Tag: scholarship tax credits

Texas Pastors Are Wrong about School Choice

Today, the Fort Worth Star-Telegram published my op-ed addressing the claims of a group called Pastors for Texas Children. For the last month, the pastors have been flooding the pages of Texas newspapers with op-eds opposing school choice. Although they raise some legitimate concerns about school vouchers, their charges against scholarship tax credits—and school choice laws generally—range from lacking substance to being demonstrably false. 

There wasn’t enough space to address all of their claims in a single op-ed, but fortunately, here at Cato@Liberty we buy megapixels by the barrel (or whatever they come in). 

The claims made by six Fort Worth pastors in this op-ed were typical. I’ll address their major claims point by point:

The Texas Senate recently passed Senate Bill 4, providing tuition tax credits to donors giving scholarships to private schools. These are plainly private school vouchers.

Actually, the scholarships plainly are not vouchers. Voucher programs are government-funded and administered. Tax-credit scholarships are privately funded and administered by nonprofit scholarship organizations. As I wrote in the Star-Telegram, it’s like the difference between government-issued food stamps and nonprofit food banks. Donors to both scholarship organizations and food banks have their tax burden lowered as a result, but in neither case do the donated funds transmogrify into government property.

Our state Legislature has repeatedly rejected private school vouchers because they divert public money to religious schools in violation of the First Amendment of the U.S. Constitution, which prohibits any establishment of religion.

First, the U.S. Supreme Court ruled in Zelman v. Simmons-Harris that school vouchers are constitutional because they serve a secular purpose, are neutral with respect to religion, and the funds are given to parents who can choose among religious or secular options. This is no more offensive to the First Amendment than holding a Bible study in a Section-8 subsidized apartment or using Medicaid at a Catholic hospital with a crucifix in every room and chaplains on the payroll.

Second, as noted previously, tax-credit scholarships are private funds. In ACSTO v. Winn, SCOTUS held that private funds do not become government property until they “come into the tax collector’s hands.”

Florida Judge Dismisses Lawsuit against School Choice

This morning, a Florida circuit court judge dismissed with prejudice a lawsuit by the members of the education establishment against the 13-year old Florida Tax-Credit Scholarship law, which grants tax credits to corporations that make donations to nonprofit scholarship organizations. About 70,000 low-income students in Florida currently receive tax-credit scholarships to attend the schools of their choice. Travis Pillow of RedefinEd (a blog connected to the scholarship organization Step Up for Students) has the story:

The statewide teachers union, the Florida PTA, the Florida School Boards Association and other groups filed the lawsuit in August, arguing the tax credit scholarship program unconstitutionally created a “parallel” system of publicly supported schools and violated a state constitutional provision barring state aid for religious institutions.

Judge George Reynolds, however, dismissed the case this morning. The plaintiffs, he ruled, could not show the scholarships harmed public schools, and could not challenge the program as taxpayers because it was not funded through the state budget.

Claims the lawsuit would harm public schools were purely “speculative,” Reynolds wrote, siding with arguments made by the state and parents who had intervened in the case. The plaintiffs could not show the program would hurt school districts’ per-pupil funding, or result in “any adverse impact on the quality of education” in public schools.

In dismissing the lawsuit on these grounds, the judge is following the precedent set by the U.S. Supreme Court and the New Hampshire Supreme Court.

In ACSTO v. Winn (2011), the U.S. Supreme Court rejected the standing of plaintiffs against Arizona’s tax-credit scholarship law because the scholarships constitute private funds, not government expenditures. Private funds, the Court ruled, do not become government property until they have “come into the tax collector’s hands.” Moreover, any impact on other taxes or spending is purely speculative, so the plaintiffs could not demonstrate any harm:

The costs of education may be a significant portion of Arizona’s annual budget, but the tax credit, by facilitating the operation of both religious and secular private schools, could relieve the burden on public schools and provide cost savings to the State. Even if the tax credit had an adverse effect on Arizona’s budget, problems would remain. To find a particular injury in fact would require speculation that Arizona lawmakers react to revenue shortfalls by increasing respondents’ tax liability.

Last year, in Duncan v. New Hampshire, the New Hampshire Supreme Court unanimously dismissed a lawsuit against the Granite State’s tax-credit scholarship law for the same reasons:

The personal injuries alleged by the petitioners in this case […] are insufficient to establish standing. The petitioners’ claim that the program will result in “net fiscal losses” to local governments does not articulate a personal injury. […] Moreover, the purported injury asserted here – the loss of money to local school districts – is necessarily speculative. […] Even if the tax credits result in a decrease in the number of students attending local public schools, it is unclear whether, as the petitioners allege, local governments will experience “net fiscal losses.” The prospect that this will occur requires speculation about whether a decrease in students will reduce public school costs and about how the legislature will respond to the decrease in students attending public schools, assuming that occurs.

This morning, the Florida judge reached the same, logical conclusion. The plaintiffs are not challenging “a program funded by legislative appropriations” so they lack standing to sue. Moreover, citing both of the above opinions, the judge concluded that any “injury” they allege is purely speculative:

Plaintiff’s Complaint also does not allege special injury sufficient to confer standing on Plaintiffs to challenge the constitutionality of the Tax Credit Program. […] [W]hether any diminution of public school resources resulting from the Tax Credit Program will actually take place is speculative, as is any claim that any such diminution would result in reduced per-pupil spending or in any adverse impact on the quality of education.

The plaintiffs are likely to appeal. And they are likely to lose that appeal. Last September, another circuit court judge dismissed a separate teachers union lawsuit alleging that the legislation expanding the tax-credit scholarship law was passed improperly. That judge also held that the plaintiffs lacked standing to sue because they could not demonstrate any harm.

Perhaps the education establishment should spend less time trying to prevent students from leaving their schools and more time trying to improve their schools so families will choose them.

When Overcrowding Happens in Vegas

What happens when the population of K-12 students grows faster than the government is able to build school buildings? Las Vegas is finding out the hard way:

Las Vegas is back, baby. After getting slammed by the Great Recession, the city today is seeing rising home sales, solid job growth and a record number of visitors in 2014.

But the economic rebound has exacerbated the city’s severe school overcrowding and left school administrators, lawmakers and parents scrambling.

This elementary school was built to serve a maximum of 780 students. Today it serves 1,230 — and enrollment is growing.

Forbuss Elementary is hardly alone. The crowding is so bad here in the Clark County School District that 24 schools will soon run on year-round schedules.

Forbuss already is. One of five sections is always on break to make room. Scores of other schools are on staggered schedules. More than 21,000 Clark County students are taking some online classes, in large part because of space strains. Nearly 700 kids in the district take all of their classes online.

“It’s pretty rough some days. I’m in a small portable with 33 students,” says Sarah Sunnasy. She teaches fifth grade at Bertha Ronzone Elementary School, a high-poverty school that is nearly 90 percent over capacity. “We tend to run into each other a lot. Trying to meet individual needs when you have that many kids with such a wide range of ability levels is hard. We do the best we can with what we have,” she says.

At Forbuss Elementary there are 16 trailer classrooms — the school prefers the term “portables” — parked in the outdoor recess area, eating away at playground space.

There’s also a “portable” bathroom and portable lunchroom. “It’s warmer in the big school,” a little girl tells me. “These get cold in winter.”

“You have to make do,” says Principal Shawn Paquette. “You get creative.”

“Our school is so overcrowded, that, you know, everybody’s gotta pitch in,” says school support staffer Ruby Crabtree. “We don’t have enough people.”

The Nevada legislature recently approved funding to build new schools and renovate old ones, but as NPR notes, the “handful of new schools won’t be finished for at least two years.” In that time, the Las Vegas school district is expected to experience 1 percent enrollment growth, or about 3,000 to 4,000 students, so the district will need “at least two more elementary schools every year.”

Alabama’s School Choice Law Needs Improvement

Educational choice laws have the potential to expand educational opportunity and improve quality. However, design matters. Ideally, educational choice laws allow very wide participation and eschew technocratic regulations that can impede or even undermine their success.

Unfortunately, Alabama’s scholarship tax credit (STC) law is far from ideal.

Last week, the Alabama State Senate passed legislation making numerous changes to the state’s STC law. Yet while the legislation includes several improvements, the changes fail to address the law’s most serious flaws, and would further constrain what is already among the most limited private school choice laws in the nation.

Eligibility

Under the Alabama Accountability Act, low- and middle-income students who are zoned to attend a district school designated as “failing” are eligible to receive tax-credit scholarships from a nonprofit scholarship-granting organization (SGO). Sadly, while other states are seeking to expand eligibility, the Alabama Senate is seeking to further restrict it.

The legislation would lower the income eligibility level from 150 percent of Alabama’s median household income (about $65,000 for a family of four in 2014–15) to that of the federal free-and-reduced lunch program, which is 185 percent of the federal poverty line (about $44,000 for a family of four). It also eliminates the provision that allowed students to continue receiving scholarships if their parents’ income outgrew the eligibility guidelines, which could contribute to the poverty trap.

Even worse, rather than eliminate the problematic “failing schools” provision, the legislation would narrow the scope of what constitutes a “failing” school. The legislation would restrict tax-credit scholarships to students zoned to district schools scoring in the lowest 6 percent on the state standardized assessment in reading and math, down from 10 percent (among other provisions). However, even schools that perform higher on average might not meet the particular needs of particular students. Educational choice laws should provide opportunities to all students, no matter where they live or how well or poorly their local district school performs on average.

Victories for Educational Choice in the Southwest

It’s looking more and more like the Year of Educational Choice each week.

Yesterday, Arizona Governor Doug Ducey signed a bill expanding eligibility for the state’s pioneering education savings account (ESA) law to all students living on Native American tribal lands. The ESAs were originally limited to students with special needs, but the state subsquently expanded eligibility to include students in adoptive care, students with an active-duty military parent, siblings of an ESA recipient, and students zoned to a district school rated D or F.

On the same day, Nevada became the third state this year to adopt a new educational choice law in both legislative chambers, behind Mississippi and Arkansas. In addition, the Montana Senate recently voted to create a new scholarship tax credit (STC) law, and Alabama Senate voted last week to expand the state’s existing STC law.

Nevada’s Assembly Bill 165 creates a STC law. Corporate donors will be able to receive tax credits for contributions to nonprofit scholarship organizations that aid low- and middle-income students attend the school of their family’s choice. The scholarships can be worth up to $7,755 in the first year, which is significantly less than the average $9,650 cost per pupil in Nevada’s district schools.

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?

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.]

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