School Choice Murder-Suicide in Pennsylvania
A huge school choice opportunity has been lost for the moment in Pennsylvania. But that lost opportunity is not the voucher program that has drawn so much attention.
The political conflagration touched off by the push for a targeted, failing-schools voucher program incinerated along with it a massive expansion of an existing, popular, successful, bipartisan-supported, and better program; the Educational Improvement Tax Credit (EITC). The House passed this expansion of credit program by a massive margin. And when I say “massive,” I mean 96 percent in favor to 4 percent opposed. Unfortunately, a stand-alone credit bill was not considered in the Senate, and the expansion fell by the wayside as the voucher battle raged.
In the next session, it would be good policy and politics to consider vouchers and credits separately. They are substantively different means of fostering choice, and the public deserves a clear debate and vote on both policies in separate bills.
The Educational Improvement Tax Credit program is vastly superior to all of the voucher bills. Vouchers are open to credible legal challenges, afford no accountability directly to taxpayers, and government money brings stifling government regulations. Furthermore, giving vouchers only to kids in or around “failing schools” won’t produce a dynamic market because there is an ambiguous, limited, and potentially shifting customer base. A failing-schools voucher program is a terrible policy design.
The EITC should not be legislatively handcuffed to vouchers. Vouchers are an inferior policy and a proven political liability. For once the popular, politically smart, most principled, and most effective thing to do are all the same; drop the voucher drama and expand the education tax credit program.
Dear Journalists, Donations Are Not ‘State Money’
Oklahoma has just joined the ranks of a half-dozen other states by enacting a K-12 education tax credit program. Under the new program, individuals or businesses that donate to non-profit School Tuition Organizations receive a tax cut worth 50 percent of the donation. STOs then use the funds to help low income families afford private schooling.
Journalists for the Associated Press and countless other media outlets routinely refer to donations made under education tax credit programs as “state money.” According to the United States Supreme Court’s recent ACSTO v. Winn decision, “that is incorrect.” This is a matter of settled law. To call these private donations “state money” is to misrepresent the facts and mislead readers.
It would be bad enough if the journalists and wire services misrepresenting these programs were simply unaware that they were distorting the facts, but in at least some cases they continue to do so even after having been apprized of their error. Brandon Dutcher, vice president for policy at the Oklahoma Council of Public Affairs, wrote to the AP last week to correct their earlier erroneous coverage. He received no reply and the errors continue.
I never cease to be amazed by this kind of behavior from an industry that is clinging for its life. The purpose of journalism is to apprize customers of the facts. Demonstrating indifference to the facts cannot be good for business.
Ensuring that Indiana’s New Voucher Program Lives up to Budgetary Expectations
A new voucher program in Indiana looks likely to be signed by Gov. Daniels soon, but without a slight modification it may not have the benign budgetary impact that is expected.
As written, the program could have a significant negative impact on state finances if families claim both the vouchers and funds from the state’s existing education tax credits.
There is nothing that precludes children who receive a voucher from also topping off that amount with private funds from the existing education tax credit program. That means a voucher student could accept, for example, $4,500 in government funds and then apply for a tax credit scholarship that reduces state revenue by, say, $2,000. The voucher student would cost the state $6,500, not the $4,500 that would be counted on the books. If state funding is 100 percent sensitive to enrollment, the state would save $5,000 on that student switching, and the net impact on state finances would be a $1,500 loss. In other words, the program could have a negative net impact on state finances due to double-dipping.
From a fiscal standpoint, the state would show an apparent “savings” based on the $4,500 voucher, but this would fail to take into account the reduced revenue due to the credit. And the law requires these on-paper-only savings to be passed out to public schools districts. The result? The state government could be out $7,000 on the student in this example, not the $4,500 it paid out in a voucher. The net impact wouldn’t be neutral, it would be a $2,000 loss.
This scenario looks only at how the vouchers might impact state finances. At the local level, the program is likely to have a strongly positive impact on the resources available for each student. But a school choice program’s impact on state finances — ensuring financial transparency, certainty, and a neutral or positive impact — is a critical concern in its own right.
Critics of expanding educational freedom always claim, incorrectly, that school choice programs are a drain on public resources. But the double-dipping that is allowed under this program could inadvertently prove them right — it would also make Indiana’s existing education tax credit program a mere appendage to the new government voucher system. In short, it’s an unforced error, and worth fixing.
SCOTUS Issues a Super-Zelman Decision on Education Tax Credits
Today, the Supreme Court of the United States issued the Zelman decision for education tax credits. More than that, it’s Super-Zelman.
The findings in Zelman apply just as well to education tax credit programs, but only credit programs allow taxpayers to spend their own money on education.
As Andrew Coulson explained in detail earlier, the Court ruled that education tax credits are not government funds, and the plaintiffs therefore have no standing to bring suit in the first place. They were not harmed because none of their money was collected and then disburse by the state.
Children are rightly our primary concern, but taxpayers deserve more consideration than they often get in debates over education reform.
Education tax credit programs can expand educational choice and freedom while respecting the preferences and values of the individual taxpayers who earned that money in the first place.
Voucher programs simply cannot provide this kind of accountability to both parents and taxpayers.
VICTORY! Supreme Court Upholds Education Tax Credits
Ruling in ACSTO v. Winn today, the United States Supreme upheld Arizona’s k-12 scholarship tax credit program. Under this program, individuals receive a tax cut if they donate to a non-profit scholarship fund that gives out private school tuition aid.
Today’s decision, a reversal of an earlier ruling by the 9th Circuit, found that the respondents had no right to sue to stop the AZ program because they have not been harmed by it. And the reason they have not been harmed is central to why, for nearly 20 years, I have favored education tax credit programs over both traditional public schooling and voucher programs.
Respondents alleged that cutting a person’s taxes is equivalent to spending government money — and since taxpayers are receiving credits for donations to religious organizations, that was ostensibly equivalent to the government giving to those organizations. The Court answered, quite simply: “That is incorrect.” Elaborating, the Court ruled that:
tax credits and governmental expenditures do not both implicate individual taxpayers in sectarian activities. A dissenter whose tax dollars are “extracted and spent” knows that he has in some small measure been made to contribute to an establishment in violation of conscience…. [By contrast,] awarding some citizens a tax credit allows other citizens to retain control over their own funds in accordance with their own consciences. [emphasis added]
That is precisely the argument I have been making for a very long time (last Friday, at a conference in Berkeley; last year in a blog post, here; a dozen years ago, in my book Market Education: The Unknown History).
With this ruling, the way forward for the school choice movement is clearer than it has ever been. Education tax credits — both the scholarship form operating in Arizona and the direct form operating in Illinois and Iowa — allow for universal access to the education marketplace without forcing any citizen to subsidize instruction that violates their convictions. No other school choice system offers that advantage and it is an advantage that is central to the values of our nation. As Thomas Jefferson wrote in the Virginia Act Establishing Religious Freedom:
To compel a man to furnish contributions of money for the propagation of opinions which he disbelieves… is sinful and tyrannical
Public schooling has long been a source of social conflict because it engenders just such compulsion. Education tax credits offer a way of securing universal public education without this blight. It is time to adopt them more widely.
Election Results in School Choice States
While most of the election punditry to date has been focused at the national level, major gains by Republicans in states that already have k-12 education tax credits or school vouchers could lead to the expansion of such programs or the passage of new ones. To see where the action might lie, I offer the chart below, showing post-election party control of the legislative and executive branches of government in school choice states (the height of each bar represents degree of control, with the height of the executive branch = 100%). The states are sorted by the number of branches of government that changed hands (represented on the chart by the yellow circles, which correspond to the axis on the right).
There might be gridlock at the national level, but at the state level we may see some interesting school choice developments over the next 2+ years.
South Carolina Gov Race: What’s Haley Thinking on School Choice?
Nikki Haley promises to be a star governor if–most likely when–she’s elected this fall by South Carolina voters. Word is she’s a committed fiscal conservative, and her background is steeped in a successful family business, not large corporations, so she should have an intuitive grasp of what makes our economy grow.
And Haley has a long, solid record of supporting school choice through education tax credits in South Carolina. As recently as August 19th, Haley was reported as saying, “like Sanford, she would veto a bill to expand public education options unless it included help with private tuition. She agreed with Sanford that it must be all or nothing, saying otherwise the Legislature won’t return to the debate.”
Now that’s the stuff.
But Haley has recently put out some concerning and confusing statements on school choice. “Haley said approving private-school choice, which would provide tax credits or vouchers to pay private-school tuition, was not a priority. ‘That is not my focus; my focus is the school funding formula,’ Haley said.”
Changing the funding formula is all well and good. It might save some money. But it will NOT improve education in South Carolina. Education tax credits will improve performance and save much more than any public school reform. School choice should be Haley’s only education issue.
Why is she backing away all of a sudden? Sure, the primary is over, but Haley is leading comfortably in the polls. Education tax credits pull down serious majority support across nearly every single demographic in South Carolina. White voters, black voters, old and young, Republicans and even Democrats. This is a great issue. And backtracking on a signature issue could tarnish her fresh, reformer image.
Most important, school choice is the right policy. Haley always seemed to have a deep understanding that only an education tax credit program can substantively improve education in South Carolina.
Senator Jim DeMint has a great short video plug for school choice out . . . let’s hope Haley takes a look at this, remembers what reform really matters, and does the right thing in office.
School Vouchers vs. Tax Credits
NRO editor Robert VerBruggen has weighed in a couple of times this week on the relative merits of school vouchers and education tax credits, raising interesting and important issues.
In response to my earlier post today about an education tax credit case now before the U.S. Supreme Court, VerBruggen writes:
If the Supreme Court buys this logic — which I suppose is sound on its face — it could lead to some very interesting programs. Any time it’s illegal for a government to fund something directly, it could simply make a dollar-for-dollar “tax credit” program for it, allowing sympathetic taxpayers to technically “donate” — but actually just redirect the taxes they’d otherwise have to pay — to the cause.
This is actually an argument presented by critics of the program in their brief asking the Supreme Court not to hear the appeal that it… just decided to hear. The fact that this argument is fallacious is no doubt one reason that the Supreme Court decided to reject critics’ request. Here’s where it goes wrong:
Under a constitutional tax credit program such as Arizona’s, the state has no power to pressure/encourage taxpayers to do anything that the state could not do directly. Taxpayers can choose to give no money to religious charities, or to give all their money to them. The state is unable to affect their decisions in any way.
As Ilya Shapiro and I pointed out in Cato’s amicus brief in this case, this is identical to the law pertaining to federal charitable tax deductions. Religious charities get more tax deductible donations than any other kind of entity, and the Supreme Court has repeatedly upheld their constitutionality because the decisions regarding such donations are left entirely to the unfettered choices of private citizens.
“You’ve Got to Admit It’s Getting Better…”
“…a little better all the time.”
Some school choice supporters and philanthropists began to suffer burnout a few years ago, disappointed that private school choice programs had not yet scaled up massively a decade-and-a-half after the first modern program was launched in Milwaukee. That disappointment is likely to give way in the coming years to new hope, and looking back a generation from now, 2010 may well be seen as a turning point in the history of educational freedom.
Last week, a private school choice bill sponsored by a Democrat (the Rev. James Meeks), passed the Democratic-controlled Illinois Senate. Even if this particular bill isn’t enacted into law, the impact of its passage in the Senate will reverberate around the country. Also in the past week, the Florida Senate passed a major expansion of its education tax credit program that would allow that program to expand every year in which demand for it has grown. Should current trends continue, that would allow it to become the biggest private school choice program in the country in a matter of years. It, too, was defended on the Senate floor by African American Democrats. And just a few weeks before that, a Democratic filmmaker saw his pro-school-choice education documentary picked up by Paramount Pictures.
It’s not even April yet!
2010 is shaping up to be a very good year indeed.
Charters No Substitute for Private Innovation
I wrote about this private school in South Carolina last year. The Voice for School Choice has a new video highlighting the great work of the Eagle Military Academy, which works with many kids the public schools cannot or will not educate.
There’s a lot of talk lately about the transformative power of some charter schools, and it’s easy to lose sight of the fact that many secular and religious private schools have been saving kids all along with no public funds and little or no recognition from the elite opinion class.
We need to open up choice to these schools as well, not just public charter schools that cannot provide the breadth and depth of experiences offered by private schools.
Public charter schools are no substitute for full school choice through education tax credits.
Education Tax Credits the Choice for Independents in Virginia
My last post focused on the general results of a school choice poll in Virginia. Contra conventional wisdom, education tax credits are significantly more popular and less opposed than are charter schools.
Even more interesting is the stability of support for donation tax credits across party identification. A stunning 64 percent of Democrats support credits, with only 21 percent opposed. Independents support credits 65 percent to 22 percent.
Charters are supposed to be the poster child for policies targeting Independent voters. And yet charters draw 59 percent of support from independents and 23 percent opposition.
That’s a swing from a 43 percent margin of support for credits to a 36 percent margin for charters. And vouchers run even further behind with a 22 percent margin of support from Independent voters.
Smart politicians looking for cost-saving and effective education reform would do well to take note of these numbers.
More to come . . .
What’s the Most Popular Choice Reform in Virginia?
Pop Quiz: What’s the best education policy a moderate politician in Virginia can pursue?
- Vouchers
- Charter Schools
- Education Tax Credits
Conventional wisdom says go with charter schools, because they are a bipartisan, moderate compromise reform that will get you the largest number of Independents and the least opposition. Vouchers are too hot to touch. And what’s an education tax credit . . . oh, right, they’re too controversial as well
Conventional wisdom is WRONG.
The Friedman Foundation has released another in their invaluable series of state education polls, this time for once-purple Virginia. Their findings are consistent with other polls, and the pattern is worth highlighting.
Charter schools draw 59 percent in support and 26 percent in opposition. Vouchers find 57 percent in support and 35 percent in opposition. Personal-use credits get the support of 59 percent and are opposed by 32 percent.
Donation tax credits are supported by 65 percent of voters and opposed by 23 percent.
Charters, vouchers, and personal-use credits, in other words, are equally popular, with credits and vouchers drawing a bit more fire. And donation credits are wildly popular with only a rump of opposition.
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