COLUMBIA--A new state analysis finds that a
proposal to give tax breaks for private school tuition would cost South
Carolina money, not save it, as proponents long have argued.
The much-anticipated fiscal analysis by the Board of Economic Advisors
calculated that the "Put Parents in Charge" legislation would cost the
state $18.8 million dollars in its first year. The cost would rise to
$201.5 million in fiscal year 2011, when the program is fully implemented.
The findings by the state's chief economist, William Gillespie,
contradict a supporter-funded study that shows the state could bank money
by applying the credits.
In that study, Clemson University economist Cotton Lindsay estimated
total savings, including federal and local dollars, at $227.8 million in
the first year and $931.3 million by 2011.
As the legislation stands, parents would receive tax credits to defray
the cost of private school tuition, home schooling or transferring to
another public school. Those eligible would be parents with taxable income
up to $75,000, or combined salaries of $100,000 or less.
It would allow any individual or business to donate their tax savings
to a scholarship fund.
The House Ways and Means Committee was poised to address the
legislation -- and dozens of possible amendments that could have gutted
the proposal -- but postponed action until next week.
Gillespie refused to comment on the state's analysis until the next
meeting.
The main difference between the studies results from two economists'
interpretations of what it costs the state to educate a child. The state's
analysis finds that if some public school students left for private
schools, the cost for fixed items, such as lights and infrastructure,
remains.Lindsay's study, commissioned by the South Carolina Policy
Council, was based on the determination that fixed costs don't exist, and
that the number of students is directly proportional to the amount spent
by the school district.
Some proponents, including Gov. Mark Sanford, immediately termed the
state's analysis flawed. Others, including bill co-sponsor Rep. Shirley
Hinson, said they couldn't support the tax breaks if it would cost the
state money.
"We certainly are going to be taking a very close look at Dr.
Gillespie's study," said Sanford spokesman Will Folks. "I think the
governor will put a bit more faith in the Lindsay study."
Randy Page, president of South Carolinians for Responsible Government,
said the state's analysis showed "a clear bias toward minimizing the
positive aspects of the proposed legislation."
"We see the BEA report as a flawed but encouraging step in the right
direction," said Page, whose group is one of the main supporters of the
bill. Page noted that the report supports his group's assertion that the
state saves money on each child who provides a tax credit.
The BEA analysis finds that the state would save some money because it
would be educating fewer students, but those savings do not overcome the
loss of revenues through the tax credits.
Hinson, a Goose Creek Republican, said she's concerned about the new
cost estimate.
"The whole time that we've been reviewing this bill it's been sold that
it will not cost public schools, that it's a savings to the state," she
said. "It is very contradictory.
"We've got to find out the criteria that Dr. Gillespie used and the
criteria that the Policy Council used and take a look at where we are,"
Hinson said. "Because right now we are, it seems, miles apart in our
bottom line."
The BEA study estimates that only 12,261 students will take the credits
the first year. That excludes current private school students, who aren't
eligible the first year.
At full implementation, when all private school students are included,
the BEA estimates 77,253 will take advantage of the credit.
Lindsay's study says about 100,000 students would position their
parents for the credit.
The state analysis considered the possibility that more students would
leave, but still found that costs outweighed savings.