School Passports: Making the Stimulus Pay Off for Students and State Budgets
Author: Gottlob, Brian
Date: 2011-01-00
Type: Reports - Research
Subjects: State Aid,Budgets,State Government,Tuition,Scholarships,Federal Aid,Public Schools,Private Schools,Enrollment Trends,Educational Finance,Financial Support,Budgeting,Program Effectiveness,Federal Programs,Incentives,Educational Change,Change Strategies,Resource Allocation

The Obama Administration is currently using more than $4 billion in federal stimulus funds in a controversial program called Race to The Top in an attempt to improve student achievement in public schools throughout the country. However, this study analyzes a different approach to spending stimulus funds from the American Recovery and Reinvestment Act--creation of a $4 billion tuition scholarship or education voucher program to enable public school students in 50 states to attend private schools of their choice. The purpose of this analysis is to generate, and then evaluate in comparison to other reforms, a competition-based education reform, while providing states with lasting fiscal benefits that continue beyond the life of stimulus funds. The study examines the impact the proposed tuition scholarship program would have on current public and private school enrollments in each state, and calculates the annual fiscal impact on states after stimulus funding is removed and states assume financial responsibility for the program. Finally, the discussion highlights some of the design features and key variables states could use to maximize fiscal benefits and achieve a variety of different educational and equity objectives. Key findings include: (1) Unlike some reforms funded by the Race to the Top program, the financial rewards for states inherent in the School Passport program provide an incentive for states to continue the program long after federal funds for the program cease; (2) A $4 billion School Passport tuition scholarship program, funded with remaining stimulus funds, would provide between 420,000 and 630,000 annual tuition scholarships and produce savings for states long after stimulus funding ends; (3) In return for an initial, one-time federal investment of $4 billion, a School Passport program with scholarship values of between $2,000 and $2,250 would generate annual savings for states of $1 billion to $1.6 billion once states assume financial responsibility for the program; (4) The School Passport program will create a competition-based education reform program of a large enough scale to be evaluated against other reforms funded by the Race to the Top; (5) If School Passport scholarship values are set at $2,250 or below, every state in the nation will realize annual fiscal savings from the program once states assume financial responsibility for the program, but some states can set scholarship values significantly higher and still realize savings; and (6) A few key design features (e.g. the value of scholarships and the number of years over which federal funding for the program is spread) can be modified in each state to accommodate capacity constraints in private schools and to generate different levels of desired savings. (Contains 9 figures, 4 tables and 12 notes.)