A recent analysis by the Fiscal Research Center at EdChoice and the Cardinal Institute for West Virginia Policy reports the Mountain State’s Hope Scholarship Program (HSP) has generated $26.9 million in net fiscal benefits to West Virginia taxpayers in its second fiscal year.
The Hope Scholarship Program, an education savings account (ESA) program that goes fully universal for the 2026–27 school year, was launched in 2022. To be eligible for the program currently, students must have been enrolled in a public school for the entirety of the previous school year or 45 full-time instruction days of the current school year.
In just its second year of existence, HSP provided 5,443 children with the means to attend the school most likely to suit their unique educational needs. This represents 2.4 percent of the state’s total public school enrollment numbers. Funding for the program in fiscal year (FY) 2024 was $24.4 million, about 0.6 percent of the $4.2 billion budget for West Virginia’s public school system.
West Virginia public schools saw a total revenue reduction of $24.4 million in FY 2024 thanks to the transfer of Hope students out of the public school system, but more than 99.5 percent of public-school funding remained intact, and all school districts maintained at least 98.7 percent of their budgets.
Overall, the report finds that the Hope Scholarship Program generated a net fiscal cost of $637,412 in FY 2024, merely 0.003 percent of total state government expenditures on all public services and just 0.02 percent of total funding for West Virginia’s public schools. Further, the report notes, “funding for WV public schools is largely based on factors other than student enrollment. Thus, the amount of resources per student increases for school districts when students leave. As a result of Hope, per-pupil revenue for WV public schools increased, on average, from $16,500 to $16,769, an average increase of $269 for each student who remained in public schools.”
These net fiscal costs do not represent the full picture of HSP’s impact in FY 2024. “Assessing the fiscal impact of WV’s Hope program on local public school districts requires evaluating the short-term (year-to-year) variable costs of educating students in public schools,” the report states. “This involves determining how much a district’s expenses would rise if a Hope student were to enroll in a public school instead. Put another way, variable cost-savings are the reduction in education costs experienced by districts when students leave public schools via the Hope program….The present analysis uses [a] $9,434 estimate of the average short-run variable cost (average additional cost) for educating a student in the WV public school system to estimate the fiscal effects of students switching out of public schools via the Hope program. The net fiscal effect of Hope on local taxpayers compares the cost-savings from Hope students diverted from WV public schools with the reduction in revenue for WV public schools when Hope students leave.”
With variable-cost savings for West Virginia taxpayers of $51.4 million, this gives the state a net fiscal savings of $26.9 million after the $24.4 million deduction in reduced revenue for Mountain State public schools.
This keeps HSP roughly in line with what we have seen of the fiscal impact ESA programs have had in other states. According to EdChoice, there have been 83 empirical studies looking at the fiscal effects of education choice programs in 23 states and the District of Columbia since 2006. Of those 83 studies, 77 found a positive fiscal benefit from choice programs, five found they had no effect, and seven found they had a negative effect.
The Mountain State provides true, full eligibility to education choice to all West Virginia children through HSP, and the legislators who voted to enact the program back in 2021 should be commended for it.
However, the average award for an HSP account amounts to roughly 33 percent of the state and local per-pupil funding that is provided to public schools. State legislators should bring the funding award for each of these accounts closer to the public school per-pupil funding level.
West Virginia has unquestionably been in the vanguard of the education choice movement in the United States, and in many ways helped kickstart the school choice revolution that has overtaken the country since the COVID-19 pandemic and ultimately harmful school lockdowns undertaken in its wake. To keep its vanguard position, West Virginia must ensure that the account funding level of the HSP matches the public school per-pupil state and local funding level going forward.
Although Mountain State lawmakers have already done much to ensure a robust (and rapidly expanding) school choice environment in West Virginia, their work is not quite finished. Enacting equal funding is the last bit of major business that needs doing. Once that is accomplished, West Virginia’s private schools will be on a truly level playing field with charters and traditional public schools. Their success or failure in this marketplace will be entirely based on the educational services they offer, the quality of care they provide students and families, and the results they produce.
Heartland Impact can send an expert to your state to testify or brief your caucus; host an event in your state; or send you further information on a topic. Please don’t hesitate to contact us if we can be of assistance! If you have any questions or comments, contact Cameron Sholty, at csholty@heartlandimpact.org or 312/377- 4000.
