Scholarship Tax Credits Would Be Good for Connecticut

Scholarship tax credits have numerous benefits, which can vary depending on how a credit is structured

March 8, 2021 • Testimony

Finance, Revenue, and Bonding Committee
Connecticut General Assembly

Chairman Fonfara, Chairman Scanlon, members of the committee, thank you for holding this hearing. My name is Neal McCluskey and I am the director of the Center for Educational Freedom at the Cato Institute, a nonprofit, non‐​partisan, public policy research organization. My comments are my own and do not represent any position of the institute.

I will briefly discuss the benefits of scholarship tax credits.

Were Connecticut to enact a scholarship tax credit program, it would join 19 other states that provide tax credits when individuals or corporations donate funds to groups that supply scholarships for children to attend private schools that best fit their needs. In the 2020–21 school year 329,393 students received scholarships connected to such credits.1

Scholarship tax credits have numerous benefits, which can vary depending on how a credit is structured:

  • Choice – freedom – is a fundamental good unto itself, enabling families to pursue education according to their children’s unique needs and desires, within the realm of what freely acting educators are willing and able to provide
  • The need for choice has been highlighted by COVID-19, which has shown that individual families and teachers have different circumstances, health needs, and education challenges, and one size cannot fit all2
  • Private school choice has been shown to result in higher achievement test scores using the most rigorous analytical techniques3 as well as higher high school graduation rates, college enrollment, and college completion.4 Florida’s tax credit scholarship program, specifically, has been found to have the latter results.5 And note that where lower test scores have been found, it may well be because private schools offer a different educational approach than standards‐​and‐​testing‐​centric public schools which may overemphasize test scores and under‐​emphasize character development, critical thinking, and other desirable outcomes that are not conducive to measurement via standardized tests
  • A scholarship tax credit maximizes freedom not just by enabling families to make choices, but funders as well. With a tax credit, taxpayers choose whether to donate and, depending on how the credit is structured, can choose to what kinds of schools: Roman Catholic, Montessori, STEM‐​focused, and so on. This eliminates the concern that donors may have funding go to schools that they believe teach things that are morally or educationally wrong
  • A scholarship tax credit can both deliver choice and save money for all taxpayers. Again depending on how the credit is structured, by moving children from public to private schools, often at less cost than is incurred at a public school, money is left over which can either result in savings to taxpayers or greater resources per child remaining in public schools.6 An analysis of existing scholarship tax credit programs up to fiscal year 2014 found a taxpayer savings of between $1,650 and $3,000 per scholarship student.7 As a simplified illustration, were two students to start at a public school at $10,000 per student, and one to leave using a $5,000 scholarship, $15,000 would be available for the remaining public school child
  • Perhaps as a result of the intensified focus of funding in public schools when families are able to choose private institutions, or perhaps because of the incentives to improve due to greater competition, research has repeatedly found – 25 of 27 studies – that more private‐​school choice, including specifically the Florida Tax Credit Scholarship Program, leads to better test scores in public schools8
  • A scholarship tax credit could make Connecticut a more attractive state for new residents and businesses, both by allowing families and businesses to claim credits, and by offering residents greater diversity in educational options than other states
  • Private schooling has a demonstrated advantage in forming good citizens. Studies comparing private and public school students, all with varying controls for student characteristics that could obscure the effect of the schools themselves, find heavily for private schools. Overall, 34 studies including 86 total findings on political tolerance, political participation, civic knowledge and skills, and voluntarism and social capital, overwhelmingly find either a private advantage or no effect. Overall, there have been 50 findings of a private advantage, 33 of no statistical difference, and only 3 of a public‐​school advantage9
  • School choice can help to promote social harmony. By forcing people with diverse values to support single schools or districts, public schooling can leave citizens little option but to enter into divisive conflicts if they want their values taught. Choice eliminates that by allowing people with differing views and desires to all choose what they want rather than having to impose it on others to get it10

p>If you have questions as you continue with your work please feel free to contact me at nmccluskey@​cato.​org.

Thank you for your time.

About the Author
Notes

1 The count is from EdChoice, “Tax‐​Credit Scholarships,” The ABCs of School Choice: 2021 Edition, p. 85, https://www.edchoice.org/wp-content/uploads/2021/01/2021-ABCs-of-School-Choice-WEB-2–24.pdf#page=88.

2 See, for instance, Linda Conner Lambeck, “CT educators still want schools closed. Now they have a 20‐​foot petition of names as support.” CT Post, December 10, 2020, https://​www​.ctpost​.com/​n​e​w​s​/​a​r​t​i​c​l​e​/​C​T​-​e​d​u​c​a​t​o​r​s​-​s​t​i​l​l​-​w​a​n​t​-​s​c​h​o​o​l​s​-​c​l​o​s​e​d​-​N​o​w​-​t​h​e​y​-​1​5​7​9​2​6​9​8.php, and Emily Brindley, “When COVID-19 spiked in Meriden, the school district forced 13 kids into fully remote learning — including a kindergartner with disabilities; he regressed almost immediately,” Hartford Courant, February 4, 2021, https://​www​.courant​.com/​c​o​r​o​n​a​v​i​r​u​s​/​h​c​-​n​e​w​s​-​c​o​r​o​n​a​v​i​r​u​s​-​s​t​u​d​e​n​t​s​-​d​i​s​a​b​i​l​i​t​i​e​s​-​b​a​r​r​e​d​-​s​c​h​o​o​l​-​2​0​2​1​0​2​0​4​-​w​m​w​m​p​s​4​t​q​5​b​z​l​g​k​g​o​m​t​g​s​a​u​2​o​m​-​s​t​o​r​y​.html.

3 EdChoice, “Program Participant Test Scores,” The 123s of School Choice: 2020 Edition, pp. 9–16, https://www.edchoice.org/wp-content/uploads/2020/04/123s-of-School-Choice-2020–4.pdf#page=14.

4 EdChoice, “Program Participant Attainment,” The 123s of School Choice: 2020 Edition, pp. 17–16,

5 Matthew Chingos, et al., “The Effects of Means‐​Tested Private School Choice Programs on College Enrollment and Graduation,” Urban Institute, July 2019, https://​www​.urban​.org/​r​e​s​e​a​r​c​h​/​p​u​b​l​i​c​a​t​i​o​n​/​e​f​f​e​c​t​s​-​m​e​a​n​s​-​t​e​s​t​e​d​-​p​r​i​v​a​t​e​-​s​c​h​o​o​l​-​c​h​o​i​c​e​-​p​r​o​g​r​a​m​s​-​c​o​l​l​e​g​e​-​e​n​r​o​l​l​m​e​n​t​-​a​n​d​-​g​r​a​d​u​a​t​i​o​n​/​v​i​e​w​/​f​u​l​l​_​r​eport.

6 For a detailed discussion of how this works, and the tradeoffs of different tax credit structures, see Martin F. Lueken and Benjamin Scafidi, “Myth: School Choice Siphons Money from Public Schools and Harms Taxpayers,” in Corey A. DeAngelis and Neal P. McCluskey, eds., School Choice Myths: Setting the Record Straight on Education Freedom (Washington, DC: Cato Institute, 2020), pp. 79–96.

7 Martin F. Lueken, “The fiscal effects of tax‐​credit scholarship programs in the United States,” Journal of School Choice 12, no. 2, (2018): 181–215.

8 EdChoice, “Public School Students’ Test Scores,” The 123s of School Choice, pp. 31–39, https://www.edchoice.org/wp-content/uploads/2020/04/123s-of-School-Choice-2020–4.pdf#page=14.

9 Patrick J. Wolf, “Myth: Public Schools Are Necessary for A Stable Democracy,” in Corey A. DeAngelis and Neal P. McCluskey, eds., School Choice Myths: Setting the Record Straight on Education Freedom (Washington, DC: Cato Institute, 2020), pp. 39–57.

10 For thousands of illustrations of this problem nationwide, including 24 in Connecticut, see Cato Institute, Public Schooling Battle Map, https://​www​.cato​.org/​e​d​u​c​a​t​i​o​n​-​f​i​g​h​t-map.