An Affordable Option: Increasing Private School Access for Working-Class Families February 2013 With Revised Appendix

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1 An Affordable Option: Increasing Private School Access for Working-Class Families February 2013 With Revised Appendix Rationale for study This legislative session, North Carolina lawmakers may consider an Opportunity Scholarship Program which would allow working-class parents to access private schools that best meet their children s needs. Accordingly, Parents for Educational Freedom in North Carolina (PEFNC) conducted an extensive study to learn more about private education in the Tar Heel State and how private school tuition rates and capacity would affect accessibility for opportunity scholarship students. This study addresses criticisms made when an Opportunity Scholarship Program was under consideration by the North Carolina General Assembly in That proposal would have allowed North Carolina businesses to receive tax credits for their donations to nonprofit organizations that distribute private school scholarships to working-class children. Independent and government studies have proven the effectiveness of such programs, 1 now operating in 11 states. Critics claim, however, that even with an Opportunity Scholarship Program, working-class families would still be unable to afford private schools. They claim these schools don t have room for such students. Our research dispels those myths by showing both affordability and availability for students. In July 2012, PEFNC obtained information from the state Division of Non-Public Education (DNPE) listing roughly 700 private schools. Additional information was found through DNPE s Directory of Non-Public Schools, published in June PEFNC then reached out to each North Carolina private school 2 and collected crucial data. Key discoveries are broken down in this report to show comparisons in per-pupil spending between private and public schools statewide. of their annual income on education in We believe this percentage is a reasonable calculation to discuss affordability. Using this percentage, a family of four with an annual income of $40,000 can afford to spend no more than $800 on education every year. If tuition for this family s two children totals $10,000 a year, two $4,825 scholarships would reduce the family s tuition bill to $350 a year - less than one percent of their annual income. Moreover, many private schools offer tuition assistance for working-class families and multi-child discounts, resulting in additional savings. The common assumption is that private education in North Carolina is unaffordable for working-class families. However, even when including the most expensive private schools such as boarding schools, preparatory schools and special needs schools where yearly tuition can exceed $20,000 the statewide median 4 private school tuition is just $4,600. When looking at average tuition rates for North Carolina s private schools, including the aforementioned higher-priced schools, the average tuition is $6,235 a year. When excluding the top 10 percent of highest-priced tuition schools, the average tuition is $4,901 - a figure that is more reflective of the majority of North Carolina s private schools. Both the median and average private school tuition rates indicate that private education is well within reach for many workingclass families. Thus, a means-tested opportunity scholarship would make private education even more affordable for many families. Qualification for such scholarship programs are based on financial need and generally provided to students from working-class families. These findings will help ensure that legislators, journalists and the general public understand the affordability and availability of private education in North Carolina for working-class families through an opportunity scholarship. Key findings Private schools are affordable in North Carolina According to recent numbers from the Bureau of Labor Statistics, 3 families in the United States spent approximately two percent Private school tuition costs in North Carolina 20% Under $3,000 41% Under $4,000 68% Under $6,000 1 Cassandra M.D. Hart and David Figlio, Does Competition Improve Public Schools: 2 Data obtained represents approximately 90 percent of all available private school data excluding treatment centers. 3 U.S. Department of Labor, Consumer Expenditures in 2010: Lingering Effects of the Great Recession, 4 Using the median tuition shows a more accurate reflection of tuition cost because it is the exact midpoint between the cost for lower- and higher-priced private schools. While the average has traditionally been a popular measure of a mid-point in a sample, it can be affected by any single value (school) being too high or too low compared to the rest of the sample.

2 9,000 8,000 7,000 $7,254 6,000 5,000 4,000 $4,825 $5,361 3,000 $2,681 2,000 1, % Scholarships 90% Scholarships State Expenditures Per Pupil State and Local Expenditures Per Pupil What a scholarship program could look like for working-class families Under a hypothetical Opportunity Scholarship Program, a child whose family s annual income is no more than 185 percent of the Federal Poverty Level 5 (about $42,600 for a family of four) would receive a scholarship equaling 90 percent of the state s per-pupil expenditure, which is $5,361. Therefore, a student meeting these income requirements would receive a scholarship of up to $4,825. Families earning between 185 and 275 percent of the federal poverty level would receive a scholarship totaling 50 percent of the state s per-pupil expenditure, or a $2,681 scholarship. Tuition rates at 68 percent of North Carolina s private schools are less than $6,000 per year. Nearly half 41 percent are $4,000 or below and 20 percent are $3,000 or less every year. These figures are even lower when taking into consideration multiple discounts offered by many private schools. Currently, North Carolina s overall education spending is $8,436 per student, according to the state Department of Public Instruction (DPI). The majority of that funding ($5,361 or 64 percent) comes from the state, 22 percent ($1,893) comes from local funding and 14 percent ($1,182) from federal funding. Since 1998, North Carolina s total state and local per-pupil funding has increased 43 percent, according to DPI. 6 It is believed that while per-pupil funding has increased, so has private school tuition. However, the median and average tuition highlighted in this report prove that, contrary to popular belief, private education is and remains an affordable option for North Carolina s workingclass families. Below is an example of median tuition and district per-pupil spending. A complete statewide breakdown is provided in the appendix. Long term, an Opportunity Scholarship Program saves taxpayers money because the cost of a scholarship is less than what the state spends per student and in some states these savings are reinvested back into the traditional public school system. Although an opportunity scholarship may not cover the entire tuition amount, many parents are willing to make up the difference in order to send their child to the school of their choice. Opportunity scholarship participation The collection and analysis of private school tuition data in this report clearly shows that private education is within reach for working-class families. Now the question is: Do private schools have room for these students? Throughout our ongoing efforts to gauge and understand North Carolina s private education landscape, PEFNC has been privileged to work with private school leaders, unaffiliated schools and various statewide private school associations. Partnering with these groups, along with examining Opportunity Scholarship Programs in other states such as Florida, has helped us measure the potential capacity for scholarship students. Based on our research, it is reasonable to assume that up to 50 percent of North Carolina s private schools may participate in an Opportunity Scholarship Program. This estimate reflects the willingness and potential capacity of private schools across the state to enroll new students. In Florida, for example, more than 55 percent (1,216 schools) of private schools take part in its Opportunity Scholarship Program. Florida s program, which has operated for over a decade, currently has 50,000 working-class children receiving scholarships to attend the private schools of their parents choosing. Even more compelling are statistics showing that these 50,000 students represent less than two percent of Florida s County / City District Private K-5 Median Private 6-8 Median Private 9-12 Median Buncombe County - Asheville City New Hanover County Union County $7, $6, $3, $8, $6, $3, $8, $4, $3, District Per Student Spending (local & state funds) $9, $7, $6, *Opportunity Scholarship (Approx. $4,000 per student) POTENTIAL SAVINGS $5, $3, $2, *As the report defines an Opportunity Scholarship Program, a reasonable scholarship amount for an eligible student could be approximately $4, Georgetown University Health Policy Institute Center for Children and Families, 2012 Federal Poverty Level Guidelines: 6 Public Schools of North Carolina, Per Pupil Expenditures:

3 total public school student population. The two percent figure demonstrates that Florida s Opportunity Scholarship Program does not result in students leaving the traditional school system en masse nor does it somehow financially cripple the public school system. What it does do, however, is give children in need access to schools that work best for them. students. It also must ensure that neither income nor zip code prevents any child from receiving a quality education. To further illustrate this key point, an independent study by Northwestern University and the National Bureau of Economic Research 7 showed that Florida s means-tested Opportunity Scholarship Program has led to increased student performance not only for children that received scholarships, but the program also positively impacted the academic performance of students who chose to remain in the traditional school system. Average state and local per-pupil expenditures versus average private school tuition* $4,901 Average Private School Tuition $7,254 Average State and Local Per-Pupil Expenditures *Excludes outliers (top 10%) such as boarding, preparatory, and special needs schools. Conclusion This paper shows that, based on North Carolina s median and average private school tuition, private education is an affordable educational choice for working-class families if they were offered opportunity scholarships. Encouragingly, private schools also have the capacity to accept such students. Moreover, this scenario would provide taxpayer savings that could be reinvested into public education. Our research was not done to highlight private schools as a superior option to traditional public schools or any other educational model. Although there are great public schools in North Carolina, not every school can meet the needs of every student. This fact is highlighted by our state s growing end-ofgrade achievement gap which increased to 30 percent in , according to DPI. With widening academic gaps between working-class students and their wealthier peers, additional quality educational options are needed to help at-risk students excel in school. Having more available educational choices allows all families to choose the best school for their children, which is critical in improving students academic performance and quality of life. We envision an education system where the term public education does not represent a particular educational model, but instead defines a learning system that benefits the public. In part, this redefinition involves our traditional and nontraditional schools working together to educate North Carolina s About PEFNC PEFNC is a statewide organization that advocates for greater educational options for all children through parental school choice. Simply put, parental school choice means allowing parents to send their children to their school of choice public, private or non-traditional regardless of address or income. PEFNC s advocacy efforts have led to a number of historic educational measures, including the elimination of the public charter school cap and North Carolina s first K-12 private school law the tax credit for children with disabilities. In fighting for more quality educational options for families, PEFNC realizes that parents must be informed in order to make the best educational decisions for their child. This is why PEFNC has trained over 2,000 parents statewide to become better advocates for their child s education. Since its founding in 2005, PEFNC s mission has been to inform parents of the benefits of expanded educational options and empower them to exercise freedom in meeting their children s needs regardless of race, national origin, income or religion. PEFNC envisions an education system that maximizes parental choice because children have unique needs and parents should have the freedom to choose the best education to meet those needs. This belief has helped PEFNC grow into a strong network of over 60,000 supporters who transcend economic, geographical, political and racial boundaries. To obtain your district s private school tuition, local public school spending data and potential Opportunity Scholarship Program savings, please turn to the next page. 7 David N. Figlio and The National Bureau of Economic Research, Evaluation of the Florida Tax Credit Scholarship Program Participation, Compliance and Test Scores in : Studies/2012%20Report%20on%20FTC%20Academic%20Gains.pdf.

4 Appendix Statewide breakdown of median tuition, district per-pupil spending and per-pupil savings with an Opportunity Scholarship Program. Counties not listed do not have a private school, according to the state Division of Non-Public Education. County / City District North Carolina Alamance County Alleghany County Beaufort County Bertie County Bladen County Brunswick County Buncombe County Buncombe County - Asheville City Burke County Cabarrus County Cabarrus County - Kannapolis City Caldwell County Carteret County Catawba County - Hickory City Catawba County - Newton-Conover City Chatham County Cherokee County Clay County Cleveland County Columbus County Columbus County - Whiteville City Craven County Cumberland County Currituck County Dare County Davidson County Davidson County - Lexington City Davidson County - Thomasville City Davie County Duplin County Durham County Forsyth County Franklin County Gaston County Graham County Granville County Greene County Guilford County Halifax County Halifax County - Roanoke Rapids City Harnett County Haywood County Henderson County Hertford County Hoke County Iredell County Iredell County - Mooresville City Jackson County Johnston County Lee County Lenoir County Lincoln County Macon County McDowell County Mecklenburg County Private K-5 Median Private 6-8 Median Private 9-12 Median $4, $5, $2, $3, $4, $1, $6, $7, $4, $2, $4, $8, $3, $1, $4, $3, $3, $3, $12, $3, $2, $1, $2, $6, $2, $3, $3, $6, $3, $4, $3, $3, $3, $3, $4, $4, $3, $3, $5, $3, $2, $7, $4, $6, $2, $4, $4, $1, $4, $6, $8, $5, $4, $2, $2, $4, $9, $4, $1, $3, $5, $3, $3, $3, $18, $3, $2, $1, $2, $6, $2, $3, $3, $7, $3, $4, $3, $3, $7, $3, $3, $4, $4, $3, $3, $6, $3, $2, $8, $4, $6, $4, $4, $1, $8, $8, $5, $4, $2, $5, $5, $14, $6, $4, $1, $3, $5, $3, $3, $3, $18, $3, $3, $1, $2, $6, $5, $2, $3, $3, $8, $3, $4, $3, $9, $3, $4, $11, $23, $3, $6, $4, $2, $9, District Per Student Spending (local & state funds) $7, $7, $9, $7, $8, $7, $7, $7, $9, $6, $6, $7, $6, $7, $6, $7, $8, $8, $8, $7, $7, $7, $6, $6, $7, $10, $6, $8, $7, $7, $6, $8, $7, $7, $6, $9, $7, $8, $7, $7, $7, $6, $7, $7, $8, $7, $6, $6, $7, $6, $7, $6, $6, $8, $7, $7, *Opportunity Scholarship (Approx. $4,000 per student) POTENTIAL SAVINGS $3, $3, $5, $3, $4, $3, $3, $3, $5, $2, $2, $3, $2, $3, $2, $3, $4, $4, $4, $3, $3, $3, $2, $2, $3, $6, $2, $4, $3, $3, $2, $4, $3, $3, $2, $5, $3, $4, $3, $3, $3, $2, $3, $3, $4, $3, $2, $2, $3, $2, $3, $2, $2, $4, $3, $3, *As the report defines an Opportunity Scholarship Program, a reasonable scholarship amount for an eligible student could be approximately $4,000.

5 Appendix (cont d) County / City District Mitchell County Montgomery County Moore County Nash County New Hanover County Northampton County Onslow County Orange County Orange County - Chapel Hill-Carrboro City Pamlico County Pasquotank County Person County Pitt County Polk County Randolph County Randolph County - Asheboro City Richmond County Robeson County Rockingham County Rowan County Rutherford County Sampson County Sampson County - Clinton City Scotland County Stanly County Stokes County Surry County - Mt. Airy City Transylvania County Union County Vance County Wake County Warren County Watauga County Wayne County Wilkes County Wilson County Yancey County Private K-5 Median Private 6-8 Median Private 9-12 Median $3, $5, $4, $6, $6, $8, $2, $2, $2, $2, $2, $5, $2, $2, $2, $3, $6, $5, $5, $3, $2, $4, $1, $2, $3, $5, $5, $6, $2, $15, $11, $2, $2, $2, $2, $5, $2, $2, $2, $3, $6, $5, $4, $3, $2, $4, $1, $2, $3, $5, $4, $4, $2, $16, $15, $4, $2, $2, $7, $2, $3, $2, $3, $7, $5, $3, $3, $4, $1, District Per Student Spending (local & state funds) $8, $7, $7, $7, $7, $9, $6, $8, $10, $9, $7, $7, $6, $9, $6, $7, $7, $6, $7, $7, $7, $6, $7, $8, $7, $7, $8, $8, $6, $7, $6, $8, $7, $6, $7, $6, $7, *Opportunity Scholarship (Approx. $4,000 per student) POTENTIAL SAVINGS $4, $3, $3, $3, $3, $5, $2, $4, $6, $5, $3, $3, $2, $5, $2, $3, $3, $2, $3, $3, $3, $2, $3, $4, $3, $3, $4, $4, $2, $3, $2, $4, $3, $2, $3, $2, $3, *As the report defines an Opportunity Scholarship Program, a reasonable scholarship amount for an eligible student could be approximately $4,000.

6 Faces of opportunity scholarship Below are two parents - out of many across North Carolina - whose children would benefit from an Opportunity Scholarship Program. Courtnie Carter Burlington, N.C. Courtnie Carter is one of those parents who would love to send her child to a private school. Her threeyear-old son, Phoenix, will enroll in kindergarten in two years and the thought of sending him to her local school makes her anxious. Cynthia Franks Charlotte, N.C. Cynthia Franks and her husband, Harley, can only dream of a private school for their grandson Zachery. While raising the kindergartner, they have always hoped that they could someday send him to a school with smaller class sizes and more structure but it s out of reach for them financially with Cynthia losing her job last year. It s good to hear tuition may not be as much as we thought, she said. We thought it was more like $10,000 but I still can t afford it without a scholarship. I would really love for him to get into a private school. I am a single mom and only with a scholarship would I be able to send him to a private school, she said. The friends I have with children in private school tell me the children accomplish so much. They can give him more attention and not just teach to the test. Courtnie is one of thousands of North Carolina parents who would like to see the legislature pass an opportunity scholarship measure allowing working-class moms like her to give their children another educational option. The new PEF- NC report shows it may be within reach in The new PEFNC report gives her hope that someday her grandson may earn an opportunity scholarship to attend a school that can meet his academic needs. Right now it s limited to people with money and parents need choices, she said. Of the kids around here who go to private school, you can tell they are not only fully educated, but are better behaved. I want that for him. 434 Fayetteville St. Suite 1620 Raleigh, N.C (919)