Nevada’s Opportunity Scholarship program saves taxpayers millions, new study shows

Today, the Nevada Policy Research Institute released a first-of-its-kind study detailing the fiscal benefits derived from the implementation of Nevada’s Opportunity Scholarship program.

Established during the 2015 Nevada legislative session, the Opportunity Scholarship program provides low-income students with the opportunity to attend a private school of their parents’ choice. The scholarships are financed by private businesses, who are then awarded dollar-to-dollar credits against their Modified Business Tax liability.

In Opportunity Scholarships: A Win for Students and Taxpayers, NPRI Policy Analyst Daniel Honchariw reports that the Opportunity Scholarship program produces a net-savings to taxpayers, while simultaneously increasing per-pupil funding for traditional public schools.

“Not only does this program immediately help the children it serves, but it is a win for the student population that remains in the public school system,” says Honchariw. “And it does so without burdening Nevadans with any additional layer of taxation.”

The savings are derived from the difference between the value of the average scholarship and per-pupil spending levels. The study shows that while the average scholarship costs taxpayers about $4,500 in foregone revenues, the state simultaneously foregoes the burden of educating a student at a cost of over $9,000 per year with each scholarship awarded.

“Thus, every dollar in lost revenue due to tax credits for scholarship contributions has yielded $1.14 in savings for taxpayers — and the program isn’t even running at full capacity yet. That savings could increase to almost $2 as a greater proportion of allocated credits are used to finance more scholarships,” explains Honchariw.

Honchariw recommends that Nevada policymakers increase the annual cap on the Opportunity Scholarship program to fund a goal of enrolling 25,000 students, representing about 5 percent of the state’s total student population. School choice programs in both Florida and Arizona have already achieved the 5-percent enrollment benchmark, and have quickly become recognized as leading the way in improving educational outcomes.

Increasing the number of participating students to 25,000 would produce a net-savings to taxpayers of over $100 million per year, while increasing available per-pupil funding levels by about $235 per public school student. Remarkably, a per-pupil funding increase of this magnitude mimics the effects of an additional $116 million in baseline education funding.

“In other words, if the state wants to increase per-pupil funding levels by this magnitude, it has two options: 1) Grant choice scholarships to 25,000 students, or 2) Increase annual spending by $116 million.

“Being able to increase per-pupil funding to such a degree by simply giving more options to low-income students is an easy win-win for Nevada.”

Honchariw notes that school choice programs including Opportunity Scholarships appeal to the priorities of both the traditional education establishment as well as concerned taxpayers and educational choice proponents.

“For years, the education establishment has touted increases to per-pupil spending levels as the cure-all to what ails Nevada’s struggling K-12 system,” explained Honchariw. “School choice programs offer a way to do that, without the need for imposing additional layers of taxation — and they have the added benefit of directly improving the lives of the children that decide to take advantage of new educational options.”

Honchariw also points out that funding Education Savings Accounts would generate a similar net-savings, but it’s difficult to speculate how much given the fact that the program has never been funded.

“Assuming that the average value of an ESA would be comparable to Opportunity Scholarships, the net-savings would likely be in the $1.50 to $2.00 range for every dollar in lost revenue.”

The full report can be viewed here

For more information or to schedule an interview with report author Daniel Honchariw, please contact Michael Schaus at 702.222.0642 or MS@NPRI.ORG.