On March 18, Louisiana state Reps. Julie Emerson (R-39), Rhonda Butler (R-38), and Laurie Schlegel (R-82) introduced House Bill 745, a bill that would create an education savings account (ESA) program in Louisiana. Similar language has also been adopted in Senate Bill 313. Phased in over three years, the “Louisiana Giving All True Opportunity to Rise” (LA GATOR) Scholarship Program would first be available to low-income students and students leaving public schools in Louisiana. By the 2027-2028 school year, it would be available to all students. 

Louisiana policymakers, like those in other states that have adopted universal school choice programs, will be keenly interested in how this proposal might affect the state budget, school districts, and taxpayers. While nobody can predict the exact level of demand a new school choice program will have, it’s possible to estimate the fiscal effects of school choice programs under various scenarios. 

Executive Summary

• The LA GATOR Scholarship proposal would greatly expand educational options for Louisiana families, especially those who are low- and middle-income.
• The proposal reserves higher annual individual scholarship amounts for special education students ($15,099 per school year) and families below 250% of the federal poverty line ($7,550 a year). Individual students in households above 250% of the federal poverty line receive an estimated scholarship of $5,190 annually.
• At most, proposed individual scholarship amounts are equal to about half of the total per-pupil spending in Louisiana public schools.
• Under scenarios where student participation rates in the ESA are relatively low, the estimated short-run net fiscal costs of the proposal would be equal to less than 2% of total public school revenues based on estimates generated by the K-12 School Choice Calculator. 
• If student participation rates are higher, the estimated short-run net fiscal costs of the proposal would be equal to less than 5% of total public school revenues. 
• Many of the families already choosing alternatives to public schools are low- and middle-income. U.S. Census Household Pulse Survey data indicate that about half of Louisiana children already in private schools are in households making less than $75,000 per year. 

Louisiana House Bill 745’s Design

Allowable Uses and Standardized Testing

House Bill 745 (HB 745) would establish an education savings account that families can use so long as they aren’t enrolled full-time in a public school. Account funds can be spent on qualifying education expenses, including private school tuition, tutoring services, educational supplies, contracted public school services, and transportation. The bill provides for the administration of standardized tests to participating students, which can include state tests required of public schools or a nationally norm-referenced test approved by the state school board. Additionally, the LA GATOR Scholarship would replace the state’s existing Student Scholarships for Educational Excellence private school voucher program. 

Student Eligibility 

The LA GATOR Scholarship Program would be implemented in the following order:

• Year 1 (2025-2026): In the first year of the program’s enactment, the LA GATOR Scholarship Program would only be available to students previously enrolled in the Educational Excellence voucher program, students entering kindergarten, students previously enrolled in public schools, or students in households at or below 250% of the federal poverty line ($78,000 per year for a family of four). At this phase, at least 85% of Louisiana students would be eligible because most are enrolled in public schools. 
• Year 2 (2026-2027): In year two, all eligibility criteria would remain unchanged, except the student household income threshold would rise to 400% of the federal poverty line ($124,800 per year for a family of four). 
• Year 3 (2027-2028): In year three, all Louisiana students will be eligible for the ESA. 

Scholarship Amounts

The bill’s language indicates that LA GATOR Scholarship amounts would be based on the average state and local funding in the minimum foundation program (MFP), the state’s main public school funding formula. This school year, the average state and local per-student MFP allocation was $9,437 per student. Importantly, the formula is not the only source of revenue for Louisiana public schools, because they also receive non-MFP funding from local property taxes, other state grants, and federal grants. 

ESA amounts under the proposed bill vary based on student household income and special education status:

• Special education students: Students with an individualized education plan or a similar plan developed by a private school receive scholarship amounts equal to 160% of the average state and local MFP amount per student, or $15,099 annually. 
• Students at or below 250% of the federal poverty line: Roughly two-thirds of Louisiana students meet this criterion, and they would receive scholarships equal to 80% of the MFP amount, or $7,550 annually. 
• All other students: All students in households above 250% of the federal poverty line receive scholarships equal to 55% of the MFP amount, or $5,190 annually. 

Estimating the Potential Fiscal Effects of HB 745

Note: For more details on how to estimate the fiscal effects of school choice, see the methodology section of the K-12 School Choice Calculator co-published by EdChoice and Reason Foundation. 

Estimating the fiscal effects of HB 745 requires a basic accounting for scholarship amounts, eligible student populations, and fixed and variable costs in Louisiana public schools. More importantly, the key variables determining the fiscal effects of the proposal will be the participation rates among students who would otherwise have gone to a Louisiana public school (switchers), and participation rates among students who would have otherwise not enrolled in a public school (non-switchers). Switchers generally yield fiscal savings to taxpayers because they are opting out of a higher-cost public school that they otherwise would have attended without the program. By contrast, non-switchers are a pure cost to taxpayers, because, under the program, taxpayers are now paying for an education that the non-switcher student’s household would have otherwise purchased. 

In states with no previous private school choice programs, measuring switcher and non-switcher rates once a program is implemented is more straightforward. Students who leave public schools to use the school choice program are switchers, while students who were already receiving a private education are non-switchers. But for states that already have established choice programs, as Louisiana does, estimating switcher rates is trickier because students have already left public schools thanks to a choice program. 

Louisiana has had three limited-eligibility private school choice programs for more than a decade. Combined, these three programs already serve about 8,400 students who are in low- and middle-income households, in lower-performing school districts, or who have disabilities. HB 745 would eliminate and replace the largest of the three existing programs, but it’s unclear how enrollment or participation in the other two would be affected by the LA GATOR Scholarship.

Another important variable affecting the popularity of a school choice program is how regulations can deter private schools from participating. Louisiana’s existing programs have stricter testing requirements than HB 745, meaning that participation rates for the LA GATOR Scholarship could be higher than those of Louisiana’s existing choice initiatives.

Cost Scenarios

With these factors in mind, the K-12 School Choice Calculator, co-published by EdChoice and Reason Foundation, provides general estimates of what House Bill 745 could cost taxpayers under various student participation scenarios. For simplicity, the calculator will only be used to examine fiscal effects once the program is fully implemented in year three. Because the scholarship amounts are broken into three tiers, each tier will be treated separately and then combined to arrive at a net fiscal effect estimate. Short-run fiscal effects estimates treat some public school expenditures as fixed since some costs can’t be immediately eliminated when students leave public schools (e.g. central office, capital bonds). Long-run fiscal effects estimates treat all public school costs as variable since all costs can be adjusted over time when enrollments change in public schools. 

Note that all cost estimates are annual figures and are likely overstated because current ESA amounts are being compared to the latest federal public school cost data, which is several years behind. Note also that non-public take-up rates for the special education components are 0% because the calculator assumes all qualifying students will have an individualized education plan, meaning they have to have been previously enrolled in a public school. 

Scenario 1: Low Overall Take-Up Rates
Scholarship Tier	Special education	Below 250% of federal poverty line	Above 250% of federal poverty line	Combined results
Public Take-Up Rate	1.0%	1.0%	1.0%	1.0%
Non-Public Take-Up Rate	0.0%	20.0%	20.0%	19.6%
Implied Switcher Rate	100.0%	20.6%	20.6%	22.3%
Number of Participants	775	19,525	14,988	35,288
Short-Run Net Fiscal Effect	$887,597	-$114,770,358	-$52,731,056	-$166,613,817
Long-Run Net Fiscal Effect	$9,262,883	-$93,060,998	-$36,065,851	-$119,863,966

Scenario 1 estimates the fiscal impact of House Bill 745 in the case that take-up rates from both switchers (public) and non-switchers (non-public) are low, set at 1% and 20% respectively. Real cost figures would be closer to this estimate if many Louisiana private schools opt not to accept the ESA funds and if many families are unaware or uninterested in the program. About 35,000 students would use the LA GATOR Scholarship under these assumptions, yielding a short-run net fiscal cost of $166.6 million (equal to 1.7% of public school revenue) to taxpayers and a long-run net fiscal cost of $102.2 million (1.2% of all public school revenue). 

Scenario 2: Higher Take-Up Rate for Non-Public Students
Scholarship Tier	Special education	Below 250% of federal poverty line	Above 250% of federal poverty line	Combined results
Public Take-Up Rate	1.0%	1.0%	1.0%	1.0%
Non-Public Take-Up Rate	0.0%	50.0%	50.0%	49.5%
Implied Switcher Rate	100.0%	9.4%	9.4%	10.3%
Number of Participants	775	42,784	32,843	76,402
Short-Run Net Fiscal Effect	$887,597	-$290,373,954	-$145,396,422	-$434,882,779
Long-Run Net Fiscal Effect	$9,262,883	-$268,664,594	-$128,731,218	-$388,132,929

Scenario 2 estimates the fiscal impact of the proposal if 50% of students already not enrolled in public schools accept the funds and the public school take-up rate remains unchanged from Scenario 1. Real cost figures would be closer to this estimate if more private schools choose to participate in the LA GATOR Scholarship program and more families already enrolled in private schools are aware of and interested in the ESA. About 76,000 students would participate in the program under these assumptions, yielding a short-run net fiscal cost of $434.9 million (equal to 4.5% of public school revenue) and a long-run net fiscal cost of $388.1 million (4% of public school revenue). 

Scenario 3: Higher Overall Take-Up Rates
Scholarship Tier	Special education	Below 250% of federal poverty line	Above 250% of federal poverty line	Combined results
Public Take-Up Rate	1.0%	3.0%	3.0%	3.0%
Non-Public Take-Up Rate	0.0%	50.0%	50.0%	49.6%
Implied Switcher Rate	100.0%	23.7%	23.7%	24.4%
Total Participants	775	50,822	39,013	90,610
Short-Run Net Fiscal Effect	$887,597	-$285,776,541	-$127,304,714	-$412,193,658
Long-Run Net Fiscal Effect	$9,262,883	-$220,648,460	-$77,309,099	-$288,694,676

Scenario 3 estimates the net fiscal impact if 3% of public school students and 50% of non-public school students participate in the ESA. Real costs of the program would be closer to this estimate if awareness of and interest in the program is higher among all families and many private schools choose to participate. Over 90,000 students would participate under these assumptions, yielding a short-run net fiscal cost of $412.2 million (4.3% of public school revenue) to taxpayers and a long-run net fiscal cost of $288.7 million (3% of public school revenue). 

Interpreting the Results

While not exhaustive, the three scenarios estimate fiscal effects policymakers could expect from House Bill 745. As the cases illustrate, switcher rates and take-up rates have a substantial impact on the fiscal outlook—and these are the hardest variables to forecast. 

Additionally, fiscal effect estimates are different from estimating how the LA GATOR Scholarship would impact Louisiana’s state budget. For the state budget, the short-run fiscal effect estimates are more informative since the variable cost assumptions used in the school choice calculator are roughly equivalent to minimum foundation program funding, funds the state can recuperate when students leave public schools for the ESA. 

These results don’t account for other potential taxpayer cost offsets, such as decreases in the number of students using the state’s other private school choice programs or the private school tuition tax deduction. Scenario cost estimates also appear modest when compared with the magnitude of recent increases in public education funding and Louisiana’s K-12 public education budget, which totals $9.67 billion according to the latest federal data. 

LA GATOR Scholarship Fiscal Effects Estimates Compared to Public School Revenues

Finally, large shares of families in Louisiana already have their children enrolled in private schools or homeschooling when compared to other states, indicating that many households are paying taxes into a public education system from which they don’t directly benefit. Many of the families already not enrolling their children in public schools are low- and middle-income as well. New data from the U.S. Census Household Pulse survey (which should be interpreted cautiously) estimates that 46% of private school students in Louisiana are in households making less than $75,000 a year. 

While Louisiana legislators are considering other more limited education choice proposals this session, House Bill 745 would enable all families to choose and customize their child’s education.

*Editor’s Note: The scholarship amounts and fiscal effect estimates in this post were updated on March 29, 2024, to reflect the latest fiscal note data released by the Louisiana Legislative Fiscal Office.