May 20, 2015 9:01AM

The Year of Educational Choice: Update II

Educational choice is on the march.

As I noted back in February, the stars appeared to be aligned for a "Year of Educational Choice." By late April, state legislatures were halfway toward beating the record of 13 states adopting new or expanded school choice laws in 2011, which the Wall Street Journal dubbed the "Year of School Choice." The major difference in the types of legislative proposals under consideration this year is that more than a dozen states considered education savings account (ESA) laws that allow parents to purchase a wide variety of educational products and services and save for future education expenses, including college.

On Monday, Tennessee Gov. Bill Haslam signed the Individualized Education Act, an ESA program for students with special needs. Earlier this year, Mississippi enacted the nation's third ESA law, behind Arizona and Florida. Lawmakers in Montana also passed an ESA, but Gov. Steve Bullock vetoed it earlier this month.

Nevertheless, Gov. Bullock allowed a universal tax-credit scholarship bill to become law without his signature. The law is an important step toward educational freedom, albeit a very modest one. Taxpayers can only receive tax credits for donations to scholarship organizations up to $150, meaning that a single $4,500 scholarship will require 30 donors. No other state has such a restrictive per-donor credit cap. Unless the legislature raises or eliminates the cap, Montana's tax-credit scholarship program is likely to help very few students.

Fortunately, other states are working toward aiding as many students as possible. Lawmakers in three states--Arizona, Florida, and Indiana--passed expansions to their educational choice programs this year. Unfortunately, despite passing both legislative chambers unanimously, Florida's ESA expansion legislation did not become law due to a standoff between the Florida House of Representatives and the Florida Senate. 

For those keeping track at home, there have been five newly enacted educational choice law thus far this year, plus four programs expanded in two states:

New educational choice laws

  • 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.
  • Tennessee: ESAs for students with special needs.

Expanded choice programs

  • 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.
  • 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.

Several more bills are pending around the nation:

  • The Texas Senate passed a tax-credit scholarship bill that is currently under consideration in the state house.
  • The Pennsylvania House of Representatives overwhelmingly passed bipartisan legislation to increase amount of tax credits available under the Education Improvement Tax Credit from $60 million to $100 million by a vote of 166-26. Unlike tax credits for filmmaking or green energy, scholarship tax credits can save the state a significant amount of money because the average size of the scholarships are significantly less than the amount the state spends per pupil. The legislation is now pending before the state senate.
  • New York's Gov. Andrew Cuomo is asking the legislature to support a proposal to create a $150 million tax-credit scholarship program for low-income students. While the state senate included a version of the legislation in the budget, the New York Assembly left the tax credit out of its version of the budget. Ultimately, Gov. Cuomo signed the budget without the tax credit.
  • Gov. Scott Walker's proposed budget would eliminate the cap on the number of available school vouchers in Wisconsin.
  • The legislatures in Nevada and Rhode Island are currently considering ESA legislation.

On New Year's Day, 23 states had educational choice laws. Now 28 states do. As more states enact choice laws, we may be reaching a tipping point. It is becoming increasingly difficult for choice opponents to scare legislators with dire predictions about the impact of educational choice because those legislators can now see the impact of such laws on neighboring states. And as with Uber, once people get a taste of what the market offers, they don't want to go back to the monopoly.

UPDATE: The Friedman Foundation for Educational Choice has informed me that there are a few more pending bills:

  • Iowa legislators are contemplating a new ESA.
  • Nebraska is considering a new tax-credit scholarship law.
  • Ohio may expand the voucher program in Cleveland.
  • Oklahoma may expand its tax-credit scholarship program.

[Note: updated to correct impact of the amendment to Indiana's voucher law.]