NEWS RELEASE, 5/20/96 Denying education to undocumented immigrants doesn't pay off in tax dollars,according to new UC Berkeley report

by Kathleen Scalise

Berkeley -- Denying public education to undocumented immigrant children in California will mean forfeiting substantial sales and income tax dollars they would have contributed to the state, according to a new UC Berkeley report. The report examines the long-term costs of policies such as California's Proposition 187, which voters approved believing it would control costs by denying public services -- including education -- to undocumented immigrants. But "failing to educate undocumented children will result in permanently lower life-time earnings which will significantly diminish the future contributions of these workers to total state income and sales tax revenues," according to the new University of California at Berkeley Graduate School of Public Policy report. In fact, the reduced stream of income and sales tax revenues alone largely offsets the immediate savings from denying education services, said Professor Eugene Smolensky and colleague Steven Raphael, a labor economist. The study "counters the argument that Proposition 187 will lead to a substantial windfall for the state," said Raphael. "Our study is a first stab at a difficult problem," he said. "People have made the argument that undocumented children who learn less will earn less, but they haven't projected the loss before." The two researchers used a simple economic model to reach their conclusion based on the fact that modest differences in education can make substantial differences in earnings for immigrant children -- as much as 7 to 16 percent for each extra year in school. They analyzed census data for all immigrant noncitizen children who arrived in California after 1982, a population comprised of 57 percent Latino and 32 percent Asian immigrants. Then "we looked at what would happen if we had halted the educational attainments of these children as of 1990 compared to an alternative scenario in which they went on to receive a full 12 years of state-provided education. We looked at the difference in their projected lifetime earnings and estimated approximately how much tax revenue would be lost," said Raphael. They found approximately 50 percent of all funds spent annually on educating immigrant children would be offset by future tax contributions, but only if children were offered an education. "Hence, while undocumented immigrants still generate a small deficit, accounting for this single long-term consequence reduces the net figure considerably," the report said. Raphael points out that "if you're looking for education to totally offset itself in tax revenue, you're not going to find that for non-immigrant children or any other children in the state. There are other reasons why you want to educate people." These include the fiscal impact of increased incarceration and law enforcement expenditures due to youth denied schooling and the need for a well-educated work force to attract employers to the state and maintain job growth. "An analysis accounting for these alternative immediate and long-term consequences of denying education services may yield a negative net-savings estimate," said the report. Of course, "there are a lot of big assumptions here," said Raphael. "We are assuming these children remain in California for the rest of their lives and that the rate of return on education will be the same in the future." "Better estimates are sure to come along," Smolensky added, "but these [numbers] already suggest that whatever happens in the courts, Proposition 187 needs rethinking." The new research was funded by the California Policy Seminar, a joint program of the University of California system and state government to link university resources with state policy concerns.