Illinois’ tax credit scholarship program for low-income students saved taxpayer dollars

The Invest in Kids Tax Credit Scholarship program saved taxpayers hundreds of millions of dollars before it was killed by teachers’ unions, according to a new study.

Illinois’ now-defunct tax credit scholarship program for low-income students saved Illinois taxpayers money, according to a new study by EdChoice.

Specifically, the Invest in Kids Tax Credit Scholarship Program saved state and local taxpayers between $156 million and $362 million during its first five years.

The new research buttresses a previous report, which demonstrated scholarship recipients outperformed their low-income peers in Illinois public schools in reading and math. Scholarship recipients in 11th grade not only outperformed their low-income peers but also outperformed the average proficiency rate for all Illinois 11th graders.

Unfortunately, lawmakers, under pressure from Illinois teachers unions, let the program die, and 15,000 low-income kids lost access to their schools. Now Illinoisans are seeing Invest in Kids not only supported students’ academic achievement, but it saved taxpayers money as well.

Invest in Kids saved taxpayers money

EdChoice analyzed the net fiscal effects on taxpayers of 48 school choice programs in 25 states and the District of Columbia from their inception through fiscal year 2022.

It found the programs saved state and local taxpayers a combined $19.4 billion in the short run to $45.6 billion in the long run – with “short run” referring to the savings from one year to the next, and “long run” referring to the savings states could expect from programs in existence for a few years or longer.

The savings were calculated by considering the cost of educating those students in their public schools versus the cost of the school choice program itself, with the study finding it is saves states money when kids utilize a choice program rather educating all of those students in public schools.

In Illinois, the state’s Invest in Kids Tax Credit Scholarship program saved state and local taxpayers between $156 million and $362 million during the first five years of the program.

Illinois’ program awarded 31,284 scholarships to low-income students in its first five years, and the state’s savings for per scholarship recipient between fiscal years 2018 and 2022 were $4,994 in the short-run and $11,560 in the long-run. This represents the difference between what would have been spent on the student in public school and the foregone income tax revenue the state didn’t receive because of the tax credit scholarship program.

The study shows there was a significant return-on-investment for Illinois’ scholarship program. For every dollar spent on the Invest in Kids scholarship program between fiscal years 2018 and 2022, the state saved between $1.81 and $2.87, respectively.

The study also found Invest in Kids provided education efficiently. For example, the average per student spending on Invest in Kids scholarship recipients was 27% of the average per student funding for Illinois public school students. That means the average scholarship recipient received less than one-third of the dollars allocated for a student’s education in public school.

Importantly, in fiscal year 2022, Illinois’ “funding” for the tax credit scholarship program amounted to only 0.1% of the state’s funding for K-12 schools. This funding represented foregone income tax revenue and did not divert money from the state’s K-12 education funds, contrary to opponents’ claims.

Lawmakers kowtowed to teachers unions’ demands to end the successful scholarship program

The majority of Illinois voters approved of Illinois’ tax credit scholarship program for low-income elementary and high school students, but not the teachers unions putting significant dollars behind their attack on the program.

Teachers unions worked hard to kill the low-income scholarships for good. They have invested over $21.5 million in sitting state lawmakers since 2010, with nearly $1.5 million of that in the six months leading up to lawmakers’ Nov. 2023 decision on the scholarship program, according to Illinois State Board of Elections records.

Now, research about Invest in Kids has not only shown the academic benefits for low-income scholarship recipients but also the fiscal benefits for Illinois state and local taxpayers.

Unfortunately, lawmakers decided to kowtow to teachers unions’ demands to end the state’s scholarship program rather than extend the program providing an academic life-line to over 15,000 low-income students in the final year of the program.