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Fiscal-Impact-Calculator

A State Fiscal Impact Calculator for Private School Choice Proposals || John Merrifield || October 22, 2015

Alleged fiscal impact often determines the political fate of private school choice proposals. So, the sad state of fiscal impact assessment for such proposals (“fiscal notes”) had become a major barrier to the kind of school system transformation we need. So, an online fiscal notes calculator was developed to provide a solid basis for much-improved, transparent fiscal impact assessment for private school legislation; a tool to help legislative staff better meet the demand for fast fiscal impact assessment. Since anyone can access the calculator website, and enter the information that determines fiscal impact, the calculator is also useful for designing private school choice proposals, and for holding fiscal analysts accountable for their fiscal impact assessments.

Such proposals typically arise at the state level, so the calculator estimates the state government fiscal impact of private school choice proposals. It provides an estimate with and without graduation rate effects. The calculator also estimates the impact of the proposed legislation’s impact on average school district per pupil spending, and teacher salaries, public and private.

There are two versions of the calculator. The “Cursory” version provides a rough fiscal impact assessment from little information. The ‘Premium” version takes account of many more factors in providing a likely much more accurate prediction of the proposed legislation’s fiscal impact. A technical paper available at the calculator website provides a detailed description of how the fiscal impact determinants are taken into account. Among the significant, but typically neglected fiscal impact determinants taken into account by the calculator is the private school tuition change that may result from increased demand for private school slots, and the effect on school spending if/when school choice expansion affects graduation rates.

Fiscal analysts must ‘contextualize’ the information provided by the calculator; that is, appropriately apply it to the unique circumstances of their state. For example, the calculator might specify that a particular proposal would reduce state spending by $X even when a particular state’s policies directly specify such spending; for example, in California where schools get a certain percentage of state revenue. So, in that context, the estimated fiscal savings are actually dollars that will be re-allocated within the school system. Also, some states specify lags in spending change. So, a fiscal impact estimated by the calculator might actually occur in a different fiscal year than the one estimated by the calculator.

Since reasonable people can disagree on the calculator’s assumptions, the calculator provides for some sensitivity analysis. That is, the user can enter alternate values for some factors to see how the difference in assumptions impacts the fiscal impact estimate. More of that will be provided, in time, as research and experience define calculator refinement opportunities.

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