School Choice: Saving Students, Saving Money

How are public schools affected financially when students come and go?

Although almost all state and some federal funding is lost when a students withdraws from a school, local funding does not automatically change. This is unique to K-12 education.

“Remarkably, it’s only public K-12 schools – not higher education, prekindergarten, private schools or any other Georgia business or organization – that get to keep the money of their former customers,” says Dr. Ben Scafidi, director of Kennesaw State University’s Education Economics Center

Some argue that schools can’t necessarily lower spending when students leave.

“I’ve never heard a public school leader say that their costs don’t go up when they add students, so they can’t logically have it both ways,” says Scafidi. “If it is true that virtually all costs are fixed then when public schools add students they shouldn’t get extra money because their costs are fixed.”

According to Scafidi’s research, Georgia’s public school spending averaged $10,227 per student in FY 2011, with 66 percent ($6,699) of the costs variable and 34 percent ($3,528) fixed. In other words, give a student less than $6,699 as a tax credit scholarship or an Education Savings Account and the finances improve in that child’s school district.

The latest data for the average cost of tuition tax credit scholarships is $3,388 per student.

Dr. Scafidi is the director of the Education Economics Center in the Coles College of Business at Kennesaw State University and a senior fellow with the Georgia Public Policy Foundation and the Friedman Foundation for Educational Choice. Previously, he served as chair of the state of Georgia’s Charter Schools Commission, education policy advisor to Gov. Sonny Perdue, on the staff of both of Gov. Roy Barnes’ Education Reform Study Commissions, and as an expert witness for the state of Georgia in school funding litigation.

A detailed report on this subject, “The Fiscal Effects of School Choice Programs on Public School Districts,” is available from the Friedman Foundation for Educational Choice.