Ten Birds are in a Tree...

There's a riddle that I told my kids when they were just learning to add and subtract.  "Ten birds are in a tree and you shoot one.  How many are left?"  Most kids will tell you the number is nine.  When you explain that the number is zero because the rest of them fly away, they learn their first lesson in dynamic analysis. 

Some kids never heard that riddle, so they grew up to be journalists.  Here's a great example from today's Republic.

Since 1998, Arizona public schools have raked in more than $263 million in private, tax-deductible donations, while private schools have collected $293 million for scholarships.

That represents a total $556 million in lost state revenue over 10 years.

That's right.  Ten birds minus one bird equals nine birds, and $263 million plus $293 million equals $556 million.  The sentence that presents the total for us would be meaningless surplusage if it were actually correct, but it's, of course, wrong because the reporters have made the bird-in-a-tree mistake.

Let's say that it costs an incremental $10,000 to send a child to public school and that a parent wants to send his child to a private school that costs $6,000.  Then let's suppose that the parent gets access to a $2,000 (that the average scholarship) or $3000, or even the full $6,000 in private scholarship money and is able to send the child to private school. 

Under the Republic's analysis, that represents a lost of $2,000, $3000 or $6000 in state revenue.  However, we know that the state no longer has to pay the $10,000 to educate the student.  So the actual SAVINGS is $8,000, $7,000 or $4,000 depending on the size of the scholarship. 

You may argue that my numbers are wrong because it doesn't cost an incremental $10,000 to educate a child.  The Goldwater Institute would disagree with you on that one.  Besides, it doesn't change my argument.  The private school scholarships enable parents to opt out of public school and they do so at a substantial savings when compared to public school tuition. 

So the "lost state revenue" number in the article is not only simplistic, but it's wrong.  You may think I'm being picky, but the whole point of the article is that the tax credits take money away from education.  The fundamental point of the article is wrong.

So if ten birds are in a tree...

Next week, we can ask the journalists if they would rather have a truck load of nickels or half a truck load of dimes.

Post Script:

There's another aspect of the tax credits that is even too complex for my kids to understand.  Here's the key line from the article.

Schools and parents see these donations as a win-win. Donors get credits on their state taxes, plus a federal tax deduction for a donation;

Golly, doesn't that mean that parents actually make a profit off the credit?  After all, they get the full amount back on their AZ taxes and then they get to deduct the amount on their federal taxes. 

Shame on them.

Sigh. 

I will admit that this one is actually tricky.  But here's a quick crack at it.

Your state tax liability is deductible for federal taxes.  So since the credit reduces your state liability, you have lost a federal deduction.  Making the contribution deductible holds you harmless. 

Another way to look at it is that if you get a state refund, it's taxable for federal purposes, so you need to be able to deduct the contribution for federal purposes in order to offset the taxability of the state refund.

(I've left out any possible Alternative Minimum tax calculations.)

Comments

[Travis]

If you have ten birds in a tree and you shoot one, how many journalists will write a scathing story on the evil dangers of guns and the NRA? The moral is that no matter what the story is, journalists will write about whatever advances their own agenda.

[Julie]

I just asked my 12-year-old son your bird riddle and he answered correctly. He has been homeschooled his entire life. (We are also part of the evil conspiracy to take tax dollars away from public schools.)

[Dewey]

Plenty of liberals seem to believe that loads of life's problems can be solved with another one-cent sales tax, but only official "educators" seem to believe that more than 100 of them can be.

[Do as I say...]

Greg-

Your analysis would be correct if private school students were limited to just one scholarship. There is practically zero accountability on how the $293m has been distributed. STOs and the parents of scholarship receiving children are on the honor system. Nothing stops them from ear-marking contributions, shopping for multiple scholarships, or gaming the system in other ways.

In fact, Republicans in the legislature have repeatedly fought Sen. Ken Cheuvront's attempts to track basic facts about the scholarships distributed. Why won’t you and other Republicans support tracking? Wouldn’t such data prove your point if STOs and Tuition Tax Credits are the huge cost savings you say they are?

[TheShadow]

Greg:

You miss another important part of the equation - with less public school students, there will be fewer public school teachers. Now you have an unemployed teacher. You undoubtedly will argue that the teacher can get employed by the private school. Possibly true, but at a fraction of the already low salary the teacher was getting. Additionally, most private schools are filled with uncredentialed teachers. So you get an inferior product, more unemployed teachers, and more teachers making even less money. This, of course, decreases the taxes received by the state, and increases the amount of unemployemnt insurance and other state benefits that have to be paid out. More losses for the State.

Then factor in that an unemployed or lower salaried teacher spends less at the store, eating out, etc., and other businesses suffer as well. Not exactly the model for getting the economy rocking.

[Name:]

What information that is not already in the reports each STO files with the AZDOR do you need?

Ear-marking contributions would also be a federal tax problem. Every STO is also regulated by the IRS. And, there is nothing wrong with applying for more than one scholarship, but if you get one and the granting organization does means-testing that will show up in the next round.

Pretty easy to find out from the school if the kids got more than one as well.

The cost savings to the state comes from having a kid not in public school. Each county school superintendent knows exactly how many kids are in private school because the parents of kids not in the public system have to tell them where they are to keep the truancy officer away.

[Joe G.]

Teachers exist to serve the student and parent -- not the other way around.

Furthermore, if you wanted to actually "stimulate" the economy, you sure wouldn't pour it into public education.

[Voucher Fan]

"Additionally, most private schools are filled with uncredentialed teachers."

Even if this is true, so what? Based on the typical results achieved by most public schools vs. most private schools, on balance the kids are better off.

Innovative teaching methods that actually raise student achievement will never come from academia. They will come from real people who live in the real world.

[Appleblossom]

For some reason, I am getting the impression that the posters on here would like to shut down the public school system. Hmmm, cannot imagine why.

[todd]

Well, here's the rub - public education is setup to be paid for by the public regardless of whether you have children in private school or no children at all. Perhaps we should now give tax credits to people who have no children, since by not sending having children to send to public school they are saving the taxpayers the full $10000 a year* Of course, if we did this we would quickly have no public education system, which does seem to be the end-game of this whole agenda. Its kind of like how many birds do you have left when you chop down the tree?

*(actually I thought Goldwater was saying it was $9000, but who knows when they have there own special way of calculating this).

[Name:]

First, the cliche'd word is not "uncredentialed" it's "uncertified" and ALL the teachers I know, public and private school, cannot afford to "eat out." That's the first clue, and the rest of the logic is equally suspect.

I think that Shadow character is trying to bait Greg and his readers.

The best hole to poke in that argument, on the chance that we take it seriously, is that if the salaries of teachers are truly abysmally low, then when they lose their jobs the unemployment payments are really just peanuts.

[Charlie W.]

Greg, as someone who pays to send my kid to a private school, thanks for this. We are fortunate to have some of it paid for by scholarships.

As for some of the anti-credit postings so far, it is obvious from their content that they have no clue about the reasons families send their kids to private schools. Shadow especially spews some pretty nasty statements without any stats to back it up; not that I am surprised though.

[Retrorv]

Charlie-Shadow spews some nasty statements?! How about this one: "Bullshit. Source? I doubt it. Another union POS public school teacher defending his own inferior product." I believe we all know what POS stands for. That one is posted by Bing.

[John Galt]

If private schools are inferior and filled with inferior teachers, why would parents ever choose to send their children to a private school? Wouldn't they just keep their children in the superior subsidized public school? I must agree with Bing.

[Lisa Graham Keegan]

Thank God for Greg's brain and its employment.

First of all, the director at Sidwell Friends, school of choice for the Obama girls, was recently asked why they did not certify their staff...answer is because it makes no difference to them or to their students. None of the following schools.. Brophy, Xavier, Salpointe, Tempe Prep or Basis,collectively some of the highest scoring high schools in AZ, require certification for the same reason. Yet they do ask prospective teachers for demonstration of past academic performance. Because that DOES matter.

Currently, 50% of the students in Catholic schools in Phoenix are on some sort of scholarship. In these economic times, families are at deep risk of not being able to sustain their tuition payments even in light of the scholarships offered. Take them away, and we exacerbate the state's deficit as kids return to the public sector. Worse still, achievement likely declines, as families who struggle to pay tuition generally live in areas where their children are assigned to low perfoming schools. Again, like teacher qualification realities, there is good data on that.

We have a financial crisis in this state whose upside is pretty skinny...if there is one, however, it should be a desire by everyone concerned to take advantage of everything we have learned about effective education in order to construct an education funding system that promotes excellence for every child.

Check Bill Gates' comments today...Evidence says we must allow the public or private funds we dedicate to schooling to follow students into independently governed schools of their choice. And to advance the number of high quality options available...be they district schools, charter schools, or access to private schools through the scholarship program.

This state is in denial about its academic performance...we have not progressed as a state, and our newspapers propmote very little urgent discussion about our achievment gap as a state or the gap between students of wealth versus those without it. I still hear or read mostly excuses about how our kids are unique in that they sepak other languages or have greater poverty...each of which can be proven not to be a barrier to the schools...with examples in every public and private sector, by the way... who are making it for their kids against all the odds.

Schools that work attend to the achievment of their students in excrutiating detail. They work uncommon hours and demand the best of their students. They do not get paid more, even though they should.

I love this state. And it is one of my life's biggest disappointments that we have not yet taken responsibility for our substandard achievement.

Let's promote high quality education wherever we see it...and create many more opportunities for it to flourish. We have more critical work to do than to look for ways to undermine what little success we have provided for some children.

[Ken]

I just checked the stats on the private school tuition tax credit program on the ADOR web site. Rounded off, they are:

$54 million in donations (i.e., revenue lost to the state)
27,000 students receiving scholarships

If the program were canceled and, say, 20,000 of those students moved into the public school system, the state would have to pay out about $100 million/yr (at ~$5000/student-yr). Thus, the program saves the state gov’t ~$46m per yr.

Local school districts would also have increased expenses — perhaps $1500/student-yr. That’s an additional $30m. Total savings: ~$76m per yr. Not bad.

[Eric]

"Additionally, most private schools are filled with uncredentialed teachers. So you get an inferior product..."

As one of those teachers that are uncredentialed - or uncertified, if you prefer - I must take issue with The Shadow's argument. Certification has never been the measure of whether a teacher is qualified to do the job. Education and experience are much better yardsticks. Results in the classroom are what count. If one were to compare the achievement level of students in Arizona public schools to that of those in Arizona private schools, the case could be made that the presence of certified teachers is not a necessary factor in the production of well-educated, outstanding students.

[Vox]

"If one were to compare the achievement level of students in Arizona public schools to that of those in Arizona private schools, the case could be made that the presence of certified teachers is not a necessary factor in the production of well-educated, outstanding students."

The case might be made that the presence of certified educators are actually a detriment to well-educated, outstanding students.

There is a very obvious reason that concerned parents choose private school when they have the option.

[Name:]

LGK: I don't care if "we" have progressed as a state, but I can say my kids go to a better charter school in Phoenix than the private school I went to (also in Phoenix).

[Dynamic Analyzer]

I just asked my daughter the bird riddle and she said "10." I asked her how that could be and she said she shot the bird with her camera because she didn't want to kill it. Can we apply this lesson to the school system?

[benson]

Name: Thats the beauty of it : YOU as a parent had the CHOICE.

[TheShadow]

Some places call them certificates, some credentials. Either is correct. However, the greatest indicator of student success is parental involvement in the education process. This is a substantial factor in why, in some situations private schools out perform public shools. Parents who are paying for their child's education directly are much more likely to be involved in the education.

Whether or not private schools actually provide a better education is unclear. Although many times private schools have children perform better on the standardized tests, this does not translate to success in college. Many times it is because the school is teaching to the test, rather than actually teaching a child how to engage in critical thought. A credentialed teacher is much more likely to be able to educate, as they are trained in the differing models of what works for differing students. Although life experience is valuable, it does not necessarily mean they have any idea of how to impart that knowledge to students.

Before you drink too much of the Greg Patterson kool-aid, you should be aware that he is a product of public schools (although I'm sure he hates to admit it).

I do apologize for my late reply. Being gainfully employed, unlike most who worship at the Espresso Pundit altar, I actually have to keep what is left of the economy running.

[todd]

TheShadow,
I would amend one thing in your statement. The greatest predictor of student success is the economic class of the parents. This is a simple fact that gets obscured in these debates.