Economic Impact of Home and Private Schooling on the Public Education System: Iowa as a Case Study

Economic Impact of Home and Private Schooling on the Public Education System: Iowa as a Case Study

 

 Douglas P. Dotterweich

Professor of Economics and Eastman Credit Union Fellow in the

Department of Economics and Finance, East Tennessee State University, Johnson City, Tennessee,  dotterwe@etsu.edu

 

Michael M. McKinney

Associate Professor of Management in the Department of Management and Marketing, East Tennessee State University, Johnson City, Tennessee, mckinney@etsu.edu

 

Leigh Anne M. Michael

Research Assistant and Candidate, Master of Community and Regional Planning, University of Oregon, Eugene, Oregon, lmichael@uoregon.edu

 

Abstract

This article examined whether home and private school students provided a net benefit or cost to the public education system in Iowa. This research found 15,975 home school and 33,933 private school students enrolled during the 2009-10 school year. Certified Annual Reports for the State of Iowa indicated that the annual level of public school funding was $5.048 billion and $10,618 per public school student. Annual cost savings due to home and private school students in 2009-2010 were estimated to be between $88-$149 million for home school and $212-$339 million for private school students, for a combined $300-$488 million using average total cost and property tax savings methods. This amounted to an average savings of between $632 and $945 per Iowa public school student. Because non-public students helped to fund the public school system primarily through property taxes but received a rather small amount of state resources, they provided a net benefit to the public system in Iowa.  The authors believe that further study of tax credits and/or vouchers is warranted to determine whether equity concerns might be served by partial compensation of non-public school households for their dual payments for private and public schooling.

Keywords: homeschooling, homeschool, home education, economic impact, budget, private schooling, finances, public schooling, public education

 

The U.S. Department of Education recently reported that national enrollment levels in private schools dropped in 2009-2010. Generally attributed to the economic downturn, this amounted to a decline of 2% of all private school students (National Center for Education Statistics, 2012). Administrators in public education might perceive this trend as desirable since it could be seen as reducing the drain on public school budgets (Boothe, Bradley, Flick, & Cotton, 1996).  The primary research question to be addressed here is whether home and private schools students are really “costly” to traditional public schools.  This article focused on the state of Iowa and is similar to the approach utilized in two earlier studies conducted in the states of Oregon and Nevada (Ray & Weller, 2003; Wenders & Clements, 2007).

Iowa, like other states, specifically provides statutory authorization for exemptions from compulsory school attendance in the public school system for children located in the state. In addition to attendance at accredited private schools, the Iowa Code provides that a child may receive competent private instruction in the home.  However, removal of a child from the public school system for this purpose can only be accomplished by following the statutory reporting and substantive requirements.  For instance, the parent, guardian, or legal custodian must initially notify the Department of Education that the child is being removed and will be placed under competent private instruction and then provide a detailed outline describing the course of study to be followed by the child.  The home schooled child must then be monitored by the school system to ensure the child is attaining adequate academic progress.  The school districts in Iowa are required by statute and regulations to maintain records to monitor the number of home schooled children and gauge their progress.  Other mandated data must address the number of home schooled children receiving some part of their instruction through dual enrollment in the public school system and the number receiving home school assistance through a public school program.  (Further discussion of these categories takes place prior to Table 5).  Most of the enrollment data utilized in this document was gleaned from those records.

The focus of this article is an examination of the impact of home and private schooling on the public school system in Iowa. The first step in that process was to determine the number of students enrolled in the three educational settings (home, private, and public) and the recent trends for each. This is the subject of the following section.

 

Public and Private School Enrollment Trends

 

This study’s goal was to examine the budgetary impact of home and private schooling on the public education system in Iowa. The authors initially compiled and reviewed data on school enrollments for K-12 education supplied by the Iowa Department of Education (see Table 1).  Analysis of the data revealed striking differences in the trends related to the three types of students included in the table: public, private and home schooled.

Public school enrollment in Iowa has been declining for the past 5 years. The numbers have decreased from 483,335 to 474,227 or by 9,108 (1.9%) between 2004-2005 and 2009-2010.  The rate of decline averaged about four tenths of one percent during the period. While public school enrollment has been declining, the pattern has not been uniform throughout the state. The urban areas surrounding the cities of Des Moines, Iowa City and Cedar Rapids grew by 6,600 students (3.6%) while the more rural areas of the state experienced losses in the range of 6-7% of the public school enrollment 5 years earlier.

Private school enrollment has declined more rapidly than public school enrollment since 2004-2005. The current number of private school students in the state (33,933 in 2009-10) is 2,228 or 6.2% less than 5 years earlier. The urban regions of the state experienced increased private school enrollment while the rural areas saw declines in excess of 10%.

On the other hand, Figure 1 illustrates that home school enrollment in Iowa increased from 5,200 to 14,600 students between 2005-2006 and 2010-2011. That was an increase of 9,400 students or 180%! There were nearly three times as many home schooled students in 2010-11 compared to 6 years earlier.  Following a year of no growth, the 2008-2009 to 2009-2010 school years saw enrollment climb by nearly 5,500 students. This past school year, home school students have actually declined by 1,300 or 8.4%.  In summary, home school enrollment has grown dramatically in the past 6 years, but has experienced flat or declining numbers in some years.

 

 

 

Table 1

Iowa Public, Private and Home School Enrollments: 

2005-2010

 

School

Year

Home

School

Home School Growth Rate Private

School

Private

School

Growth Rate

Public School Public School

Growth Rate

Total

Public & Private (Excluding Home)

Total Public  & Private Growth Rate
2004-05 5,271       – 36,161 -2.91 483,335 -0.35 519,496 -0.53
2005-06 5,455   3.49 35,250 -2.52 483,105 -0.05 518,355 -0.22
2006-07 6,919 26.84 34,278  -2.76 482,584 -0.11 516,862 -0.29
2007-08 10,560 52.62 34,722   -1.30 480,609 -0.41 515,331 -0.30
2008-09 10,524 0.34 34,272   -1.30 477,019 -0.75 511,291 -0.78
2009-10 15,975 51.79 33,933  -0.99 474,227 -0.58 508,160  -0.61

 

Source: Home school figures – (Personal communication, Carla Schimelfenig, Manager, Iowa Dept. of Education); Area Education Agency personnel contacts, and author estimates; private and public school enrollment figures (Iowa Department of Education Condition of Education Reports 2005-2010); figures for homeschooling  (Iowa Department of Education) and author estimates.

 

 

 

Figure 1. Source: Iowa Department of Education Bureau of Planning Research Development and Evaluation, Basic Educational Data Survey, Project EASIER Student Archived Files; (correspondence with AEA Chief Administrators) and estimation by the author.

 

 

 

Forms of Home School Enrollment

 

Another important component of this study involved the number of students participating in a combination of home school and public school education programs.  Like other states, the Iowa Code provides for different forms of home school education. Upon request, a home schooled child is entitled to register in a public school in the child’s district of residence for what is called dual enrollment purposes. Under this status, a child is permitted to participate in academic or instructional programs and extracurricular activities available in the child’s grade at the public institution like any regularly enrolled student.  However, in Iowa, such students must receive at least one-quarter of their instruction through the traditional home school method (competent private instruction).  In addition to dual enrollment, Iowa law also provides that a school district may offer assistance to students receiving competent private instruction.  Under the Home School Assistance Program (HSAP) a licensed teacher employed by the public school district provides instruction or instructional supervision to the parent, guardian, or legal custodian of the home schooled child.  These programs impact the state’s funding formula so monitoring student participation was important to this study.

The enrollment numbers for dual enrollment and HSAP’s presented in Table 2 were obtained from the Iowa Department of Education and the nine Area Education Agencies (AEAs) in the state of Iowa.  The process used in developing these numbers was as follows. The Department of Education (DOE), Project EASIER office was contacted to obtain private non-accredited student enrollment for school years 2004-2005 to 2010-2011. This office provided information on the number of home school students in one of three categories: those who are enrolled in the Home School Assistance Program (HSAP), those who are Dual Enrolled in public schools for certain activities such as academics or sports, and those who are registered for both HSAP and Dual Enrollment.

 

Table 2

Composition of Home School Student Enrollment by Type: 2009-2010

HSAP

DUAL ENROLL-MENT DUAL & HSAP CPI Only < 6 or > 16 Total HS
1,895 2,528 3,366 5,321 3,010 15,595

Source: Department of Education (DOE), Project EASIER provided the HSAP, Dual, and Dual & HSAP numbers for all non-accredited private school students; CPI only is from AEA form count, May-July 2011; <6 or >16 were estimated by the author.

Many home schooled children, however, do not participate in either dual enrollment or HSAP programs.  As with students obtaining assistance through the department of education, these children were tracked through the use of Certified Public Instruction (CPI) forms.  The Iowa Code and administrative regulations require that every student not attending a public school or accredited nonpublic school must submit a CPI. These forms must be provided to their local school district and the public educational administrative division in the state (the Area Education Agency or AEA). As no state assistance is received by these students, copies of their CPI forms are not forwarded to the state department of education. Upon learning this from the Division of Research and Statistics of the department of education, extensive efforts were taken to obtain counts of the CPI forms from the individual AEAs.

 

Sources of General and Special Education Revenues in Iowa

 

Once the enrollment figures were obtained, the authors could then turn their attention to the funding sources for public education in Iowa.  There are three main governmental funding sources for general and special education revenues: the state, local, and federal governments. During the past fiscal year, these branches of government provided 46%, 40% and 14%, respectively (Iowa Dept. of Education, Certified Annual Report, 2010).  This study omitted the small quantity of additional funds obtained from other sources.

 

The Iowa Plan

 

To determine funding for each of the state’s 351 school districts, the “Iowa School Aid Formula” is used by Iowa’s K-12 public education system.  The formula is administered through the local school district and the (AEAs). The objective of the Iowa Plan is to guarantee a basic level of funding per student for each of the state’s 351 school districts by using state funds to make up the difference between the local district’s “ability-to-tax” and the a guaranteed state minimum.

The level of funding is based on the actual number of students enrolled on October 1 with enrollment in a particular year impacting funding for the subsequent year.  Students attending school in a different district than the one in which they reside (“open enrolled” students) count in the district where they reside, not where they attend. The funding for such students follows them to their attendance district. The operating budget for a school district is calculated using a school aid formula and the resulting figure is called the combined base district cost. It is found by multiplying the headcount (including any additional weighting by the state for special purposes) by the state per pupil cost.

The state also determines an allowable growth rate for a school district 2 years prior to the current year on a cost per pupil basis. In FY 2011, the allowable growth rate was 2%. The base funding level was $5,768 and by adding 2%, the state per pupil cost increased to $5,883.

District revenues are raised by a combination of property taxes and general appropriation funds.  Initially, a statewide property tax rate of $5.40 per $1,000 of taxable property tax (uniform levy) is applied to all state property owners and the funds are assigned to the specific school district from which they are raised. General appropriation funds through State foundation aid is then applied to provide the balance of state education funding. The uniform levy plus the state foundation aid fund comprise the majority of total funding for a district with the balance coming from local property tax revenues and federal monies (Ankeny, 2011). Public school revenues are derived from general and special education funds.  For fiscal year 2010, state sources provided 46%, local sources provided 40%, and federal sources provided 14% of total revenues (Iowa Dept. of Education, Certified Annual Report, 2010).

Table 3 provides the statewide revenues of the Iowa Plan for the school year 2009-2010. The revenue from state sources ($2.3 billion – line 11) is primarily from state foundation aid ($1.7 billion – line 8), and state categorical (designated) aid ($546 million – line 9).

 

 

 

Table 3

Combined Statewide General and Special Education Fund: Fiscal Year 2010

 

LINE

NUMBER

 

REVENUE SOURCES

 

AMOUNT

1 Property taxes $1,531,896,838
2 Income taxes/surtaxes $84,824,202
3 Excise and other taxes $58,859,742
4 Tuition $247,554,790
5 Miscellaneous Local Sources $115,764,028
6 TOTAL REVENUE FROM LOCAL SOURCES $2,038,899,580
7 REVENUE FROM INTERMEDIATE SOURCES $1,769,292
8 State Foundation Aid $1,704,472,575
9 State Categorical Aid $546,356,779
10 Miscellaneous State Sources $7,760,926
11 TOTAL REVENUE FROM STATE SOURCES $2,291,600,755
       12 American Recovery & Reinvestment Act (ARRA) $325,887,423
13 Restricted indirect grants-in-aid through the state $273,624,970
14 Miscellaneous Federal Sources $105,355,574
15 TOTAL REVENUE FROM FEDERAL SOURCES $704,867,967
16 OTHER REVENUES & ADJUSTMENTS $11,502,037
17 TOTAL REVENUES ALL SOURCES $5,048,639,634

 

                Source: Certified Annual Report, 2010.

 

 

Local sources provided an additional $2 billion – line 6. Property taxes and tuition payments accounted for the greatest share of local revenues with $1.5 billion – line 1 and $248 million – line 4, respectively. Lines 2 and 3 indicate that Income and Excise taxes accounted for an additional $141 million worth of local revenue. Federal support for local schools is reported in lines 12-15. The American Recovery and Reinvestment Act provided $325 million while restricted indirect grants-in-aid through the state accounted for $274 million, which is shown in line 13.

In summary, state support is the sum of lines 8-11, local support is summed in lines 1-6, and federal support sources are in lines 12-15. The sum of lines 6, 7, 11, 15, and 16 is reported as total revenue in line 17 at the bottom of Table 3. For Fiscal Year 2010, this was $5.048 billion.

By dividing “total revenue” from line 17 of Table 3 by the number of students enrolled in public school (“full enrollment”) in 2009-2010 (see Table 1 and column 1 of Table 4), a per-student value is obtained. This figure ($10,618) is labeled “Average Current $ Per Student” in column 6 of Table 4.

 

Other Property Tax Revenues

 

As stated above, combined district costs are funded through the uniform levy, which is a statewide property tax of $5.40 per $1,000 of taxable valuation, and a general fund appropriation to fund State foundation aid for each school district. These funds are the basis for calculating the “Average Current $ Per Student” from column 6 of Table 4.  However, these amounts do not satisfy the entire funding needs of each school district. Therefore, local districts must provide additional funds through a local property tax levy to meet the balance of the district’s combined district costs. Column 7 includes these additional local funds and is labeled “Average Total $ Per Student” which is given in column 7 of Table 4. State funding, therefore, generally varies inversely with the local region’s “ability to tax” (Ankeny, 2011).

 

Basic Support Per Student

 

Having established enrollment numbers and identified revenue streams, the next step was to determine the amount of support received by each student.  An Iowa school district presentation accessed on the Web provided information on the state educational funding formula and basic support per student. It stated that

expenditures on educational programs are funded and equalized by the state foundation formula. Facility expenditures are separate from the school finance formula and may not be used for program expenditures. The school foundation formula is funded through State general fund appropriations and locally raised property taxes. Application of the foundation formula results in a maximum expenditure per student (ceiling) by prescribing a district specific maximum amount that can be raised locally. This approach has avoided the lawsuits that other states have faced by applying a minimum level of spending (floor) for each district. It is important to note that Iowa’s Constitution does not guarantee educational equity. (Ankeny School District, 2011)

 

An important element in the Iowa Plan is the level of “basic support per student” which is determined by a variety of school district factors.  The apportionment formula considers school district student enrollment, transportation costs, special education unit costs allocation and a local wealth factor which incorporates each school district’s relative ability to raise local taxes. Basic support per student figures for Iowa for the past 6 fiscal years is reported in Table 5.

 

Cost Savings From Home and Private School Students in Iowa

 

Cost savings from home and private school students were calculated using two approaches. The first method used the average cost of educating a public school student in Iowa and included all state, local and federal revenues for public education. The average cost of education per student was multiplied by the number of home and private school students to estimate the cost savings from not having to educate these students. In Iowa, the state funding formula provides education revenues based on the number of public school students enrolled the previous fall. Thus, increases in home and private school enrollment that are not compensated by increased public enrollment could reduce public school funding to some extent.

 

 

 

Table 4

Iowa School District Revenues Per Student: School Year 2009-2010

 

IOWA Full

Enroll-

ment

[1]

State $ Per Student

[2]

Current Local $ Per Student

[3]

Total Local $ Per Student

[4]

Federal $ Per Student

[5]

Average Current $ Per Student

[2]+[3]+[5]

Average Total $ Per Student

[2]+[4]+[5]

All Public

 

474,227 $4,832 $1,073 $4,299 $1,486 $7,392 $10,618

 

Source: Table 1; Certified Annual Report, 2010.

 

 

Table 5

Iowa Department of Education Statewide Basic Support Per Student: 2005-2010

 

School Year Ending Support Per Student Current $ Annual Change

(Percent)

Support Per Student

(2010 $)

Annual Change

(Percent)

Iowa Current Cost Per Student

(2010 $)

Grant Wood

AEA 10

Current Cost Per Student

(2010 $)

Heartland

AEA 11

Current Cost per Student

(2010 $)

2005 $9,155 4.25 $10,222 0.83      
2006 $8,780 -4.10 $9,497 -7.09 $9,488 $9,333 $9,248
2007 $9,237 5.20 $9,714 2.28 $9,684 $9,448 $9,496
2008 $9,829 6.41 $9,954 2.48 $9,955 $9,657 $9,850
2009 $10,405 5.87 $10,576 6.24 $10,559 $10,330 $10,407
2010 $10,646 2.31 $10,646 0.66 $10,722 $10,557 $10,398

 

 

 

 

 

 

 

 

 

 

 

 

Source: Certified Annual Financial Reports, 2005-2010; Iowa Department of Education Condition of Education Reports, 2005-2010.

 

 

 

Cost savings were also calculated using a second approach – property tax collections per public school student. Only state and local property tax revenues were included, which comprised about 61% of public education funding, and these funds were not directly dependent on student enrollment, but rather the value of state and district properties. Property tax revenue per public school student was then multiplied by the number of home and private school students to calculate property tax savings from non-public students.

There are two types of expenditures incurred by the public school system in educating non-public school students that had to be examined.  First, school districts provided transportation for some private students, either directly or indirectly by compensating parents or other service providers.  Second, a home school student who was either dual enrolled, or participating in the home school assistance program, or both, caused a local district to incur additional expenses. The State of Iowa employs a funding formula based on a fractional portion of the public school student cost to reimburse the district for these additional expenses.  While it is likely the intent of the state funding was to fully cover the added expenses, this report assumed it does not do so completely. Therefore, these two types of incurred costs were viewed as public school expenditures associated with non-public school students to be subtracted from gross savings to produce a net figure.

 

Average Cost Savings

 

The first approach to estimating the economic impact of home and private school student was based on the assumption that these students pay the same taxes as public school students. Therefore, estimated savings would be obtained by multiplying the average costs per public school student by the number of students who choose not enroll in the public schools. There are two variations on this approach. The first is called the annual current costs and does not include local property tax revenues and the second is annual total cost savings including the local property taxes. This average cost method was used in Tables 6-8 in the following section.

The savings from home school and private school students are recorded in Tables 6 and 7. The savings are based on the average current and total $ per student figures from the last two columns of Table 4. For Table 6, the average current $ per public school student from state, local and federal sources is in column 6. Table 1 provided the number of public, home school, and private school students enrolled in 2009-2010. By multiplying the average current $ per student by the enrollment figures, the average current cost savings for home and private school students is  reported in columns 5 and 6 of Table 6, respectively. Column 7 of Table 7 reports the combined annual current cost savings from both home and private school students.

 

Current cost savings due to home and private school students.

 

Households who educate their children at home saved the public system of Iowa in excess of $118 million annually. Households who send their children to private schools produced additional savings of $250 million during the same school year. The combined impact of home and private school household support for the Iowa public schools was $369 million. This amounted to current cost savings of $778 per public school student (see Table 6). Table 6 was calculated using current cost per public school student ($7,392) not including local property taxes.

 

 

 

 

 

 

Table 6

Annual Current Cost Savings Due to Home and Private School Students: 2009-2010

 

 

 

 

 

 

 

 

 

Area Name

 

 

 

 

 

Number of Public School Students [1]

 

 

 

 

 

Number of  Home School Students

 [2]

 

 

 

 

 

Number of Private School Students

[3]

 

 

 

Average Current Cost Per Public School Student

[4]

 

 

 

 

Annual Current Cost Savings from Home School Students

[5]

 

 

 

 

Annual Current Cost Savings from Private School Students

[6]

 

 

 

Annual Current Cost Savings from Home & Private School Students

[7]

 

 

 

Annual Savings Per Public School Student

[8]

Iowa Total 474,227 15,975 33,933 $7,392 $118,088,812 $250,836,161 $368,924,973 $778

Source: Tables 1, 4

 

 

Table 7

Annual Total Cost Savings Due to Home and Private School Students – 2009-10

 

 

 

 

 

 

Area Name

 

 

 

Number of Public School Students [1]

 

 

 

Number

of Home School Students

     [2]

 

 

 

Number of Private School Students

[3]

 

 

Average Total Cost Per Public School Student

[4]

 

 

Annual Total Cost Savings from Home School Students

[5]

 

 

Annual Total Cost Savings from Private School Students

[6]

 

 

Annual Total Cost Savings from Home & Private School Students

[7]

Annual Total Savings Per Public School Student

[8]

Iowa Total 474,227 15,975 33,933 $10,618 $169,623,426 $360,302,456 $529,925,882 $1,117

 

 

Source: Tables 1, 4

 

 

 

Total cost savings due to home and private school students.

 

Annual total cost savings from home school students were $170 million and $360 million from private school students as reported in Table 7. This figure was larger than the annual current cost savings of Table 6 because the earlier table did not include public education expenditures raised through local property taxes. Total cost savings per public school student were $1,117. Table 7 utilized the average total cost per public school student ($10,618) including local property taxes.

The annual total cost savings from Table 7 are summarized in Table 8 and are based on the average total cost for public schools including property taxes. For 2009-10, the potential cost savings are $170 million from home school students, and an additional $360 million that can be attributed to private school students, for a combined savings of $530 million. These are the costs that Iowa public schools save by not having to educate home and private school students.  These savings amount to $1,117 per public school student. The per-student cost savings are derived by dividing the total dollar amount saved by the number of public school students in Iowa.

 

 

Property Tax Savings

 

The second method for estimating cost savings from home and private school students included only state and local property tax revenues generated from private school households. It assumed these revenues continue to be available to the public system while the non-public school students enjoy few state benefits. These property tax savings are reported in Tables 9-10.

 

Net Cost Savings After Expense Adjustments

 

A total of $3.2 million in property taxes was paid by home and private school households in 2009-2010. These property taxes amounted to $6,825 per public school student.  Property tax cost savings measure $109 million for home school students and an additional $232 million for private school schools. This amounts to $718 per public school student. The combined annual property tax savings for home and private school students is reported in Table 10 as $340 million for 2009-2010.

 

 

 

 

Table 8

Annual Total Cost Savings Due to Home and Private School Students: 2009-2010

 

Annual Cost Savings from Home School Students

($ Millions)

[1]

Annual Cost Savings from Private School Students

($ Millions)

[2]

Annual Cost Savings from Home & Private School Students

($ Millions)

[3]

Annual Total Cost Savings Per Public School Student

[4]

$169.6 $360.3 $529.9 $1,117

 

Source: Table 4 based on Average Total Costs.

 

Table 9

Annual Property Tax Cost Savings Due to Home and Private School Students: 2009-2010

 

STATE Number of Public School Students

[1]

Number of Home School Students

[2]

Number of Private School Students

[3]

Property Tax Revenue

($Millions)

[4]

Property Tax Revenue

Per Public School Student

[5]

Property Tax Cost Savings from Home School Students

($Millions)

[6] 

Property Tax Cost Savings from Private School Students

($Millions)

[7] 

Property Tax Cost Savings per Public School Student

 [8]

Iowa Total 474,228 15,595 33,933 $3,236.369 $6,825 $109,021 $231,576 $718

 

Sources: Tables 1-3, Certified Annual Report, 2010; values based on local and state property tax.

 

 

Table 10

Annual Property Tax Savings Due to Home and Private School Students: 2009-2010

 

Annual Property Tax Savings from Home School Students

($ Millions)

[1]

Annual Property Tax Savings from Private School Students

($ Millions)

[2]

Annual Property Tax Savings from Home & Private School Students

($ Millions)

[3]

Property Tax Savings Per Public School Student

[4]

$109.0 $231.6 $340.6 $718

 

Source: Table 7 based on Average Total Costs.

 

 

 

The average and property tax cost savings estimated for home and private school households thus far have not been adjusted for costs to the public system associated with educating non-public school students and/or the benefits received by non-public school households. Public expenditures for private school student transportation, and dual enrollment and/or HSAP are reported in Tables 11-12. .

Some non-public school students receive transportation support from the public school system in getting to and from school. Private school transportation cost information was obtained through communication with the Iowa Department of Education. Nearly 34,000 private school students received financial support for transportation-related reasons. Parents received payments of nearly $3 million, school districts got nearly $4.5 million and private contractors obtained an additional $1.1 million. Total transportation payments amounted to $8.6 million for the academic year 2009-2010.

The Iowa Department of Education reported 7,789 students in Dual Enrollment, the Home School Assistance Program, or both for 2009-2010. The school districts that assisted in educating these students received a total of $12,279,894 during that academic year. The actual payments for each program were not available for 2009-10 but were estimated by the author on a per student basis from 2010-2011 statistics.

 

Summary: Actual Total Cost and Property Tax Savings

 

A total of $20.9 million in state expenditures for private school students was reported in Tables 11-12 for 2009-2010. These figures must now be subtracted from the gross cost savings found in Tables 8 and 10. Tables 13 and 14 provide these net annual total and property tax cost savings.

Table 13 reports net annual total cost savings of $149 million from home school students with an additional $339 million from private school students. The combined net total cost savings using the average cost method is $488 million per year or $945 per public school student.

 

 

 

 

Table 11

Iowa Private School Transportation Costs: 2009-2010

 

Private School Students  

Parental Payments

 

District Payments

Contractor Payments  

Total Payments

33,933 $2,944,718 $4,473,096 $1,169,367 $8,587,181

 

Sources: Table 1; Personal Communication, Max Christensen, School Transportation Advisory Group, Iowa Department of Education, Des Moines, IA (2012, May 12); payments by type are estimated based on 2010-11 transportation cost data.

 

 

Table 12

Iowa Private School Dual Enrollment (DE), Home School Assistance Program (HSAP), and (DE) & (HSAP) Costs:

2009-2010

 

Funding Type Number of Students Program Costs
Dual Enrollment 2,528 $1,430, 848
Home School Assistance Program (HSAP) 1,895 $3,221,500
Dual Enrollment & HSAP 3,366 $7,627,356
Total Students Funded 7,789 $12,279,894

 

Sources:  Personal communication, Jay Pennington, Bureau of Planning Research Development and Evaluation, Iowa Department of Education, Des Moines, IA (2012, May);  Basic educational data survey: project EASIER student archived files; and estimates provided by the author.     Individual program cost numbers do not add perfectly due to rounding.

 

 

Table 13

Net Annual Total Cost Savings Due To Home and Private School Students Adjusted for State Costs:2009-2010

 

Net Annual Total Cost Savings from Home School Students

[1]

Net Annual Total Cost Savings from Private School Students

[2]

Net Annual Total Cost Savings from Home & Private School Students

[3]

Net Annual Total Cost Savings Per Public School Student

[4]

$148.8 $339.4 $488.2 $945

 

Source: Table 7 based on Average Total Costs.

 

Table 14

Net Property Tax Savings Due to Home and Private School Students Adjusted for State Costs:

2009-2010

 

Net Annual Property Tax  Savings from Home School Students

($Millions)

[1]

 

Net Annual Property Tax  Savings from Private School Students

[2]

Net Annual Property Tax  Savings from

Home & Private School Students

[3]

 

Net Annual Property Tax Savings Per Public School Student

[4]

$88.2 $211.7 $299.9 $632

 

Source: Table 8 based on Average Property Tax Savings.

 

 

 

An alternative, and more conservative, estimate of the public school system’s net annual cost savings based solely on property tax savings is provided in Table 14. Home school students generate $88 million in net savings and an additional $212 million is produced from private school students for a net annual total property tax savings of $300 million or $632 per public school student.

In 2009-2010, there were nearly 49,908 students enrolled in homes or private schools or 10.5% of the number in public schools. If the growth in home school enrollment seen in the last five years continues, and the Iowa Department of Education private and public school projections are accurate (Iowa Dept. of Education, Condition of Education Report, 2010), by 2014-2015 the proportion of Iowa students in home or private schooling could increase to 12% of public school enrollment. This would produce even greater savings for the public school system or the residents of Iowa.

 

Policy Implications

 

The projected future savings from home and private school students might be used in various ways. State taxpayers might benefit directly if the savings are used to reduce tax burdens.  Alternatively, the savings could be spent on other public programs or to improve the education of those students who remain in public schools.

There is often a tendency from those who are part of the public education system to believe that school system funding will suffer if increasing numbers of students shift to other educational options.  This article has demonstrated that a majority of the funding for public education in Iowa is derived from local and statewide property taxes. This portion of the funding formula is paid by property owners regardless of whether or not they receive any current direct benefits (i.e., by having children enrolled in school).  The property tax portion of local educational revenue is fairly fixed as it depends more upon the tax rate set by the local government than the number of students in the system. This funding source represents a majority (around 60%) of the income received per child under the funding formula.  The other 40% of the revenue stream might be considered variable revenue which may fluctuate according to student population.  When a student is removed from the public system, it is possible that up to 40% of the funding for that student might be lost by the public system.  However, it seems more realistic to expect the state to take back less than the entire 40% due under the funding formula. The remaining revenue from property taxes in conjunction with the funding formula should provide sufficient monies that more spending per public school student remaining in the system could be possible.

Since the students that choose not to remain in the public system are providing benefits to the public school students in the form of unused revenues, their households might be partially compensated by receiving a tax credit for a portion of their property taxes paid. Alternatively, a voucher might be provided to the student’s family to allow the additional expense of alternative schooling to be partially offset. It could be argued that those who choose private education are actually subject to double taxation by paying toward the public system as well as the private system. As tax credits and vouchers are discussed in various states throughout the country, care should be taken to insure that school administrators are not allowed to pressure their legislators to dismiss the matter out of hand without careful study. For instance, one school board in the state of Tennessee recently sent a resolution to the state legislature voicing its adamant opposition to these concepts.  Although neither approach was addressed in this article, it is the opinion of the authors that such policy options are deserving of additional research in the future.

 

References

 

Ankeny School District (2011).  The financial basics. Ankeny, IA.  Retrieved 7/7/11 from http://business-finance- services.ankeny.school/fusion.us/modules/groups/ homepagefiles/gwp/694384

Boothe, J, Bradley, L, Flick, T. M, & Cotton, K. (1996). School size, school climate, and student performance [Monograph]. School improvement series, The Northwest Regional Educational Laboratory. http://nwrel.org/scpd/sirs/10/c020.html

Iowa Department of Education, Bureau of Planning Research Development and Evaluation. (2010). Basic educational data survey: project EASIER student archived files.  Des Moines. http://www.:iowa.gov/educate/

Iowa Department of Education. (2010). Certified annual report. Des Moines. http://www.:iowa.gov/educate/

Iowa Department of Education.  (2005-2010). Certified annual financial reports.  Des Moines. http://www.:iowa.gov/educate/

Iowa Department of Education.  (2005-2010). Condition of education reports.  Des Moines. http://www.:iowa.gov/educate/

National Center for Education Statistics.  (2012). Condition of education. Washington, DC. http://nces.ed.gov/

Ray, B., & Weller, N. (2003).  Homeschooling: an overview and financial implications for public schools. School Business Affairs, 69(5), 22-26

Wenders, J., & Clements, A.  (2007). An analysis of the economic impact of home and private                schooling in Nevada.  Home School Researcher, 17(2), 13-35