The cost of a pilot program can first be estimated on a per-student basis, using projected ridesharing rates in different cities. While each student's travel needs and situation differ, the annual per-student cost for full-time use could reasonably be estimated to be $1,400 per student. That would pay for four students sharing two five-mile trips, to and from campus, in a larger rideshare vehicle for 180 days.[*] Operating the program in Detroit, where public transit options are more prevalent, would likely reduce the average cost where some of these services are partially subsidized by other taxpayers.[†] Prorated funding could be provided in cases where work schedules limit parents’ ability to drive their children only either to or from school, or only on certain days of the week. The availability of smaller accounts for part-time usage could enable more students to be served.
The core of funding should come through direct legislative appropriation. The relatively modest cost of a pilot program could easily be financed within existing revenue streams. Mobility scholarships serving nearly 700 students in the first year could be paid for with an annual legislative appropriation of just $1 million. Most of those funds would directly serve the school transportation needs of low-income families. No more than 10% of state dollars should pay for indirect expenses, including the Michigan Department of Treasury's management and oversight. Additional funds raised through community philanthropic partnerships could help with advertising and outreach, as well as data collection and reporting to state lawmakers. The share spent on overhead should decrease with a larger appropriation. If the total usage of scholarship funds is less than the legislative appropriation in a given fiscal year, the difference could be refunded to the state treasury and possibly earmarked for future Student Mobility Scholarships.
The state could also authorize a nonprofit organization to help supplement funding if program dollars are insufficient to meet low-income families’ demand for the service. To expand participation, the state could provide a dollar-for-dollar tax credit for donations to this organization, which could then use these donations to fund more transportation scholarships. This tax credit could be capped either as a percentage of a taxpayer’s total liability or a total amount of donations for a given fiscal year. Unused funds within a designated student's account would first be recaptured by the scholarship-granting organization to be used toward future Student Mobility Scholarships.
A potential future funding source to expand the limited geographic scope of a pilot program could come through Education Freedom Scholarships. Legislation introduced in the U.S. Congress in 2019 would set up a $5 billion pool of federal tax credits for donations made to state-approved scholarship organizations. If Michigan opted to participate, the state would determine both the eligibility of student recipients and the qualifying purposes for the funds. Student Mobility Scholarships could be approved as one among many possible uses for families.
[*] Costs are based on the online ridesharing fare estimator Ride Guru, capturing UberXL and LyftPlus rates for travel from multiple different low-income housing complexes to an area school, most of which received high marks on the Mackinac Center’s Michigan Public Elementary and Middle School Context and Performance Database, available here: https://www.mackinac.org/depts/epi/performance.aspx?report=3. Areas investigated include Detroit, Flint, Grand Rapids, Lansing and Saginaw. The estimates do not allow for possible discounts that could be offered for extended terms of service.
[†] For example, though its reach is limited, an annual pass on the Detroit Q-Line can be purchased for $285, as of March 2019. For more information, see https://qlinedetroit.com/.