Education Week - October 2, 2024 - 12

panded eligibility for the program to
all students.
More than half of states have at least
one private school choice program, and
12 have one that is on track to be accessible
to all K-12 students in the state
or already is, according to Education
Week's private school choice tracker.
" Even the existence of these programs
introduces a lot of uncertainty
into the K-12 school budgeting or district
budgeting process, both for revenue
this year and/or revenues next year
and beyond, " said Ashlee Gabrysch,
who helps analyze school districts' financial
health in her role as an analyst
at the credit rating firm Fitch Ratings.
Proponents of private school choice
acknowledge the effects these programs
have on district operations.
But they argue those impacts are relatively
insignificant and worth the benefits
that private school choice affords
parents and students.
" Districts might be put in a position
How Private School Choice
Complicates Public School Budgets
By Mark Lieberman
The Iowa City school district has
seen its enrollment grow every school
year except one since the turn of the
century.
But that changed last school year,
when the state rolled out its education
savings account program, offering
thousands of public dollars each for
families to spend outside the public
school system on private educational
expenses of their choosing.
The state let the district know that
470 students who live within its
boundaries had accepted ESAs worth
$7,800 each and would not be attending
public school for at least that year.
But many of those students were already
attending private schools before
the ESA offering. The state did not tell
the district how many of the 470 students
were departing public schools
for private options.
Months before the school year had
started, district officials assumed
that roughly 1 in 6 students who
lived within district boundaries and
claimed an ESA would be leaving the
public school system. With no easily
accessible statistics, they had to
comb through a state report on private
school enrollment, tracking individual
student IDs from one school to
another, to make their best guess.
All told, the share turned out to be
much higher than expected: at least
135 of those 470 students-more than
1 in 4-came from public schools.
That's a tiny portion of the district's
roughly 14,500 students-hardly an
indication that students are flocking
from public to private school, even
with generous state subsidies enticing
them to do so.
Still, thanks to the vagaries of school
funding in Iowa, losing 135 students
results in a drop in state funding that's
roughly equivalent to 11 full-time
teaching positions.
District administrators are projecting
at least 75 more public school
students will take ESAs in each of
the next few years. For the 2023-24
school year, all students who previously
attended public school could
receive an ESA, as well as any student
whose family earned 300 percent of
the federal poverty level or less. During
the current school year, eligibility
expanded to any student whose family
earns 400 percent of the federal
poverty level or less.
Next school year, every K-12 student
in Iowa will be eligible for an ESA.
" Throwing in the ESA program has
put us in really uncharted territory in
terms of not having solid projections, "
said Adam Kurth, the district's chief
financial officer.
The situation in Iowa City echoes
the experience of districts in many
states with private school choice. As
yet, the growing trend of giving parents
public funds for private education
hasn't decimated school budgets.
Even in states where private school
choice is open to all students, the
overwhelming majority of K-12 students
still attend public school. And in
many places, the bulk of the students
accepting state dollars for private education
expenses were never in public
schools to begin with, which means
districts don't immediately lose funding
when those students accept school
choice funds.
Still, the proliferation of private
school choice programs has injected
uncertainty and volatility into the
already-chaotic school budgeting
process. Districts in states including
Indiana, Iowa, and Florida have reported
losing millions of state dollars
as students exit their schools for statefunded
voucher and ESA offerings.
Others are bracing for fiscal storms
to come as the number of students
eligible for newly created and expanded
private school choice programs
grows, with future prospects
for enrollment and financial viability
becoming harder than ever to predict.
Ohio districts saw increases of up to
600 percent in voucher participants
after state lawmakers in 2023 ex12
| EDUCATION WEEK | October 2, 2024 | www.edweek.org
Even the
existence of
these programs
introduces a lot
of uncertainty
into the K-12
school budgeting
or district
budgeting
process, both for
revenue this year
and/or revenues
next year and
beyond.
ASHLEE GABRYSCH
Midwest Region Manager for
Local Government Ratings,
Fitch Ratings
to make tough decisions that officials
may not want to make or want to deal
with " about budget cuts or tweaks,
said Marty Lueken, the director of fiscal
policy and analysis for EdChoice,
the leading nonprofit advocating nationwide
for private school choice.
" That's just an uncomfortable reality
that I think all actors in the economy
have to face. "
Some districts lose money when
students move to vouchers and ESAs
One challenge in assessing the impact
of private school choice on public
school budgets is that every state's
system for school funding and private
school choice looks different.
Even within states, districts with
lots of nearby private schools will feel
higher degrees of fiscal shock than
districts in rural areas with few options
beyond public schools.
Most states give districts permission
to raise local taxes to supplement
their budgets when unexpected
expenses arise.
But Iowa's school funding formula
imposes spending caps on all districts
based on enrollment.
" We don't have the option to go out
and levy additional funds for general
fund purposes, things like teacher salaries,
even if the community supports
it, " Kurth said.
That means enrollment plays an
outsize role in determining a school
district's financial condition from one
year to the next.
The district lost at least $7,800 for
each of the 135 students who left Iowa
City schools for an ESA. But the state
gives districts roughly $1,200 for
each student who lives within district
boundaries and accepts an ESA.
Iowa City got $565,000 from that
provision. But as a result of the enrollment
drop, it still had to cover a budget
deficit of $1.3 million, or roughly
$90 for each of the district's remaining
14,500 students.
Out of an annual operating budget
of $135 million, that sum might seem
insignificant. But with 11 fewer teachers,
class sizes would be larger, and
secondary students would have fewer
options, Kurth said.
The district ultimately eliminated
nine teaching positions and several
other roles as staff members retired
or left for other opportunities; delayed
curriculum purchases of $1
million; cut the number of substitute
teachers per school building; and increased
employees' health insurance
contributions.
The core problem, said Kurth, is
that fewer students doesn't inherently
mean lower costs. Teachers get
paid the same amount, and electricity
bills barely change, whether 22 or 30
students are in a single class.
" As we lose students, we become
less efficient, " he said.
Plus, assuming those 135 students
don't come back to public schools,
the district will have $1.3 million less
to work with in future years as well.
District leaders want transparency
when passing along
A loss of revenue isn't the only consequence
of private school choice that
has administrators on edge.
In Wisconsin, districts each year
receive a bill from the state detailing
the total number of voucher funds
students who reside within district
boundaries are claiming. Then the
district divides that sum among property
taxpayers and adds it to their annual
bills.
The Kickapoo district in the rural
southwestern part of the state doesn't
have any private schools within its
boundaries. Relatively few students
who attend district schools have opted
for a voucher-funded private school.
Still, the amount of voucher funds
that went to students living within district
boundaries shot up from $25,000
in the 2022-23 school year to more than
$113,000 the following year. Those
increases came as the state raised the
total voucher amount by more than
$1,000 per elementary and middle
school student and by nearly $3,000
per high school student.
" We're kept whole financially, " said
Melissa Wickert, the district's bookkeeper.
" But it's moving that burden
to our taxpayers, rather than the state
funding. "
If taxpayers feel suffocated by
higher bills, they might be less inclined
to support the school district
when it asks their permission to raise
additional revenue for long-awaited
building projects or ballooning special
education expenses, said Kim Johnson,
the district administrator who
oversees finance.
The Kickapoo district is calling
on the state to stop funding private
school vouchers with public dollars.
Short of that, though, administrators
want state lawmakers to require
property-tax bills to show residents
how much of their money is funding
tuition for private schools.
Predicting the future is harder
than ever
Some players in the education landscape
outside schools themselves lament
the increasing uncertainty and
unpredictability that expanded private
school choice brings.
Every school district has a credit
rating, not unlike an individual's
credit score, that helps determine the
interest rates it pays on debt, such as
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Education Week - October 2, 2024

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