Even with the UTTC system, it is likely that the traditional public school system will remain two to three times the size of the alternative school system.
The model predicts consumer behavior using well-defined techniques that take into account the incentives for parents to place their child in a traditional public school because of the significantly lower effective price. As the UTTC becomes available, the incentive to choose a traditional public school over an alternative school will be reduced. Therefore, more parents are likely to put their children in alternative schools. Appendix I discusses in detail the economic analysis used to project the response of consumers (students and parents) to changes in the price structure (alternative school tuition, tax credits, and "free" traditional public schools) in this market.
The model takes into account the increasing value of the UTTC relative to the average alternative school tuition. As shown in Figure 1, the UTTC starts at a relatively small share of the average alternative school tuition. Over the nine years in which the system is phased in, the maximum tuition tax credit increases to an amount somewhat less than the average alternative school tuition.71
Given this increasing incentive to place children in alternative schools, the model predicts that alternative school enrollment grows significantly. Figure 2 compares alternative school enrollment under the current system with the UTTC plan. It shows that with the UTTC, alternative school enrollment increases from approximately 220,000 to over 550,000 over the next ten years. This rapid growth in enrollment levels off once the UTTC is fully implemented.
However, even under this scenario, alternative schools take only a small share of the overall market for education. Figure 3 shows that under the UTTC plan, the traditional public school system continues to have over 1.4 million students even after the UTTC is fully phased in. Thus, even with the UTTC system, it is likely that the traditional public school system will remain two to three times the size of the alternative school system.