New Jersey is in deep financial trouble, and government estimates keep get ting worse. The most recent budget deficit prediction tripled the last one, concluding that the state might be $1.2 billion in the hole.
The bad news doesn't end there. The economic slowdown is prompting many families who can no longer afford both taxes and private school tuition to move their children into public schools. Catholic elementary schools in the Diocese of Camden, for instance, have lost almost 1,000 students, about 10 percent of their enrollment from last year.
And those declining enrollment figures came before the worst of the recession hit.
The accelerating closure of private schools in urban areas will only add to the pressure. Public schools will suddenly need to spend more -- even as tax revenues drop. With this kind of budget problem, lawmakers need to take a look at an important benefit of programs that make it easier for families to choose private schools: School choice means huge savings for state and local governments.
New Jersey spends more than $18,500 a year on every student when you count all local school taxes and expenses like pension and health benefits. That figure doesn't even include huge sums spent on construction. A 1 percent drop in private school enrollment will put New Jersey governments on the hook for about $55 million a year; a 10 percent swing will require $550 million more in school spend ing. In contrast, the national me dian private school tuition is just over $4,000 and a little more than $5,000 when it's adjusted for New Jersey's higher income levels.
There is a way to avoid getting slammed by huge new demands for public school spending while saving money and improving education: A broad-based, moderate-size education tax credit would help families stay in private schools and save their children from burdening taxpayers with the public schools' (much greater) price tag. The credit would also help others make the switch to the private sector, easing the burden on taxpayers even more.
Education tax credits reduce the amount a taxpayer owes the government for each dollar he spends on his child's education or on scholarships for children who need them. That money comes straight off a person's tax liability, so it's a dollar-for-dollar benefit: You can send it to the government or use it on the kind of education you want to support. Tax credits for donations to scholarship organizations help support school choice for lower-income families, while personal-use credits help middle-class families send their children to good schools.
Democratic leaders in the state Senate and Assembly have proposed a donation tax credit plan for New Jersey. Businesses would get tax credits for donations to scholarship organizations that provide school choice for lower-income families. An economic study supporting the Urban Enterprise Zone Jobs Scholarship Act concludes that this tax credit for children in eight underperforming districts would save $72 million over the length of the five-year pilot. A re cent fiscal analysis of Cato's model tax credit legislation shows that New Jersey could save $5 billion to $10 billion over 10 years with that larger program based on the sav ings found for New York and Illinois.
Across the nation, many Democratic lawmakers have embraced education tax credits as a way to offset the persistent educational disadvantage facing low-income children. When Florida's donation tax credit program became law seven years ago, only one Democratic legislator voted for it. This year, a third of statehouse Democrats, half the black caucus and the entire Hispanic caucus voted to expand the program.
Arizona, Rhode Island and Iowa all passed education tax credit initiatives in 2006, and Pennsylvania, under Democrat Gov. Ed Rendell, expanded its program. The Arizona and Iowa bills became law under Democratic governors, and the Rhode Island business tax credit was born in a Democrat-controlled Legislature.
The momentum is still building. A government fully controlled by Democrats in Iowa -- governor and both legislative houses -- expanded the tax credit dollar cap by 50 percent in 2007. Just this year, Georgia passed a $50 million program with no family income cap on student eligibility.
A bipartisan group of New Jersey legislators, led by Raymond Lesniak (D-Union) and Tom Kean Jr. (R-Union), supports an education tax credit bill because it will improve education and save children from failing schools. Now they have billions more reasons to support it, and so do New Jersey's overburdened taxpayers.