Topic: Education and Child Policy

Rejoinder to WaPo’s Primer on Private School Tax Credits

By
Jason Bedrick

The debate over scholarship tax credit (STC) programs continues. Yesterday, Professor Kevin Welner of the University of Colorado at Boulder responded to my rebuttal of Valerie Strauss’ faulty analysis in the Washington Post’s blog. Welner, who wrote a book that was critical of STC programs, makes several points worthy of consideration. However, he ultimately fails to defend Strauss from any of my central criticisms. Contrary to Strauss’ claims, STC programs do benefit low-income families, donors do not “profit” from the tax credits, and STC programs are significantly different from vouchers. Finally, Welner is correct that the true fiscal impact of STC programs is unknown but the available evidence suggests that savings are likely.

STC Programs Do Benefit the Poor

In conceding that there is “no question that these programs … do indeed provide financial assistance to many lower-income families,” Welner flatly contradicts Strauss’ assertion that low-income families do not benefit. (Strauss correctly noted that tax-credit scholarships do not always cover full tuition, but then incorrectly concluded: “Poor families can’t make up the difference. Guess who can.”) So while Strauss did not directly admit that she was wrong, at least she was willing to let Welner do so on her behalf.

However, Welner then continues, “This [that low-income families benefit] is particularly true in states like Florida that means-test the recipients… It appears to be much less true in states like Arizona and Georgia… In those states, the programs also provide a great deal of assistance to upper-income families.”

Welner’s assertion is misleading because he neglects to provide context. Nine of the ten corporate-donor STC programs, including Arizona’s, contain means-testing provisions. The same is true for five of the seven individual-donor STC programs, the only exceptions being Arizona and Georgia. So when Welner refers to “states like Florida” he means every single STC program except for two, but when he expresses concerns about “states like Arizona and Georgia” he actually means just one of Arizona’s two STC programs and Georgia’s.

Welner notes correctly that I avoided “making many specific claims about the actual distribution of benefits” because there is little available evidence. That is why it is especially odd for him to claim that a “great deal” of upper-income families benefit in Arizona and Georgia. Though that’s technically possible in Georgia, he provides no evidence to support his claim.

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Topics: 
Education and Child Policy

Alabama’s School Choice Program Is a Good Start

By
Jason Bedrick

In a surprise move yesterday, Alabama’s state legislature passed a scholarship tax credit (STC) program. The program allows individuals and corporations to receive tax credits for 50% of their donations to nonprofit scholarship organizations that fund low-income students in failing school districts.

If the governor signs the legislation into law, which appears likely, Alabama will be the 12th state to enact an STC program. Last year, New Hampshire and Virginia enacted similar programs.

While Democrats have legitimate complaints about the manner in which the legislation was adopted, it is likely that once the program takes effect it will garner the bipartisan support that STC programs have found in other states.

From Al.comFrom Al.com

Alabama’s proposed STC program is much more constrained than other STC programs. It will be the only STC program yet enacted that is limited entirely to students in failing government schools. While a good start, students in non-failing schools would also benefit from more educational options. No school can best meet the needs of every single child who happens to live nearby.

Along with Indiana and Oklahoma, Alabama’s 50% credits will be the lowest in the nation. Arizona, Florida, and Pennsylvania grant 100% credits, while tax credits in other states range from 65% to 90%. Higher credit percentages create a greater incentive for individuals and corporations to donate, allowing the STC program to reach more students.

Unlike most other states, Alabama’s STC program mandates that participating schools administer standardized tests, which could exacerbate the “teach to the test” problem. These unnecessary testing provisions are intended to quell concerns about accountability, but the most effective form of accountability is the chosen schools’ direct relationship with parents who can choose to leave if their kids’ needs are not met.

Still, despite its limitations, Alabama’s STC program will expand educational options for those most in need. Evidence from Florida and elsewhere suggests that Alabama’s STC program is likely to raise the academic performance of both participants and nearby public school students. And it can do all this while saving the state money.

Topics: 
Education and Child Policy

Yes, School Choice Does Help Poor Kids

By
Jason Bedrick

Yesterday, WaPo’s Valerie Strauss accused scholarship tax credit (STC) programs of operating as Reverse Robin Hoods, robbing from the poor to give to the rich.

Call it welfare for the rich. Why? Wealthy businesses and individuals are the folks who get the tax credits for putting up the cash to pay the tuition. Furthermore, the amount of money for tuition made available for tuition by private scholarship organizations often does not actually cover the full cost of attending a private school. Poor families can’t make up the difference. Guess who can.

The reality is almost exactly the opposite. Donors are not benefitting financially at the expense of the poor or anyone. And while it is true that tax-credit scholarships do not always cover the full cost of tuition at private schools, thanks to low-cost options and needs-based tuition breaks, low-income families are the primary beneficiaries of STC programs.

STC Donors Do Not Benefit Financially

It is odd to claim that “wealthy businesses” are financially benefitting by receiving a tax credit for their donations. Even a 100% tax credit means that they are simply no worse off than before. A corporation with a $10,000 tax liability that made a $10,000 donation to a scholarship organization would then owe no state taxes but it would still have $10,000 less than it did before. Whether the $10,000 went to the government or a nonprofit is irrelevant to its bottom line.

Moreover, Strauss fails to mention that most state STC programs do not grant 100% credits. In fact, only four of the fourteen STC programs do. The other credits range from 50% to 90%. In these states, corporations would be better off financially if they merely paid their taxes.

STC Programs Benefit Low-Income Students

It is telling that Strauss provides only one example to support her claim that rich people benefit from the scholarships instead of the poor: “[Pennsylvania families] eligible to receive money to pay private tuition can earn more than $72,000…”

The key words in that sentence are “can earn.” The relevant question is how much do the families of scholarship recipients actually earn.  The nonpartisan Pennsylvania Legislative Budget and Finance Committee reported in 2010 that the average scholarship recipient’s family earned only $29,000 annually, less than half of what the program allowed at the time.

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Topics: 
Education and Child Policy

Arne Duncan, Less Than Zero?

By
Neal McCluskey

Yesterday we laid out how, as percentages of total state education workforces, the Obama administration’s worst-case sequester job loss predictions are actually tiny. They’re so small they approach zero, generally clocking in at around 0.30 percent.

It seems, though, that even that number might be too big to fully capture the degree of fear-mongering by the administration. As the Washington Post is now reporting, U.S. Secretary of Education Arne Duncan actually has no evidence to back up the claim he made on Face the Nation this weekend that “there are literally teachers now who are getting pink slips, who are getting notices that they can’t come back this fall.” OK, he could point to one example – Kanawha County, West Virginia – but not without adding, “whether it’s all sequester-related, I don’t know.”

The big question now is, can we get the administration to cop to less than zero job losses? It might not be possible because, as trumped up as the sequester is, it probably will involve some job trimming. But it isn’t hard at all to see less than zero cuts when you put the sequester into historical context. As our by-now famous graphs make clear, for decades hiring in our schools grew well in excess of enrollment – a huge hiring boom. That means relatively minor cuts will, indeed, come out to far less than zero long-term losses. And considering that academic achievement was utlimately flat throughout the boom, much bigger cuts are clearly in order.

 

Anyway, thanks to Secretary Duncan – and the Washington Post – for making the job of exposing administration fear-mongering much, much easier.

Topics: 
Education and Child Policy, General, Tax and Budget Policy

Only Doom Without the Denominator

By
Neal McCluskey

The Obama administration tried to turn the doom-and-gloom up a notch over the weekend, releasing reports on how many employees each state could lose if sequestration isn’t stopped. Teachers were prominently featured, of course, because nothing scares people like the prospect of their kids not getting educated.

“Could” is a crucial word here, because it is entirely possible that savings could be found that would negate the need to dismiss people. For instance, unnecessary purchases could be cancelled, or all employees could take small pay cuts. But suppose worst-case firings did come. How horrific would the education damage be?

It turns out, once you look at the overall staffing picture, not very. Using a compilation of the state reports put together by the Washington Post, as well as Digest of Education Statistics staffing data, we assembled the following table calculating how big a percentage of public school employees in each state would disappear in the worst-case scenario. Unlike the administration, we included the numerator and the denominator.

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Topics: 
Education and Child Policy, General, Tax and Budget Policy

Who Cares If Pre-K Would Work?

By
Neal McCluskey

The following is cross-posted from the National Journal’s Education Experts blog:

This week’s introduction says that, when it comes to President Obama’s preschool proposal, “the only problem, as always, is that these investments cost money.” These proposals certainly would cost money – dollars Washington doesn’t have – but even discussing cost is seriously jumping the gun. The fact is that right now, regardless of cost, there is almost no meaningful evidence to support massive expansion of federal pre-school efforts. Indeed, the evidence calls much more loudly for the opposite.

Start with the biggest federal pre-K initiative, Head Start. It costs about $8 billion per year, and what are its lasting effects? According to the latest random-assignment, federal assessments, there essentially aren’t any. The program has demonstrated no meaningful, lasting benefits, and is therefore a failure.

How about Early Head Start, which involves children ages 0 to 3? It is a much newer program than its big brother, but it, too, provides no evidence of overall, lasting benefits. As a 2010 random-assignment, federal study concludes:

The impact analyses show that for the overall sample, the positive effects of Early Head Start for children and parents did not continue when children were in fifth grade…. It appears that the modest impacts across multiple domains that were observed in earlier waves of follow-up did not persist by the time children were in fifth grade.

There were, to be fair, some lasting positive effects found for some subgroups, but there were also negative effects. And for the “highest-risk” children – the ones the program is most supposed to help – the outcomes were awful:

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Topics: 
Education and Child Policy, General

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