JLBC memo on School Choice Cost Comparison 2-17-17

Joint Legislative Budget Committee
Staff Memorandum
1716 West Adams Telephone: (602) 926-5491
Phoenix, Arizona 85007 azleg.gov
DATE:
February 17, 2017
TO:
Senator Debbie Lesko
FROM:
Matt Beienburg, Fiscal Analyst
SUBJECT:
REQUESTED SCHOOL CHOICE COST COMPARISON
This memo responds to your request for a comparison of what it would cost for school district students to switch to the Empowerment Scholarship Account (ESA) program under SB 1431 (empowerment scholarships; expansion; phase-in) versus what it would cost if they instead switched to charter schools.
Estimated Impact
Our fiscal note for SB 1431 assumes that 2,300 school district students would switch from district schools to ESAs under the bill in FY 2018 at an estimated net new state cost of $1,840,000. If they instead all switched to charter schools, as you posed in your question, the estimated net new state cost would be $3,220,000, or $1,380,000 higher.
The corresponding higher amounts for the subsequent 3 years would be $3,420,000 for FY 2019, $7,260,000 for FY 2020 and $12,480,000 for FY 2021.
Analysis
Our fiscal note for SB 1431 estimates that 2,300 students would switch from district schools to ESAs under the bill in FY 2018. It likewise estimates that the cumulative number of school district students switching to ESAs under the bill would be 5,700 by FY 2019, 12,100 by FY 2020, and 20,800 by FY 2021.
The General Fund cost of these students switching from a district school to the ESA program is approximately $800 per student. If these students were to instead switch to charter schools, the General Fund cost would be approximately $1,400 per student.
This differential would yield approximately $1,380,000 in FY 2018 (2,300 students X $600 = $1,380,000), $3,420,000 in FY 2019 (5,700 students X $600 = $3,420,000), $7,260,000 in FY 2020 (12,100 students X $600 = $7,260,000), and $12,480,000 in FY 2021 (20,800 students X $600 = $12,480,000).
(Continued)
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Local Government Impact
There would be no net local government impact from school district students switching to charter schools rather than ESAs under this analysis, as both charter schools and the ESA program are funded with state General Fund, rather than local resources.
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Richard Stavneak, Director

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