Friedman Foundation Conducts Fiscal Study of Scholarship Tax Credit Program in Kentucky

The Friedman Foundation, a non-profit education think tank, has conducted a fiscal analysis of the legislation, Senate Bill 44.

“This proposal, if enacted, will have a negative estimated net impact of $2.4 million on the state General Fund and a positive estimated net impact of $15.5 million on school district revenue for FY 2016-2017. The net combined impact would be positive, equal to $13.1 million,” according to the analysis, which looked at three buckets:

  •     State impact: The state would experience a decline in revenue of $25 million (the maximum credit allowed under this bill). This would be offset by $22.6 million in reduced state aid (SEEK) expenditures.  After factoring these savings, we estimate there will be a net negative state impact of $2.4 million.
  •     Impact on local property taxes: There will likely be no impact on property taxes, at least in the short run, because they are set locally and independent of enrollment. In the long run, districts that experience significant enrollment change may choose to adjust property tax rates.
  •     School district impact: Local public school districts would experience $22.6 million in reduced SEEK revenue from the state. This reduction would be completely offset by $38.1 million in cost burden relief for students diverted from public schools.  Thus, there will be a net positive local impact of $15.5 million.

DATA SOURCES: Kentucky State Department of Education; National Center for Education Statistics (U.S. Department of Education); U.S. Census Bureau, American Community Survey; U.S. Department of Agriculture; Friedman Foundation for Education Choice

DISCLAIMER: The Friedman Foundation for Educational Choice is committed to research that adheres to high scientific standards, and matters of methodology and transparency are taken seriously at all levels of the organization. We are committed to providing high-quality information in a transparent and efficient manner.  We welcome any and all questions related to methods and findings.

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PREPARER: Martin F. Lueken, Ph.D., Director of Fiscal Policy & Analysis
Statement Last Updated: 1/5/2016