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.

Governor Brian Sandoval is likely to sign the legislation.

Unfortunately, the law will help very few students attend their school of choice. The total amount of tax credits available is limited to only $5 million in the first year, or about 0.14 percent of statewide district school expenditures. Following Arizona, Florida, and New Hampshire, Nevada lawmakers wisely included an “escalator clause” allowing the total amount of credits to grow by 10 percent each year. However, assuming an average scholarship of $5,000 (significantly lower than the law allows), there would only be sufficient funds for 1,000 students in the first year, which is the equivalent of about 0.2 percent of statewide district school enrollment. Even with the escalator clause, very few students will be able to receive scholarships without the legislature expanding the available credits.

To learn more about how scholarship tax credit laws expand educational freedom and benefit students, see the Cato Institute’s recent short film, “Live Free and Learn”: