Tag: education tax credits

Equity vs. Excellence. Or…A Crank Phone in Every Home!

Education secretary Arne Duncan has just announced the Obama administration’s latest initiative to improve educational quality for low-income and minority students: pressure states to measure the distribution of “quality” teachers across districts; and then to make that distribution more uniform. The emphasis is on the pursuit of equity rather excellence. In fact, a state could make a massive leap forward on this scale by simply randomizing the assignment of public school teachers to schools. And if it turned out that some districts were badly managed and actually had a consistently negative effect, over time, on the performance of their teachers, well then the randomized teacher assignment process could be repeated every school year—or even every half-year!

But is a uniform distribution of today’s “quality” teachers really the best we can do for low-income and minority students (or, for that matter, everyone else)? Would they be better off today if Arne Duncan’s and Barack Obama’s equity focus had driven, say, the telelphone industry over the last century? Back around 1900, most telephones were hand-cranked, and not everyone had one. Would the poor, minorities, and others be better off today if we had achieved and maintained a perfectly equitable distribution of hand-crank phones?

The alternative, of course, is what we do have: a vigorously competitive phone market that has given rise to cell phones and then smart phones containing super-computers, global positioning satellite receivers, wireless networking, etc. But of course only rich whites have cell phones and smart phones, right? Not according to Pew Research. Based on 2013 data,

92% of African Americans own a cell phone, and 56% own a smartphone… blacks and whites are equally likely to own a cell phone of some kind, and also have identical rates of smartphone ownership.

In fact, Pew’s comparable smart-phone ownership figure for whites is 53%, but the difference is not statistically significant. With regard to income, Pew finds a 9 point difference in smartphone ownership between those making < $30,000 and those making between $30,000 and $49,999. Most of that difference seems to be accounted for by age, however. Among 18-24 year olds, 77% of those making < $30,000 own a smartphone vs. 81% for those making $30,000 to $74,999.

So pretty much everyone who wants one now has a cell phone which is rather more functional than the old hand cranked variety, and the majority of young people, at all income levels, even have smartphones. That’s a relatively high level of equity, coupled with excellence. Brought to you, again, by a competitive industry. Could the federal government’s Lifeline (a.k.a., “ObamaPhone”) phone subsidy programs be helping out? Certainly, to some extent. Though it’s far from true that every low-income American’s cell phone is paid for by Uncle Sam.

Ironically, many of the people who staunchly support subsidized access to the cell phone marketplace are dead set against programs that subsidize access to the educational marketplace. They’d much rather just redistribute teachers within our hand-crank-era public school systems, sentencing everyone—rich and poor alike—to more generations of academic stagnation. We can do better. We can encourage the same dynamism, choice, and entrepreneurship in education that have driven the fantastic progress in every other field, and we can ensure universal access to the educational marketplace via state-level education tax credit programs.

Live Free and Learn

Earlier this week, the Show-Me Institute released my study “Live Free and Learn,” the first analysis of New Hampshire’s trailblazing scholarship tax credit program, which is the first in the nation to include homeschoolers. The study found that participants in the program were overwhelmingly low-income and nearly universally satisfied. Some of the key findings include:

  • 97 percent of parents of scholarship recipients are satisfied with their chosen private or home school.
  • 68 percent of parents reported that they noticed measurable academic improvement in their child since receiving the scholarship.
  • 91 percent of scholarship recipients had a household income that would qualify for a free or reduced-price lunch program under the federal National School Lunch program (185 percent of the federal poverty line, or $43,568 for a family of four).
  • 74 percent of private school parents reported that they would have been unable to afford tuition without the scholarship.

I discuss the findings of the study in greater detail at the Education Next blog.

School Choice Week Grinches in Colorado

Just before National School Choice Week, Democratic state legislators in Colorado killed a school choice tax credit bill. The legislation would have granted tax credits to families with children in private schools worth up to half of the average per pupil spending at government schools or up to $1,000 for homeschoolers.

Democratic Senate President Morgan Carroll did not even give the legislation a fair hearing in the committee that normally takes up education or tax related bills. Instead he assigned it to the State, Veterans, and Military Affairs Committee, locally known as the “kill committee,” where it faced certain doom from legislators apparently impervious to the evidence:

Under SB 33, a family’s tax credit for full-time private tuition costs could not be more than half the state’s average per-pupil amount. While revenues to the treasury would decline,the official fiscal note showed that over time the limited credit amount would reduce state spending even more for each student who exercised an educational option outside the public system.

Still, Democrats on the committee were unconvinced. “I think it will actually detract from the funding of our public schools,” said Sen. Matt Jones (D-Louisville).

Colorado currently has a school voucher program operating in Douglas County.

A Governor’s Warped Priorities

The governor of New Hampshire just submitted an amicus brief in the lawsuit against the “Live Free or Die” state’s scholarship tax credit program. Last year, Governor Maggie Hassan unsuccessfully sought its repeal. The brief offers nothing new in the way of legal arguments. As with the ACLU and, unfortunately, the trial court judge, the governor’s brief tries to imagine a constitutional difference between tax credits and tax deductions and absurdly assumes that money that a private corporation donated to a private nonprofit that financially assists private citizens sending their children to private schools is somehow “public” money because the state could have collected it in taxes had the legislature so decided. This claim contradicts both logic and the U.S. Supreme Court’s holding in ACSTO v. Winn:

Like contributions that lead to charitable tax deductions, contributions yielding [scholarship] tax credits are not owed to the State and, in fact, pass directly from taxpayers to private organizations. Respondents’ contrary position assumes that income should be treated as if it were government property even if it has not come into the tax collector’s hands. That premise finds no basis in standing jurisprudence. Private bank accounts cannot be equated with the … State Treasury.

The Cato Institute submitted an amicus brief defending the constitutionality of the program back in November.

What’s noteworthy here is not the legal reasoning, but the governor’s chutzpah. First, as the Union Leader noted, “Hassan is pushing state-funded, need-based scholarships for college students while trying to eliminate need-based scholarships for students in grades K-12.” The governor’s amicus brief does not explain why direct public expenditures that students can use at a Catholic college are perfectly constitutional but a low-income student using a tax-credit scholarships at a religious elementary or secondary school would, as her amicus brief melodramatically puts it, “jeopardize both the hallowed underpinnings of religious tolerance and freedom, and the prohibition against entanglement made sacred by [the] New Hampshire Constitution.” 

Second, Hassan is a strong proponent of “research and development” tax credits that pick winners and losers among certain types of businesses and business activities, thereby distorting the market. Moreover, by the governor’s faulty logic, these tax credits constitute direct subsidies of public funds to profit-seeking entities. R&D tax credits clearly reduce state revenue to fund activities that businesses are generally doing anyway for their own financial self-interest.  

By contrast, scholarship tax credits expand the market for private education without distorting it. Parents pick winners and losers among schools rather than the government. The corporations who receive the 85 percent tax credits do not benefit financially – indeed, they’d be better off financially had they not donated at all. Moreover, the Josiah Bartlett Center projected that, if fully utilized, the scholarship tax credits would save New Hampshire taxpayers millions of dollars in the long run by reducing state expenditures by more than they would reduce state tax revenue.

In short, Governor Hassan supports corporate welfare but opposes tax credits that assist low-income families seeking the best education for their children.

2013: Yet Another ‘Year of School Choice’

In 1980, frustrated by the attention given to Paul Ehrlich’s Malthusian doomsaying, economist Julian Simon challenged Ehrlich to a wager. They agreed on a basket of five commodity metals that Simon predicted would fall in price over 10 years (indicating growing supply relative to demand, contrary to the Malthusian worldview) and Ehrlich predicted would rise. In 1990, all five metals had decreased relative to their 1980 prices and Ehrlich cut Simon a check.

In 2011, two education policy analysts made a similar wager. After Jay Mathews of the Washington Post predicted that voters would “continue to resist” private school choice programs, Greg Forster of the Friedman Foundation for Educational Choice challenged Matthews to a wager, which Mathews accepted: Forster would win if at least seven new or expanded private school choice programs (i.e., vouchers or scholarship tax credits, but not including charter schools) were signed into law by the end of the year. That July, the Wall Street Journal declared 2011 to be the “Year of School Choice” after 13 states enacted 19 new or expanded private school choice programs, nearly triple the number Forster needed to win the bet.

Undeterred, the following year Mathews proclaimed that school choice programs “have no chance of ever expanding very far,” prompting another challenge from Forster. Mathews did not take the bet, which was fortunate for him because in 2012 10 states enacted 12 new or expanded private school choice programs.

Now, for the third year in a row, Forster’s prediction has proved true, with 10 states enacting 14 new or expanded private school choice programs, including:

Most of these laws are overly limited and several carry unnecessary and even counterproductive regulations like mandatory standardized testing. Nevertheless, they are a step in the right direction, away from a government monopoly and toward a true system of education choice.

Of course, that’s why defenders of the status quo have made 2013 the Year of the Anti-School Choice Lawsuit.

New Study Explains How and Why Parents Choose Private Schools

Why do parents choose a particular school? What information do they consider in making that choice? Do they prioritize high standardized test scores, rigorous college preparation, moral or religious instruction, or something else?

This morning, the Friedman Foundation released a new study, “More Than Scores: An Analysis of How and Why Parents Choose Private Schools,” that sheds light on these questions. The study surveyed 754 low- and middle-income parents whose children received scholarships from Georgia GOAL, a scholarship organization operating under Georgia’s scholarship tax credit law.

The study’s findings provide analysts and advocates across the education policy spectrum with much to consider. 

Parents Want More Education Options

A record number of low-income families participated in Florida’s scholarship tax credit (STC) program this year.

According to the Florida Department of Education’s latest report, the number of scholarship recipients grew by 10,827 students from 40,248 in 2011-12 to 51,075 in 2012-13, an increase of 26.9 percent. More than half of the scholarship recipients are in grade 3 or lower, indicating that the program will continue to grow over time.

Florida’s sole scholarship organization, Step Up for Students, focuses aid on the families that are most in need. Florida’s STC program requires that the families of first-time scholarship-recipients earn less than 185 percent of the federal poverty line ($43,568 for a family of four), but the average scholarship recipient’s family income is only about 106 percent of the federal poverty line ($23,579 for a family of four). 

Scholarship recipients are much more racially diverse than Florida’s general population. Scholarship recipients are 25 percent non-Hispanic white, 33 percent non-Hispanic black and 35 percent Hispanic compared to 78 percent non-Hispanic white, 17 percent non-Hispanic black, and and 23 percent Hispanic in the general population.

According to Jon East, spokesperson for Step Up for Students, there are still more than 10,000 students on the waiting list due to the program cap. This is consistent with the demand for STC programs in other states. For example, just one of Pennsylvania’s roughly 250 scholarship organizations, the Children’s Scholarship Fund Philadelphia, had to turn away 104,500 of 115,000 scholarship applicants over the last decade due to the state’s program cap.

Florida’s STC program is allowed to grow to meet demand over time because the law contains an “escalator” provision that automatically raises the cap whenever the program grows to at least 90 percent of the cap. While STC programs in Arizona and New Hampshire contain similar provisions, most do not. That’s unfortunate, since the caps limit the program’s ability to expand education options to low-income families.

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