Squeezing the Public School Districts: The Fiscal Effect of Eliminating the Louisiana Scholarship Program on State Education Expenditures

Eliminating the Louisiana Scholarship Program (LSP) was proposed as a way to improve the financial situation of the Louisiana Department of Education budget in the current fiscal environment. A study released by the School Choice Demonstration Project (SCDP) found that the net fiscal impact on the Louisiana Department of Education budget would likely be an overall cost increase. In this study, we consider the effects that the removal or reduction of the program would have on individual districts. Districts would receive additional revenue from the state for affected students, but districts would also incur additional costs to educate these students. For each district, we compare the additional costs incurred to the additional funding received from the state. We conclude that the overall fiscal impact on districts will be negative; in other words, the overall additional variable costs incurred by the districts will be greater than the overall additional funding provided to the districts. In fact, we find that only 2 to 7 of the 69 school districts would benefit from the elimination of the program. For the affected districts, the average outcome would be a financial loss of about $1,500 per returning voucher student in 2016. In each scenario, we find that over 80% of student transfers would result in a financial loss for the local district. While we have framed this discussion in terms of the elimination of the LSP, the same analysis would be applicable to any situation that causes students to move from private schools to public schools in Louisiana, including the current funding cap which may force some current LSP students out of the program and has already generated a waitlist of over 400 students for next year