An Analysis of the Fiscal and Economic Impact of Georgia’s Qualified Education Expense Tax Credit

View the full study as a PDF here.

By Ben Scafidi and Heidi Holmes Erickson

Georgia’s Qualified Education Expense (QEE) Tax Credit Scholarship Program allows individual  and corporate taxpayers to receive a Georgia income tax credit for donating to nonprofit, tax exempt student scholarship organizations (SSOs). SSOs use these funds to provide scholarships  to pre-K through 12th grade Georgia students, where these scholarships offset the cost of  attending independent (private) schools.

House Bill 217, which passed in 2018 and became law in 2019, requires that the Georgia state  auditor issue an analysis of the performance of the state’s QEE program in the year 2023. The  analysis shall include: (A) Net change in state revenue; (B) Net change in state expenditures,  which shall include, but not be limited to, costs of administering the tax credit; (C) Net change  in economic activity; and (D) Net change in public benefit. To facilitate consideration among  Georgia state auditors, lawmakers, and SSOs of the best methodologies to analyze performance  of the QEE Program, this report provides a fiscal and economic analysis of the QEE Program. For  this report, our “fiscal” analysis of the QEE program consists of our analysis of the net changes  in state revenues and state expenditures. Our “economic” analysis consists of our analysis of  how an increase in educational attainment results in changes in economic activity due to  increased lifetime earnings accruing to scholarship recipients and changes in public benefits  accruing to others and society. Public benefits that result from an increase in educational  attainment include increased tax revenue, reduced criminal behavior, fewer health care costs,  and less dependency on welfare programs.

To conduct these analyses, we relied on publicly available data regarding the QEE Program and  Georgia public schools that are provided by the Georgia Department of Revenue and the  (Georgia) Governor’s Office of Student Achievement. We also relied on a data file of the three  most recent cohorts of students receiving scholarships from Georgia GOAL Scholarship  Program, Inc. — where each cohort begins in the 9th grade.

Overall, we find:

  • The taxpayer cost of tax credit scholarships is significantly less than the taxpayer cost of  educating scholarship students in the public schools — saving taxpayers a total of $53.2  million in academic year 2018-19 from the entire QEE program.
  • The three cohorts of GOAL scholarship students graduate high school and enter college  at higher rates relative to students in Georgia public schools — with an estimated  economic benefit of $46.7 million for this subset of students, or about $15.6 million per  cohort in our sample.
  • If scholarship students at all SSOs graduate high school and enroll in college at the same  rate that GOAL students in our sample do, then the estimated economic benefit from  the entire QEE program would be $66.4 million for the cohort of ninth grade students  starting high school in 2018. Below we provide an overview of our analyses and findings.

View the full study as a PDF here.