Tuition Tax Credits II
Ronnie Lynn wrote a good article on tuition tax credits ("TTC") in today's Tribune. The study she describes should not be viewed as the determinative factor in the TTC debate. Rather, it is one tool in the tool box, to be used to determine whether TTC could benefit overall funding of public education.
In any study of a complex issue, assumptions will be subject to criticism. On balance, I think the study ends up providing useful data. While I tend to agree that some of the positive numbers might have been overstated (like the marginal cost per student), I also believe that some of the negative numbers also might have been overstated. For example, there is no marginal cost for a student receiving the tax credit, if that student would have gone to private school without the credit. In other words, that student receives the credit but never would have put a financial burden on the public system. For TTC to financially work, there needs to be a certain number of "switchers" -- kids who would have gone to public schools, but, in response to the TTC, opt for private school and, thereby, save the system the cost of providing his education (which cost would have been greater than the TTC offered; hence, a savings to the system).
In determining the cost to the system of those kids who would receive the credit but never would have entered public schools in any event (about 2.7% of the population, by the way), the economists had to determine what percent of those students would qualify for free and reduced lunch (since their cost on the system is greater -- 150% that of other students). The economists used 30% -- meaning they assumed that 3 out of every 10 kids currently enrolled in private schools (without the credit, mind you) qualify for free and reduced lunch. Well, that's obviously too high a factor. If a factor of 10 or 20% had been used, the final number reached by the economists for overall benefit to the system would have been even higher.
Again, the assumptions of the study are subject to challenge and should be challenged. And, that is the beauty of a model. It is capable of accommodating varying projects and assumptions. The model is a tool. And, I'm glad we have it in the tool box to aid our discussion.
In any study of a complex issue, assumptions will be subject to criticism. On balance, I think the study ends up providing useful data. While I tend to agree that some of the positive numbers might have been overstated (like the marginal cost per student), I also believe that some of the negative numbers also might have been overstated. For example, there is no marginal cost for a student receiving the tax credit, if that student would have gone to private school without the credit. In other words, that student receives the credit but never would have put a financial burden on the public system. For TTC to financially work, there needs to be a certain number of "switchers" -- kids who would have gone to public schools, but, in response to the TTC, opt for private school and, thereby, save the system the cost of providing his education (which cost would have been greater than the TTC offered; hence, a savings to the system).
In determining the cost to the system of those kids who would receive the credit but never would have entered public schools in any event (about 2.7% of the population, by the way), the economists had to determine what percent of those students would qualify for free and reduced lunch (since their cost on the system is greater -- 150% that of other students). The economists used 30% -- meaning they assumed that 3 out of every 10 kids currently enrolled in private schools (without the credit, mind you) qualify for free and reduced lunch. Well, that's obviously too high a factor. If a factor of 10 or 20% had been used, the final number reached by the economists for overall benefit to the system would have been even higher.
Again, the assumptions of the study are subject to challenge and should be challenged. And, that is the beauty of a model. It is capable of accommodating varying projects and assumptions. The model is a tool. And, I'm glad we have it in the tool box to aid our discussion.
posted by steve u. at 12/23/2004
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