$10,700 Per Student: The Estimated Cost of Arizona’s Private School Subsidy Programs

September 5, 2018

Policy Paper

September 5, 2018


$10,700 Per Student: The Estimated Cost of Arizona’s Private School Subsidy Programs

$62 Million Extra Cost to State General Fund


Dave Wells, Ph.D.

Research Director, Grand Canyon Institute


Executive Summary

Arizona is identified as a leader in school choice across the United States and has two programs that subsidize private school tuition. It established the country’s first private school tax credit program two decades ago.[1]  In 2017, Arizona’s legislature passed bill SB1431 to make school vouchers, known as Empowerment Scholarship Accounts (ESA), available to all K-12 school students.[2] The school choice proposition is that families that are dissatisfied with their public school options can apply for a tuition tax credit scholarship or an ESA voucher to attend a private school.

Proponents of the programs regularly claim that they save taxpayer dollars. Earlier this year Senate President Steve Yarbrough claimed in reference to tuition tax credit scholarships, “we actually save money on that program. Those scholarships are considerably less than what it costs to pay for those same students to go to a public school.”[3] State Senator, now Congresswoman, Debbie Lesko put forward a similar argument for her bill SB1431 to expand ESA vouchers for private schools in 2017. She said, “They also save taxpayers money about $4,300 per year per student.”[4]

Yarbrough is technically correct, most tax credit scholarships are valued at less than what the state pays per pupil to attend a public school but he doesn’t take into account that students typically receive multiple scholarships, which in aggregate can surpass the annual per pupil cost of public education. For regular education students in 2015-2016, district schools received base funding of $4,112, which with transportation and district additional assistance was still less than $4,400.  Charter schools base funding for the same students with charter additional assistance totaled less than $6,000 per student.[5]

Importantly, both Yarborough and Lesko assume in their calculations that any student receiving a tuition tax credit scholarship or an ESA voucher would have otherwise attended a public school. If this were true, then we would see far higher enrollment in private schools than we do. In fact, since the program’s inception, while the number of students attending private schools has modestly increased the percentage of students attending private schools has decreased instead of increased as the number of K-12 students in the state has grown.  Figure 1 excludes any administrative costs.

Figure1 Growing Tax Subsidies to Private School Less Enrollment

GCI’s analysis of enrollment numbers indicate that the tax dollar subsidy programs have impacted private school enrollment; however, their fiscal effectiveness is greatly overstated by Yarbrough and Lesko. In this analysis, we control for national trends in private school enrollment and the growth of charter school enrollment, which is a substitute option for private school. GCI estimates that the private school tuition tax credits and ESA vouchers for regular education students[6] have resulted in the estimated enrollment of 13,170 students in 2015-2016 who would not have otherwise attended a private school. GCI’s research finds that Arizona taxpayers spend $10,700 per student from the general fund or in costs of dollars diverted from the General Fund to support private school enrollment. That is 75 percent more than the General Fund support for charter school regular education students, which like students receiving private school subsidies, are completely funded from state resources (or resources diverted from the state) as opposed to varying levels of local property taxes.

GCI’s analysis uses the cost of educating a charter school student as opposed to a district school student for two reasons. First, charter schools are fully funded by the state, similar to private school subsidies; whereas district school funding is a complex and variable mix of local and state funding. Second, the analysis suggests that many, if not most, students attending private schools due to subsidies would enroll in charter schools if these subsidies were eliminated. This approach also provides a more conservative result with regard to the per student cost of private school subsidies because the average cost of educating a regular education student in a district schools is less than a charter school.[7]

Fiscally, the program is ineffective given the lack of academic accountability required of private schools in return for the taxpayer subsidies used for a percentage of their students, especially when compared to charter schools as a substitute.

In addition, recent research into scholastic outcomes find that private schools subsidized with public dollars overall do no better than public schools and may do significantly worse than public schools for similar students. Consequently, private school subsidy programs for regular education students have little accountability, cost significantly more for each student who otherwise would be in a public school, and frequently provide worse academic outcomes compared to equivalent students in public schools.



Key findings of this policy paper are that:

  • The cost to Arizona’s General Fund of the state’s private school subsidy programs is $10,700 per student, 75 percent more than the cost per public school student.
  • The private school subsidy programs cost an extra $62 million overall to provide tax credit scholarships and ESA vouchers for regular education students who would not have otherwise attended private school compared to if they had attended charter schools.
  • The state’s private school subsidy programs have not been successful in increasing private school enrollment, which has decreased slightly as a percent of overall K-12 students since 2009 at 4.0 percent. In fact, private school enrollment has fallen from 5.6 percent since the state introduced its first private school subsidy program in 1999.
  • While student enrollment in private schools has remained relatively flat, the amount spent on private school subsidies from the General Fund has increased nearly 50-fold from $3 million in 1999-2000 to $141 million in 2015-2016 in 2016 dollars.
  • The school choice program that has been successful in terms of enrollment growth has been in the charter sector, not the private school subsidy programs. Charter schools as opposed to private schools offer greater academic accountability and enrollment fairness than private schools due to oversight by the Arizona State Board for Charter Schools.

[1] Rau, Alia Beard (2015), “Arizona’s private school families cash in on state’s tax-credit program,” July 25, https://www.azcentral.com/story/news/arizona/investigations/2015/07/26/private-school-families-arizonatax-credit-program/30647833/

[2] Empowerment Scholarship Accounts are currently available to specific student groups including those with disabilities, those attending D or F rated schools, children in foster care and children of veterans.

[3] Interview on KAET, Horizon, Wednesday, April 25, 2018, https://azpbs.org/horizon/2018/04/teacher-walkout-on-thursday-over-1000-schools-close/ start at 11:30 point in program.

[4] Brahm, Resnik (2017), “Arizona parents want universal school choice, legislator says, but poll doesn’t back it up,” Sunday Square-Off, 12 News, February 5, https://www.12news.com/article/news/politics/sunday-square-off/arizona-parents-want-universal-school-choice-legislator-says-but-poll-doesnt-back-it-up/75-399090934.

[5] For a general overview that includes students with added weights for special needs see “Overview of K-12 Per Pupil Funding for School Districts and Charter Schools’, JLBC Staff. 6/21/2018. https://www.azleg.gov/jlbc/districtvscharterfunding.pdf

[6] Special education students are not included due to the significant cost differences for their education as well as federal dollars publicly-funded schools receive to support these students.

[7] See pages 16 for more details.