vouchers anyway. Multiplying 7,779 students times the average voucher amount of $4092 produces a total of $31 million. This is all a new expense for the state.
Thus there are two groups of voucher students. One group of students chose to leave public schools for a less expensive private school, as the 2011 program envisioned. This group cost the state $50 million in 2013-14 and saved the state approximately $15 million compared to what the state would have paid if those students had remained in public schools.
The second group did not follow this path. It is comprised of students that have always been in private schools. This group cost the state $31 million, and totally wiped out the $15 million savings from group one, leaving a net fiscal cost to the state of roughly $16 million as reported by IDOE.
Thus endeth the voucher program as a money saver for the state of Indiana. Now we are hearing all the arguments from voucher proponents about why taxpayers should shell out even more for private and religious schools. Their goal again is to have the taxpayers of Indiana pay for all private and parochial school tuition.
From What Budget Does the New Fiscal Cost for Vouchers Come?
The General Assembly did not set up a line item for vouchers in the state budget. Given that, where will the $15.7 million come from to pay for the new voucher costs?
Voucher payments to private schools have always come out of the line item for public school tuition support. This fit with the theory that whatever the costs of vouchers for students transferring out of public schools, the costs would always be less than the costs for those students had they stayed in public schools. Now, this has all changed.
The General Assembly added $132 million to the tuition support budget for 2013-2014, an anemic 2% increase over the previous year. The $15.7 million for vouchers has to come from that amount. Subtracting out the bill for private school vouchers shows that the true increase for 2013-14 was about $115 million, turning the 2% increase into a 1.74% increase.
That 2% increase was already an historic low increase for public school funding. Except during the Great Recession budgets in 2009 and 2011, schools had not dipped below 2.4% in the last 20 years. A 2% increase has left many school districts in dire financial condition as they just try to maintain current programs. Now the extra money for private school vouchers will dig further into the money for public school programs.
This is exactly the scenario that Joel Hand painted for legislators as he lobbied on behalf of ICPE against voucher expansion in the 2013 session. At the last moment of the budget session in the final budget version, legislators acknowledged that the problem was real by adding a $25 million dollar emergency fund which the budget committee could vote to use to supplement the tuition support budget. In the words of Ways of Means Chairman Tim Brown as the final budget was presented for passage, this fund “would protect the foundational support.” Otherwise, public schools would have to give back a share of what they had already been promised to pay for the $15.7 million in new costs for vouchers.
I have not heard if the budget committee has made any plans to implement this $25 million “foundational protection” fund, but they will need to do so unless somehow they over budgeted for public school tuition support. We should all be watching for that move, which no doubt will be done quietly and close to the vest in order to avoid the questions this raises about the expensive 2013 voucher expansion.
As if this situation wasn’t bad enough for public school funding, the school budget for the second year of the biennium in 2014-15 lifted school funding by only 1%, well below the 1.6% cost of living cited in expert testimony during the 2013 budget process. This 1% increase meant an additional budgeted amount of $69 million for tuition support in 2014-15. If another $15 million is spent in 2014-15 on the voucher program, the new tuition support amount for public schools would drop to $54 million, making the true increase only 0.78%.
Fortunately, the $25 million “bailout fund” was set up for 2014-15 as well. It looks like it will be needed.
All this makes funding for the 1 million plus students in public schools look like an afterthought, and indeed it has become that. We should never lose track of the thought that lower resources for public school students translate to higher class sizes and lower funding for student programs, especially for extra programs addressing students who need extra help. Public schools serve the vast majority of students of poverty, and the historically low biennial budget of 2% and 1% has certainly hurt programs to help them.
Spinning
When these voucher figures were released in June, the voucher proponents went right to work to spin the message. Their protests led columnist Matthew Tully, a voucher supporter, to write “the state Department of Education released a report claiming, dubiously, that the state’s recently expanded voucher program cost Indiana $16 million last year.” (Indianapolis Star, June 25, 2014)
There is nothing dubious about the IDOE figures. The steps IDOE followed to determine the savings from the voucher program were written by the General Assembly.
The General Assembly, not the IDOE, set up the formula for determining savings in non-code provisions of the budget bill. The five steps prescribed in the budget are summarized as follows and can also be seen on page 21 of the IDOE report:
Step 1: determine the total amount distributed in the year for voucher scholarships.
Step 2: determine the total amount public schools including charter (but not virtual charter) schools would have received if those students who received voucher scholarships and who were enrolled in a public school during the preceding two semesters “had instead remained enrolled in public schools and had not enrolled in private schools.”
Step 3: subtract the first number from the second number.
Step 4: determine the percentage of the total state tuition support distributed to each school district and to each charter school (excluding virtual charter schools).
Step 5: multiply the amount of savings in Step 3 by the percentage in Step 4 to determine how much of the savings goes back to each district and charter school.
In the words of the report, “The five-step calculation resulted in no savings from the Choice Scholarship Program for the 2013-14 school year. Therefore, the Department will not make a savings distribution to school corporations and charter schools.”
It seems obvious that when 7779 vouchers (39%) were given out for students who had never attended a public school and for which the state had to pay the full amount without any savings factor, there would be no overall savings. The 2013 voucher expansion law clearly turned the voucher program from a money saver to new fiscal cost for the taxpayers of Indiana.
Let your legislators know you are very disappointed that they expanded vouchers in 2013 and created an expensive additional fiscal cost of nearly $16 million. That money could have been used for preschool or similar important education priorities other than paying for students to go to the private schools that they have always gone to.
Your messages on behalf of public education make a big difference. Thanks for participating! Please keep up your steadfast support of public schools!
Best wishes,
Vic Smith
“Vic’s Statehouse Notes” and ICPE received one of three Excellence in Media Awards presented by Delta Kappa Gamma Society International, an organization of over 85,000 women educators in seventeen countries. The award was presented on July 30, 2014 during the Delta Kappa Gamma International Convention held in Indianapolis. Thank you Delta Kappa Gamma!
ICPE has worked since 2011 to promote public education in the Statehouse and oppose the privatization of schools. The fall ICPE membership meeting in Indianapolis will be held on Saturday, September 6, 2014 at 2pm at the Washington Township Education Center on the corner of 86th and Woodfield Crossing. The video “Rise Above the Mark” will be featured at the meeting and Rocky Killion, the video’s producer, will be among the panelists to discuss the film afterward. Prior to the 2pm meeting, a reception will begin at 12:45 honoring Dr. Bob Dalton for his 63 years of enthusiastic service to public education. Come join us on Sept. 6th!
We need your membership to help pay the bills for ICPE lobbying efforts. Many have renewed their memberships already, and we thank you! If you have not done so since July 1, the start of our new membership year, we urge you to renew by going to our website.
We must raise additional funds for the 2015 session. We need additional members and additional donations. We need your help and the help of your colleagues who support public education! Please pass the word!
Go to www.icpe2011.com for membership and renewal information and for full information on ICPE efforts on behalf of public education. Thanks!
Some readers have asked about my background in Indiana public schools. Thanks for asking! Here is a brief bio:
I am a lifelong Hoosier and began teaching in 1969. I served as a social studies teacher, curriculum developer, state research and evaluation consultant, state social studies consultant, district social studies supervisor, assistant principal, principal, educational association staff member, and adjunct university professor. I worked for Garrett-Keyser-Butler Schools, the Indiana University Social Studies Development Center, the Indiana Department of Education, the Indianapolis Public Schools, IUPUI, and the Indiana Urban Schools Association, from which I retired as Associate Director in 2009. I hold three degrees: B.A. in Ed., Ball State University, 1969; M.S. in Ed., Indiana University, 1972; and Ed.D., Indiana University, 1977, along with a Teacher’s Life License and a Superintendent’s License, 1998.
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