tuition tax credits

2013: Yet Another ‘Year of School Choice’

In 1980, frustrated by the attention given to Paul Ehrlich’s Malthusian doomsaying, economist Julian Simon challenged Ehrlich to a wager. They agreed on a basket of five commodity metals that Simon predicted would fall in price over 10 years (indicating growing supply relative to demand, contrary to the Malthusian worldview) and Ehrlich predicted would rise. In 1990, all five metals had decreased relative to their 1980 prices and Ehrlich cut Simon a check.

School Choice at the Polls

In a nation with a strong tradition of holding major political contests in years divisible by the number two, politicos are mostly confined to chirping about distant elections during odd-numbered years. The exceptions in the year following a presidential election are New Jersey and Virginia, which hold their gubernatorial elections. In addition, due to the passing of Senator Frank Lautenberg, New Jersey will hold a special election to the U.S. Senate. In all three elections, one or both of the major candidates have made school choice an issue. That makes sense because school choice is increasingly popular, especially once implemented. Unfortunately, while the candidates should be commended for promoting school choice policies in general, their specifics leave much to be desired.

Last week, the Republican gubernatorial candidate in Virginia, Ken Cuccinelli, unveiled an education plan calling for an expansion of the state’s scholarship tax credit program (or the creation of a separate program) that would direct funds to students currently attending a failing public school. However, what Virginia’s scholarship tax credit program really needs is the policy equivalent of Extreme Home Makeover to remove unnecessary regulations on private schools, shift administration of the program to the Department of Revenue, increase the credit amount, and expand the uses of the scholarships beyond just tuition. As Andrew Coulson has demonstrated, it is the least regulated, most market-like private schools that do the best job of serving families. 

Parents Want More Education Options

A record number of low-income families participated in Florida’s scholarship tax credit (STC) program this year.

According to the Florida Department of Education’s latest report, the number of scholarship recipients grew by 10,827 students from 40,248 in 2011-12 to 51,075 in 2012-13, an increase of 26.9 percent. More than half of the scholarship recipients are in grade 3 or lower, indicating that the program will continue to grow over time.

Florida’s sole scholarship organization, Step Up for Students, focuses aid on the families that are most in need. Florida’s STC program requires that the families of first-time scholarship-recipients earn less than 185 percent of the federal poverty line ($43,568 for a family of four), but the average scholarship recipient’s family income is only about 106 percent of the federal poverty line ($23,579 for a family of four). 

Scholarship recipients are much more racially diverse than Florida’s general population. Scholarship recipients are 25 percent non-Hispanic white, 33 percent non-Hispanic black and 35 percent Hispanic compared to 78 percent non-Hispanic white, 17 percent non-Hispanic black, and and 23 percent Hispanic in the general population.

According to Jon East, spokesperson for Step Up for Students, there are still more than 10,000 students on the waiting list due to the program cap. This is consistent with the demand for STC programs in other states. For example, just one of Pennsylvania’s roughly 250 scholarship organizations, the Children’s Scholarship Fund Philadelphia, had to turn away 104,500 of 115,000 scholarship applicants over the last decade due to the state’s program cap.

Florida’s STC program is allowed to grow to meet demand over time because the law contains an “escalator” provision that automatically raises the cap whenever the program grows to at least 90 percent of the cap. While STC programs in Arizona and New Hampshire contain similar provisions, most do not. That’s unfortunate, since the caps limit the program’s ability to expand education options to low-income families.

Arizona Expands Its School Choice Program

Arizona is the latest state to expand school choice. Yesterday, the Arizona legislature passed a bill to expand the type of corporations eligible to participate as donors in the Grand Canyon State’s scholarship tax credit (STC) program and to streamline the program’s tax credit approval process.

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