New NC Justice Center report finds proposal would cost the state more than $170 million over next five years
RALEIGH (June 8, 2016) — The Senate’s budget proposal makes changes to the Opportunity Scholarship voucher program that could cost North Carolina over $170 million during the next five years, according to a new report from the NC Justice Center’s Education & Law Project.
The changes under Section 11A.3 of the Senate budget proposal would lead to annual increases in funding to the Opportunity Scholarship Program, which provides public funding for vouchers of up to $4,200 per year to eligible students with a family income of less than 246.05% of the federal poverty level. Such an increase would cost North Carolina taxpayers over $170 million over the next five years, with costs increasing each year, the report said, as the program “matures” and the initial cohort of private students carries their scholarships from kindergarten through graduation.
“The Opportunity Scholarship Program contains no meaningful accountability measures, so it is unclear what benefit North Carolina’s citizens are receiving in exchange for these increased costs,” said Kris Nordstrom of the Education & Law Project and author of the report. “Policymakers have no way to determine whether the changes proposed will hurt or harm educational delivery for North Carolina’s students.”
Voucher programs like the Opportunity Scholarship Program decrease funding to school districts based on the average cost per student. This figure includes fixed costs that can’t be reduced when the student leaves school, thereby putting additional financial strain on public schools. In addition, 93 percent of Opportunity Scholarship funds in FY 2015-16 went to Christian, Islamic, and other faith-based schools that are allowed to discriminate on the basis of religion or sexual orientation, and which often rely on unqualified instructors and faith-based curricula, the report said.
Much of the proposal’s $170 million cost over the next five years is driven by the decision to expand the supply of vouchers far beyond the level that would be supported by demand for vouchers, the report said. Based on historical data, demand for Opportunity Scholarship vouchers maxes out at about 8,000 students per year. Yet Section 11A.3 of the Senate proposal would provide funding sufficient to offer 163,741 vouchers by 2027. By the time the program reaches its maximum size, the reserve fund created by Section 11A.3 will have a balance of approximately $665 million and will be accumulating over $100 million of unused funds per year.
“These unused funds would remain in the reserve fund, providing no use to North Carolina residents,” Nordstrom said. “Expected savings would decline, while costs under the proposal would increase. In short, the result will inevitably be increasing costs to North Carolina taxpayers if this proposal becomes law.”
The complete report and detailed methodology can be found at this link: https://www.ncjustice.org/publications/changes-to-opportunity-scholarship-program-would-cost-nc-millions/