Researchers declare DFA’s statement about HB1371 is an ‘incomplete picture’

The statement fails to take into account potential savings

LITTLE ROCK, Ark. (March 4, 2020) – On Tuesday researchers from the University of Arkansas Office for Education Policy and EdChoice, a nonpartisan nonprofit, refuted the Department of Finance and Administration’s legislative impact statement about HB1371, which would create the Arkansas Child Academic Opportunity Scholarship and Grant Act, as an “incomplete picture.”

“The DFA fiscal note provides an incomplete picture of the likely fiscal impact of HB1371 because it only includes the cost of the program without regard for potential savings,” said Marty Lueken, director of EdChoice’s Fiscal Research and Education Center. “When students leave public schools via a scholarship program, it reduces educational costs for public school districts and generates savings for taxpayers.”

As written in HB 1371, the program would require all eligible students to be enrolled in public school prior to entering the program. When students leave a school district for any reason, total expenses for that district decreases by the foundation amount ($7,018 per student), plus any categorical or grant funding associated with the student. Because local revenue is fixed, any reduction in district costs resulting from HB 1371 would accrue to the state as savings.

Lueken and Josh B. McGee, associate director of the Office for Education Policy, recently released a fiscal impact statement that takes into account these potential savings. Their analysis estimates that the net fiscal impact of the scholarship program on the state would be $2.3 million in savings, and the net fiscal effect on districts would be a positive benefit of about $770,000.

DFA’s statement projected $465,000 in administrative costs exceeds the costs actually incurred in other states, even though those states don’t have the extra benefit of nonprofits administering the scholarships and grants.

For example, Arizona appropriated up to 3% of ESA amount for admin costs in FY 2012 (the program’s first year), which amounted to $47,280. The state appropriated $200,000 in FY 2013, and $240,000 in FY 2014 and FY 2015 ($200,000 for state DOE and $40,000 for the State Treasury). Mississippi set aside $180,000 for administrative costs and had $99,000 in unused funds in FY 2018 and $33,000 in FY 2020.

“In these states, a state agency is running the program whereas Arkansas’s program would be run by nonprofit orgs and only overseen by a state agency,” said Jason Bedrick, director of policy at EdChoice. “Other states are running much larger programs at less than half [DFA’s projected] cost, so it should take Arkansas even less than that to merely provide oversight.”

ABOUT THE OFFICE FOR EDUCATION POLICY: The Office for Education Policy (OEP) is a research center within the College of Education and Health Professions at the University of Arkansas. The OEP exists to serve as a resource to state lawmakers, educators, administrators, and other leaders, providing them with current national, state, and regional research in education to support them in thoughtful decision-making concerning K-12 education in the State of Arkansas.

ABOUT EDCHOICE: EdChoice is a nonprofit, nonpartisan organization dedicated to advancing full and unencumbered educational choice as the best pathway to successful lives and a stronger society. EdChoice believes that families, not bureaucrats, are best equipped to make K-12 schooling decisions for their children. The organization works at the state level to educate diverse audiences, train advocates and engage policymakers on the benefits of high-quality school choice programs. EdChoice is the intellectual legacy of Milton and Rose D. Friedman, who founded the organization in 1996 as the Friedman Foundation for Educational Choice.

ABOUT THE REFORM ALLIANCE: The Reform Alliance is a nonprofit organization dedicated to ensuring every K-12 student in Arkansas has equal access to a world-class education. The Reform Alliance is proud to manage the Succeed Scholarship at no cost to the State of Arkansas. Even small expenses like the cost of mailing checks to schools are paid for by a private foundation grant. Free educational resources and more information about The Reform Alliance are available at