The Year of Educational Choice: Final Tally

This is the seventh and likely final entry in a series on the expansion of educational choice policies in 2015. As I noted at the outset, the Wall Street Journal declared 2011 “The Year of School Choice” after 13 states enacted new school choice laws or expanded existing ones. As of my last update in late September, 15 states had adopted 21 new or expanded educational choice programs, including three education savings account laws, clearly making 2015 the “Year of Educational Choice.” As I wrote previously:

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.

Readers will find a complete tally of the new and expanded programs at the bottom of this post, as well as a list of anti-school-choice lawsuits decided in 2015 or still pending.

Lawmakers across the nation are already beginning to consider educational choice proposals for the 2016 legislative session, including Maryland, OklahomaSouth Dakota, TennesseeTexas, and several others, but Florida will likely be the first state to expand choice next year. 

Florida: Expanded Choice on the Horizon But Legal Threats Loom 

Florida’s legislature is currently considering legislation to expand both the number and types of students who are eligible to receive ESAs, known in Florida as Personalized Learning Scholarship Accounts. The legislation has already cleared committees in both the Florida House and Senate, but the legislation is not expected to reach the governor’s desk until the new year.

Meanwhile, a Florida judge delivered a partial legal victory to families using tax-credit scholarships. Leon County Circuit Judge George Reynolds ruled that petitioners in a lawsuit contending that the state is not adequetely funding district schools do not have standing to challenge the constitutionality of the state’s scholarship tax credit law. However, the judge allowed the petitioners to proceed in their challenge to the constitutionality of the McKay Scholarships for students with special needs. The petitioners may also present any evidence that either of the choice programs contribute to what they argue is the inadequate level of funding of district schools. That will be a hard case to make, given that Florida’s nonpartisan Office of Program Policy Analysis and Government Accountability estimated that the state saves $1.44 for every $1.00 in reduced revenue resulting from the tax credits. Likewise, a Friedman Foundation fiscal analysis calculated that the McKay Scholarships have saved the state more than $835 million over 12 years.

The scholarship tax credit law is also still facing a second legal challenge to its constitutionality. 

Pennsylvania: Budget Stalemate Threatens Scholarships

Earlier this year, Pennsylvania appeared poised to expand the amount of tax credits available for its two scholarship programs. Now, however, a stalemate over budget negotiations has jeopardized even this year’s tax credits because some state officials say the state cannot award the credits without a state budget:

Approval letters have not gone out to businesses for the 2015-16 year.

“Without those approval letters, businesses are not going to be willing to write those checks without knowing they’re going to get credit for it,” said Aaron Anderson, CEO and Head of School at Logos Academy. “By Dec. 31 if this hasn’t happened, they’re going to have to pay their tax bills.”

Jeff Sheridan, spokesman for Gov. Tom Wolf, said letters can’t go out until there is a 2015-16 state budget. Without a budget, the state doesn’t know what limits will be put on the amount of tax credits that can be legally issued, he said.

“The Department of Community and Economic Development has been accepting and reviewing all applications and is prepared to issue award letters as soon as possible once there’s a budget,” he said.

However, proponents of the choice laws disagree with that interpretation. According to Ina Lipman, executive director of Children’s Scholarship Fund Philadelphia, the scholarship tax credit laws require the state to issue the credits whether or not the state adopts a new budget:

“This is not a matter of appropriation that needs yearly approval,” Lipman said. “So many of the arguments that Gov. Wolf’s administration are setting forth are smokescreens. The governor is in full control of whether the DCED can issue these approval letters and issue them in time for this tax credit year and not jeopardize so many organizations that are really in the field to help low-income children to gain access to educational opportunities across the board.”

More than 40,000 low-income students depend on the tax-credit scholarships, so community leaders are speaking out and holding prayer vigils and rallies to encourage lawmakers to take action. If legislators fail to reach a budget compromise or fix the issue outside of the budget process, it’s not only the scholarship students who will suffer. The state would soon find that failure to approve the credits was a costly error. According to a 2014 Show-Me Institute report, if every scholarship student were to enroll at their local district school instead, the schools “would require an additional $892 million in revenue to handle the additional enrollment.”  

Montana and Colorado: Exclusion of Religious Schools Invites Lawsuits

Earlier this year, Montana adopted a new scholarship tax credit law. Unfortunately, not only did the law have several flaws that will limit the ability of scholarship organizations to raise money and issue scholarships, but bureaucrats at the Montana Department of Revenue (DOR) unilaterally decided to forbid scholarship organizations from granting scholarships to students to attend religious schools. Legislators who passed the law are not pleasedAccording to a poll of Montana legislators, a majority believe the revenue department officials are not following the legislature’s intent. 

The Montana DOR officials claim that the state’s constitution prohibits using tax-credit scholarships at religious schools, but the state attorney general’s office sent a letter to the DOR advising them that they are in error:

The DOR has proposed excluding religious schools from the rule on the grounds that the Montana Constitution bars appropriations to sectarian schools, organizations or affiliated groups.

However, in his letter, [Solicitor General Dale] Schowengerdt argues, “The Montana Constitution does not authorize, much less require, the wholesale exclusion of religious entities from being considered qualified education providers under SB 410.”

He later argues that the rule’s rationale “that the Montana Constitution requires categorical exclusion of religious entities from SB 410’s tax credit program is in error because the tax credit envisioned by SB 410 is not a direct or indirect appropriation by the state to a religious entity.” And he said it excludes religious entities from a neutral benefits program without good reason.

Schowengerdt said Attorney General Tim Fox did not believe the proposed rule would be defensible in court.

The attorney general’s office also warned the DOR that it is their proposed rule, not the scholarship law, that is unconstitutional because discriminating against religious schools would put “Montana’s Constitution in potential conflict with the U.S. Constitution.”

Indeed, the U.S. Supreme Court may soon consider that very issue. In June, a plurality of the Colorado Supreme Court interpreted the state constitution’s historically anti-Catholic Blaine Amendment to prohibit the use of vouchers at religious schools. Now four educational choice organizations are asking SCOTUS to review that decision and consider striking down Blaine Amendments across the United States. The Goldwater Institute, the Foundation for Excellence in Education, the Hispanic Council for Reform and Educational Options, and the American Federation for Children argue that the Blaine Amendments were “motivated by bigotry” and “present an obstacle to the provision of high-quality educational opportunities for millions of American schoolchildren” that must be removed in order “to vindicate our nation’s sacred promise of equal educational opportunities.” 

Likewise, in an interview with RedefinED, Michael Bindas of the Institute for Justice argued that the First and Fourteenth Amendments forbid discriminating against religious schools. “Singling out religious schools is not even handedness,” Bindas argues. “It is discrimination.”

Louisiana: Legal Victory for a Flawed Voucher Program

In a stinging rebuke, the Fifth Circuit Court of Appeals rejected the U.S. Department of Justice’s “disingenuous” attempt to use a decades-old desegregation lawsuit to curb or control Louisiana’s voucher program for low-income students assigned to failing district schools. The DOJ claimed the voucher program imperiled desegregation efforts but two studies showed that the vouchers actually improved racial integration. Indeed, since the vast majority of voucher recipients are black, a victory for the DOJ would have meant keeping black students trapped in failing schools. Fortunately, the court ruled differently.

Educational choice advocates can issue three cheers for the court’s decision, but the voucher program itself deserves only one. Unfortunately, the program is hobbled by excessive regulations that are intended to guarantee quality but might actually be undermining it. For example, the state requires private schools that accept vouchers to administer state test, which drives what schools teach and even how and when they teach it. As I explained in a recent symposium on testing and educational choice at RedefinED:

First, the mandate puts significant pressure on schools to teach subjects at the same time and in a similar manner. A school that taught subjects in years that they are not tested or taught them in a manner that is not aligned with the test would be putting its students at an unnecessary disadvantage. That creates a powerful incentive to conform.

Second, such mandates drive down school participation in school choice programs. A recent American Enterprise Institute study found that states with lightly regulated school choice programs had much higher rates of school participation than highly regulated states. Nearly every private school in Arizona is willing to accept tax-credit scholarship students while only about one-third of Louisiana private schools are willing to accept voucher students due to the program’s regulatory burden.

What’s the difference between the schools that accept the vouchers with all their attached strings and those that don’t? We don’t yet know for certain, but Professor Jay P. Greene warns that it’s likely the least successful and most desperate private schools that accept the regulations:

“The only schools who are willing to do whatever the state tells them they must do are the schools that are most desperate for money,” Greene said. “If you don’t have enough kids in your private school and your finances are in bad shape, you’re in danger of closing — probably because you’re not very good — then you’re willing to do whatever the state says.”

Pelican State lawmakers should study the impact of the excessive regulations and consider modifying the law to allow private schools to administer one of the many nationally norm-referenced tests as an alternative to the state exam.

The Year of Educational Choice: The Final 2015 Tally

Here is the (likely) final tally for new and expanded choice programs in 2015, as well as the private educational choice lawsuits decided this year or still pending:

New Educational Choice Programs (8 in 7 states)

  • Arkansas: Vouchers for students with special needs.
  • Mississippi: ESAs for students with special needs.
  • Montana: Universal tax-credit scholarship law.
  • Nevada: Tax-credit scholarships for low- and middle-income students.
  • Nevada: Nearly universal ESA for students who previously attended a public school.
  • South Carolina: Voucher-like “refundable” direct tuition tax credit for students with special needs. 
  • Tennessee: ESAs for students with special needs.
  • Wisconsin: Vouchers for students with special needs.

 Expanded Educational Choice Programs (13 in 9 states)

  • Alabama: Raised the annual scholarship tax credit cap from $25 million to $30 million and raised the contribution cap from $7,500 to $50,000. However, the expansion came at a price: the legislation lowered income eligibility threshold from 275 percent of the federal poverty level to 185 percent (from about $67,000 to about $45,000 for a family of four). Current scholarship recipients are grandfathered in.
  • Arizona: Expanded ESA eligibility to include students living in Native American tribal lands.
  • Arizona: Expanded the types of businesses that can receive tax credits for donations to scholarship organizations.
  • Florida: Expanded ESA eligibility to include more categories of students with special needs and increased the budget from $18.4 million to nearly $55 million.
  • Indiana: Increased amount of tax credits available for donations to scholarship organizations ($2 million over two years).
  • Indiana: Eliminated cap on the value of each voucher. Vouchers are worth 90 percent of the state’s per-pupil funding.
  • Louisiana: Expanded school voucher program (funding roughly 600 additional vouchers).
  • North Carolina: Expanded school voucher program for low-income students ($17.6 million in 2015-16, $24.8 million in 2016-17). 
  • North Carolina: Expanded school voucher program for students with special needs(vouchers increased from $6,000 to $8,000, total funding increased by $250,000 to $3.25 million annually).  
  • Ohio: Increased the value of several categories of vouchers. 
  • Ohio: Raised the funding caps for special-needs vouchers.
  • Oklahoma: Expanded eligibility for its special-needs tax-credit scholarships and raised the tax credit value from 50 percent–tied with Indiana for the lowest in the nation–to 75 percent. 
  • Wisconsin: The state budget raises and eventually eliminates the statewide voucher cap.

Legal Challenges to Educational Choice Laws Decided in 2015

  • Alabama: The state supreme court upheld the state’s refundable scholarship tax credit law against a Blaine Amendment challenge.
  • Colorado: A plurality of the state supreme court declared that the state’s Blaine Amendment prohibits the use of public funds at religious schools. One justice held that vouchers violated other statutes.
  • Florida: A judge tossed out a procedural challenge to the legislation creating the state’s ESA program.
  • Louisiana: The Fifth Circuit Court of Appeals ruled against the U.S. Department of Justice’s “disingenuous” attempt to use a decades-old desegregation lawsuit to curb or control the state’s voucher program.
  • North Carolina: The state supreme court upheld the state’s voucher law.

Pending Educational Choice Lawsuits

  • Alabama: Public school superintendents claim that the Alabama Accountability Act, which created the state’s refundable scholarship tax credit law (among other things), was improperly adopted by the state legislature in violation of certain provisions of the state constitution.
  • Florida: The state’s largest teachers union claims that the scholarship tax credit law violates the state’s Blaine Amendment and “uniformity” clause, which they claim bars the state from funding or otherwise aiding any school system besides the public schools. A lower-court judge previously threw out the lawsuit, but the union has appealed.
  • Florida: A public education group claims the state is failing in its constitutional duty to adequately fund public schools. They amended their lawsuit to challenge two school choice programs as well. A county circuit judge denied standing for petitioners to challenge the constitutionality of the state’s scholarship tax credit law, but allowed them to proceed with their challenge to the constitutionality of the McKay Scholarships for students with special needs. Petitioners may also present evidence that either or both programs contribute to the supposed inadequacy of the state’s funding of public education. 
  • Georgia: The Southern Education Foundation claims Georgia’s scholarship tax credit law violates the state’s Blaine Amendment.
  • Nevada: The ACLU claims Nevada’s ESA program violates the state’s Blaine Amendment and other provisions of the state constitution.
  • Nevada: A public education group, Educate Nevada Now, claims Nevada’s ESA program is improperly funded because it violates the state constitution’s requirement that the legislature fund “a uniform system of common schools,” among other provisions. The Institute for Justice is seeking intervenor status to defend Nevada’s ESA from both lawsuits.
  • Oklahoma: Plaintiffs claim Oklahoma’s voucher program for students with special needs violates the state’s Blaine Amendment.

To learn more about how educational choice benefits students — and how defenders of the status quo are attempting to use the courts to deprive families of that choice — watch the Cato Institute’s short documentary, “Live Free and Learn”: