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School Vouchers in Colorado

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School voucher bills are a hardy perennial at the legislature. The last few years they've appeared in the guise of income tax credits. Perhaps proponents have high incomes.

The income tax twist tends to route these bills thought the Finance Committee. I was moved to comment on fresh-scrubbed home school family testimony last year: "Had I enjoyed the benefit of home schooling, the price would have been my mother's sanity."

Most discussion focuses on policy issues. We collect public school taxes seeking the most economic path to educate Colorado's 850,000-some public students. Eighty percent of those students attend the dozen largest of Colorado's 178 school districts. Economies of scale compensate for bureaucratic inefficiencies.

Some families are wealthy enough to educate their children privately. They'd appreciate a public subsidy, but will use private schools regardless. A public subsidy is a gift to the wealthy family, a dead loss to the system.

Low income families will never cover private tuition even with a subsidy. But what happens with those just on the edge of scraping together private school tuition? A public subsidy could tip the balance. Does removing those children save the system more or less than the cost of the subsidy?

So lawmakers have an idea how a bill will affect the state's budget, they hire a non-partisan professional staff of economists to analyze the fiscal impact of each bill. No one is allowed to vote until the Fiscal Note is released. It takes five years to train a good analyst. A bad note dooms a bill. Before anyone else sees it, the analyst privately previews a Note with its legislative sponsor. Analysts are better than any clergy at delivering bad news.

Occasionally discovering a Note's true message takes a little digging.

This year's school voucher bill Note shows the program costing the state the first year, but saving the state $61.5m fiscal year 2012-2013, and more in subsequent years (PDF). The savings turn out to be a mirage.

The note analyst is required to draft the note in accord with existing law.

For fiscal year 2011-2012, beginning July 1, 2011, the legislature has created a "budget stabilization factor." To balance the state's budget, Gov. Hickenlooper suggests we use it to suck $800M out of the schools. Tuition tax credits reduce state revenue, but after cutting $800M out of the schools, moving a few children produces no measurable savings. The state has a net loss.

We have a mirage because the legislature hasn't yet created a "budget stabilization factor" for the next year, 2012-2013. The reality, of course, is without a massive revenue increase we will have another budget stabilization factor in 2012-2013; there will be no other way to balance the budget.

Once the stabilization factor is in the law, the end result for 2012-2013 will be the same as 2011-2012 -- a net loss to the state. Until the factor is in law, the analyst must pretend moving children to private schools in 2013-2013 can have a measurable impact on school costs. For the moment, pretense rules.