Released: 2/5/2009
Author(s): Brian J. Gottlob
Many states have enacted or are considering proposals to give tax credits for contributions that provide tuition scholarships for students in K-12 schools to attend the private or public schools of their choice. This study seeks to inform the public and policymakers about the implications for Montana if the state were to enact such a program. The study constructs a model to determine the likely contributions that will be received, the level of participation in the program among families and students of different income levels, and the overall fiscal impact of tax-credit scholarships on state government and local school districts.
In addition to expanding educational opportunity and improving the equity of the education system, a tax-credit scholarship program would generate significant fiscal benefits for local school districts by increasing the available resources for students who remain in public schools. Because much of their revenue does not vary with enrollment, school districts retain much of the funding associated with students who use scholarships to migrate from public to private schools. The overall impact on public schools is an increase in the financial resources available for each student who remains in a public school. Depending on how the program is designed, it could also result in fiscal savings to the state budget. Even if it does not produce a savings at the state level, overall costs will be significantly reduced because public school spending will go down as students leave with scholarships.
