Tag: educational choice

What Does “Fully Funded” Mean?

Maryland is on the verge of enacting a trailblazing expansion of educational freedom.

The Maryland Education Tax Credit would grant tax credits worth 60 percent of donations to nonprofit scholarship organizations that help low-income families cover certain educational expenses. Were it to become law, Maryland would become the second state, following New Hampshire, to allow families to use tax-credit scholarship funds on a wide variety of educational expenses beyond tuition, such as tutoring, books, education-related technology, transportation, and special-needs services. The legislation has some flaws–for example, eligible schools cannot charge tuition higher than the statewide average per pupil expenditure at district schools–but it still represents a significant step in the right direction.

Unfortunately, the proposal might not get an up-or-down vote in the legislature. Today, the Baltimore Sun reports that Maryland Speaker of the House Michael E. Busch opposes the school choice proposal because Maryland’s assigned schools are not “fully funded”:

“It’s hard for the legislature to fund private religious schools when Governor Hogan fails to fully fund the public education system,” said Busch, an Anne Arundel County Democrat.

There are numerous mistaken assumptions in that statement–tax credits are not government appropriations;  parents can use the scholarships at religious or secular schools; scholarship tax credits generally produce fiscal savings by reducing expenditures more than tax revenue,  etc.–but the claim that Maryland’s district schools are not fully funded raises the question: what does “fully funded” mean?

Ignoring the Evidence Doesn’t Make It Disappear

If a study shows the benefits of school choice, but you don’t read it, does it really exist?

Apparently not, at least according to Americans United for Separation of Church and State (AU), an organization ideologically committed to opposing school choice. In a blog post today, AU makes this demonstrably false claim:

For example, voucher boosters often assert that students who receive vouch­ers excel academically in private schools. In fact, no objective study has shown this to be the case. Several studies show that voucher students perform the same or worse academically as their peers in public schools.

In reality, there have been 13 randomized controlled gold standard studies of the effect of school choice policies, all but one of which found a statistically significant positive impact. One study found no discernible impact and none found any harm. For AU’s benefit, here is a sampling:

  • William G. Howell and Paul E. Peterson, The Education Gap: Vouchers and Urban Schools, Brookings Institution, 2002, revised 2006. – After two years, African-American voucher students had combined reading and math scores 6.5 percentile points higher than the control group.
  • Jay P. Greene, “Vouchers in Charlotte,” Education Next, Summer 2001. – After one year, voucher students had combined reading and math scores 6 percentile points higher than the control group.
  • Jay P. Greene, Paul E. Peterson, and Jiangtao Du, “School Choice in Milwaukee: A Randomized Experiment,” in Learning From School Choice, ed. Paul Peterson and Bryan Hassel, Brookings Institution, 1998, pp. 335-56. – After four years, voucher students had reading scores 6 Normal Curve Equivalent (NCE) points higher than the control group, and math scores 11 points higher. NCE points are similar to percentile points.

None of these findings are earth shattering, but each study found a statistically significant positive outcome overall or for certain subgroups, particularly low-income African-Americans who are currently the most choice-deprived. Moreover, these studies were conducted by experienced researchers at some of the most widely respected academic and research institutions in the world, including Harvard, Princeton, the University of Chicago, and the Brookings Institution.

In another blog post, AU does point to the one gold standard study that found a null result, a reexamination of the Peterson/Howell study of New York’s private scholarship program. However, AU never mentions that this reexamination employed unorthodox methods and classifications, or that a further reexamination of the data by other researchers at Harvard and the Cleveland Clinic Foundation confirmed the initial findings.

The AU staff can continue to close their eyes and stick their fingers in their ears, but they should stop making the false assertion that there is “no evidence” that students benefit from school choice.

2015: The Year of Educational Choice

The Wall Street Journal declared 2011 “The Year of School Choice” after 13 states enacted new school choice laws or expanded existing ones. By that measure, 2015 could be “The Year of Educational Choice” as at least 10 state legislatures consider new or expanded education savings accounts (ESAs) in addition to at least 11 states considering new or expanded scholarship tax credits.

ESAs represent a move from school choice to educational choice because families can use ESA funds to pay for a lot more than just private school tuition. Parents can use the ESA funds for tutors, textbooks, homeschool curricula, online classes, educational therapy, and more. They can also save unused funds for future educational expenses, including college.

Currently, two states have ESA laws: Arizona and Florida. Both states redirect 90% of the funds that they would have spent on a student at her assigned district school into her education savings account. The major difference between the two laws is that Arizona’s ESA is managed by the Arizona Department of Education while Florida’s is privately managed by Step Up For Students and AAA Scholarships, the nonprofit scholarship organizations that also issue scholarships through the Sunshine State’s tax credit law. As the Heritage Foundation’s Lindsey Burke and I explained in the most recent edition of National Affairs, there are several reasons to believe that Florida’s model holds advantages over Arizona’s:

First, the non-profit scholarship organizations are less likely to be captured by opponents than is a government agency. The non-profits are dedicated to the scholarships, and the idea of school choice is built into their mission. Second, awarding scholarships is the primary mission of a scholarship organization but only an ancillary function of a state education agency — which means that not only will they be more dedicated to the concept but they can generate and retain best practices more easily. Third, scholarship organizations have the ability and incentives to be more flexible in their operation than government agencies, and therefore more responsive to the needs of families. The Arizona education department did not offer workshops for parents outside of regular business hours because employees were not paid for those hours. Non-profits can more easily implement policies like flextime.

While both Arizona and Florida redirect public funds into the ESAs, a state could create an ESA that is funded through tax credits, which would minimize the threat of overregulation and avoid coercing people into supporting the teaching of ideas that they dislike. New Hampshire’s scholarship tax credit law already has an ESA-style provision that allows homeschoolers to use scholarship funds for a wide variety of educational expenses. 

Several state legislatures are moving fast to enact ESA laws this year. Both the Mississippi Senate and Virginia Assembly passed ESA bills last week. This week, the Virginia Senate’s Education Committee and Oklahoma Senate education subcommittee both approved ESA bills and a Florida Senate panel approved an expansion of their state’s ESA law. Arizona is also considering expanding eligibility for its ESA law.

Other states considering a new ESA law include Colorado, Delaware, Georgia, Montana, and Oregon. Additionally, Politico reported that Iowa, Nebraska, Nevada, Rhode Island, Tennessee, and Texas are likely to take up ESA bills as well. States considering new or expanded scholarship tax credit laws include Georgia, Indiana, Maryland, Missouri, Montana, Nebraska, Nevada, New Mexico, New York, South Carolina, and Texas. In addition, two state senate committees in Colorado have approved a personal-use education tax credit.

There’s no guarantee that any of these bills will become law, but the number of state legislatures exploring educational choice is encouraging.

[Updated to include Oregon’s ESA bill.]

School Choice Survives Repeal Attempt in New Hampshire … Again

School choice is safe in the Granite State.

This morning, the New Hampshire Senate Education Committee voted 3-2 along party lines against SB 204, a bill to repeal New Hampshire’s trailblazing scholarship tax credit law, which was the first in the nation to include homeschoolers. The repeal bill is likely to be rejected in a vote of the entire state senate later this week. A similar repeal attempt failed two years ago. Thus far, no state has legislatively repealed a school choice law.

Last month, the Cato Institute released a short documentary on the fight for school choice in the “Live Free or Die” state, titled “Live Free and Learn: Scholarship Tax Credits in New Hampshire.” You can watch the film here:

Parents and Taxpayers Want More Educational Choice

Ever since Georgia enacted a scholarship tax credit law in 2008, individual and corporate taxpayers in the Peach State could receive dollar-for-dollar tax credits in return for contributions to nonprofit scholarship organizations—at least until the $58 million cap is reached.

Donors are eligible to receive credits starting on January 1st of each year. In 2012, the last of the credits were claimed in mid-August. The following year, donors hit the cap in May. Last year, they hit it in just three weeks. This year, all the credits were claimed within hours of becoming available on January 1st. In fact, taxpayers applied for more than $95 million in credits, $37 million more than the cap.

Scholarship families are highly satisfied. In a 2013 survey of families receiving scholarships from Georgia GOAL, 98.6% of respondents reported being “very satisfied” or “satisfied” with their chosen school.

Clearly, both the demand for scholarships and the willingness of taxpayers to support scholarship students have grown far beyond what the law currently allows. It’s time to raise the cap. Georgia legislators considering pending legislation to raise the cap to $250 million should be encouraged by two additional facts. First, the best evidence suggests that the tax credit law saves money by reducing expenses by more than it reduces tax revenue. Second, two-thirds of Georgians support the scholarship tax credit law. In other words, it’s good policy and good politics.

In other states that cap the amount of scholarship tax credits available—such as Florida, Pennsylvania, and Rhode Island—donors consistently hit the cap each year. Two recent exceptions—New Hampshire and Alabama—highlight the adverse effects of lawsuits on fundraising. After anti–school choice activists sued to block New Hampshire’s Opportunity Scholarship law, donations dropped off precipitously because of the uncertainty about the law’s future. Fortunately, the state supreme court unanimously rejected the challenge last summer, so we should expect a significant increase in donations this year.

In Alabama, scholarship organizations raised only half as much in 2014 as they did in 2013 because of the uncertainty created by government education establishment’s legal challenge. The lawsuit is likely to meet the same end as similar lawsuits in Arizona and New Hampshire, but the plaintiffs are harming thousands of children while the case is being litigated.

Public Schooling’s Pluralism Problem and the School Choice Solution

Last month, the Orthodox Union, a prominent Jewish organization, launched a campaign advocating for private school choice policies. That raised hackles from Americans United for Separation of Church and State (AU), which condemned the chutzpah of the Orthodox Union to work for equal funding for children in their community:

“It [the campaign] will require us to stop being timid,” [Orthodox Union executive vice president Allen Fagin] said. “We pay our taxes, and our kids are also entitled not to be left behind.”

That statement, of course, is only half-true: Fagin’s constituents do pay their taxes, and their children are indeed entitled to an education. But that’s exactly what public schools are for. OU’s campaign relies on the same faulty logic we’ve seen from advocates of voucher programs: Because parents pay taxes, they should be able to ask every other taxpayer in the state to subsidize their child’s religious education. It’s a clear constitutional violation. […]

It’s unconscionable (and exceptionally brazen) for OU to demand that further funds be siphoned away from public schools intended to serve entire communities in order to promote their private religious agenda. If Orthodox parents want to place their children in religious schools, that’s their right. And it’s their responsibility to pay for it.

In reality though, it’s the idea that so-called “public” schools are actually “public” that is only half-true. District schools are technically open to any student whose parents can afford to live in the district, but they are certainly not “intended to serve entire communities.” For example, they are not intended to serve Orthodox Jews or others like them who have a different vision of education. When everyone is forced to pay for one school system and decisions about education are made via a political process, there will be winners and losers.

How to Design an Education Savings Account

State legislatures across the nation are considering an innovative new education reform: education savings accounts. Hailed as “School Choice 2.0,” ESAs empower parents to customize their child’s education beyond the school walls—a development that could substantially alter the way students are educated. There is “no reason to expect that the future market will have the shape or form that our present market has,” observed Nobel laureate economist Milton Friedman in a 2003 interview, “How do we know how education will develop? Why is it sensible for a child to get all his or her schooling in one brick building?”

Two states have already enacted ESA laws. In Arizona, parents of eligible students that opt out of their assigned district school can access 90% of what the state of Arizona would have spent on those students. The Arizona Department of Education deposits the funds directly into a privately managed bank account that parents can access through a restricted-use debit card. The parents can then spend the ESA funds on any qualifying education-related service or provider they choose. In the first year, eligibility was restricted to students with special needs. Since then, Arizona has expanded eligibility to include children in foster care, children of military personnel, and children assigned to low-performing district schools. Last year, Florida adopted a special-needs ESA law similar to Arizona’s except that it is privately managed.

Today, National Affairs published an essay I coauthored with Lindsey Burke of the Heritage Foundation. Our essay explores the administrative, regulatory, and constitutional issues that policymakers will have to address when designing an ESA law. Policymakers should consider crafting a privately managed and privately funded ESA law that offers tax credits in return for donations to scholarship organizations that manage the ESAs. Florida’s privately managed model is already proving to be more operationally efficient and effective than Arizona’s government-run model. A privately managed ESA would be less susceptible to capture by hostile parties than a government agency, more likely to generate and retain best practices, and more likely to have the ability and incentives to be responsive to the needs of families. Privately funded ESAs also have several advantages over government-funded ESA laws. In particular, they are more likely to pass constitutional muster in states with restrictive “Blaine amendments” and less likely to include burdensome regulations that undermine the effectiveness of the program.

We conclude:

Most school choice programs offer significant but not revolutionary changes to the traditional educational model. But true educational choice, and the educational market it could help foster, promise to radically improve education for many children. As Milton Friedman observed, “not all ‘schooling’ is ‘education’ and not all ‘education’ is ‘schooling.’” Charter schools and voucher programs still conflate the two, but education savings accounts embody a more expansive understanding of education.

ESAs offer several key advantages over traditional school choice programs. Because families can spend ESA funds at multiple providers and can save unspent funds for later, ESAs incentivize families to economize and maximize the value of each dollar spent in a manner similar to spending their own money. ESAs also create incentives for education providers to unbundle services and products to better meet students’ individual learning needs. […] These laws hold great potential to expand educational opportunity and remake the entire education system in ways that better and more efficiently meet the needs of children.

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