Category Archives: Vouchers

What Teachers’ Unions Aren’t Telling Their Supporters

TeamFriedman edchoice
Posted: November 7, 2014

In “Teachers Unions Flunked Their Midterms,” The Wall Street Journal chronicled how education reform issues played out in this year’s midterm elections. Today’s freakout comes from that story’s comments, where many parents shared their educational experiences and opinions.

Janet Ashley, whose other comments show she supports union positions, asked the second question education reformers posed long ago. The answer? Not many.

But that’s exactly what school choice vouchers, tax-credit scholarships, and education savings accounts (ESAs) do. They make private services more affordable for the majority of people who can’t afford several thousand dollars for learning services outside traditional public schools.

That’s not to say school choice is a cure-all for every family’s financial woes. Sometimes voucher amounts aren’t enough for people to afford the options they know are best for their children. And, yes, it’s possible per-pupil education funding amounts sometimes might not be enough.

For instance, Arizona parents using ESAs receive only a fraction (about 90 percent) of the state per-pupil education funds their public school counterparts receive—local and federal funds do not follow their children. In a recent survey, ESA parents said if they were to receive higher ESA funding amounts, they would spend those additional funds largely on education therapies, tutoring, private school tuition/fees, and savings for college.

Just think of how beneficial such choices could be to the people teachers’ unions are supposed to represent. As the graphic above shows, properly funded school choice programs actually increase demand for more education professionals, especially educators who specialize in therapy and tutoring.

Because current Arizona ESA amounts still don’t cover all the services the 76 percent say they need to best educate their kids, it’s unsurprising many parents are not in a position to afford anything but their zoned public school.

But that shouldn’t be a reason to repeal school choice. Rather, it shows the need to give all parents full access to their children’s public education funding.

The research suggests the number of people who want that is large:

This unfortunate reality is one that teachers’ unions are reluctant to acknowledge. But if the recent election results are any indicator, unions might be better off working with school choice proponents, not against them. One way: discussing new ways to empower teachers—their members—and help them adapt in a new, more flexible system driven by parent choices rather than bureaucrats and regulations.

Doug Tuthill, a former union leader for the American Federation of Teachers and the National Education Association, said it best:

This willingness to participate in open, honest dialogue will be much harder for teachers’ union leaders than for school choice leaders. Union leaders have so misled themselves and their members about the motivations of parents and school choice advocates that walking back from much of their rhetoric will be politically difficult. Nonetheless, if they want to survive, they’ll need to find their way to the school choice negotiating table.  

The technical, political, economic, and psychological forces driving the school choice movement are only going to accelerate moving forward. This transformation in public education is inevitable. What’s unclear is what role teachers’ unions will play in the future. I’m convinced a post-industrial teacher unionism can and should play a vital role, but that will require union leaders having the vision and courage to have some difficult conversations with each other and their members.

Unions may have “flunked the midterms.” But they still have a chance to get school choice right. Time to study up.


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Filed under Tax Credit, Vouchers

Would Shutting Down Tax-Credit Scholarships In Georgia Help Public Schools Financially?

Lyrics from Gladys Knight’s “Midnight Train to Georgia” perhaps best summarize what will happen if the Southern Education Foundation (SEF) succeeds in overturning Georgia’s tax-credit scholarship program to “return” $58 million to public schools: They’ll “(find) out the hard way that dreams don’t always come true.”

For those unfamiliar with tax-credit scholarships, the state-authorized school choice programs offer direct tax relief in exchange for donations to nonprofits that provide tuition assistance to kids enrolling in private schools. In Georgia, the tax credit is worth 100 percent of the donation, with limits on the amount of credit any individual taxpayer may earn ($1,000) and an overall limit on the number of tax credits the state will grant (currently set at $58 million annually).

Although the plaintiffs argue the program is unconstitutional in that it provides public funds to private, religious entities, the SEF’s expressed interest in the case is that the tax-credit scholarship program harms public schools by diverting funds away from public education.

The SEF’s position is that the public schools would be better off if the $58 million in tax credits were repealed and those tax collections were instead appropriated to K-12 public education.

But, critically, that argument fails to account for the additional cost of educating the kids that would have to return to public schools once their tax-credit scholarships were revoked.

The Georgia program’s design requires that students had been previously attending a public school to be eligible for a scholarship (with only a few narrow exceptions allowed). Therefore, it’s a pretty safe bet that if their scholarships are taken away, most of these kids will re-enroll in public schools.

With that in mind, more than 13,000 Georgia students are using tax-credit scholarships to attend private school. Let’s say—and this is being cautiously optimistic—one-fourth of these parents come up with a back-up plan to continue to pay tuition absent the tax-credit scholarship program. That means about 10,000 students would flow back into the public schools upon the program’s repeal.

Georgia public schools currently spend about $10,000 per student, on average, even when costs for maintaining buildings and paying off debt are excluded. At that rate, 10,000 new students in the public school system would cost $100 million.

In fairness, some of a school’s non-capital costs don’t vary much with enrollment, such as administrative overhead, grounds maintenance, and even utilities to a degree. But many other school costs are tightly aligned with enrollment—looking only at those costs, for instruction and other direct support services for students, Georgia public schools spend about $7,000 per student.

If only those variable costs rise as students flow back into the public schools, repealing the tax-credit scholarship program will cause Georgia public schools to spend $70 million on such things as additional teachers, teachers’ aides, classroom supplies, testing materials, student clubs/activities, guidance counseling, and the like.

So even if repealing the tax-credit scholarship program freed up $58 million for public schools, which is far from certain, I wouldn’t want to be the public school business official that got stuck with this deal! If I truly need $10,000 to educate a student in public school, I’m out some $42 million for all those returning students; if the number is closer to $7,000, I still need a good $12 million.

But let’s even suspend reality momentarily and look at the “best case scenario” for Georgia’s public schools: The tax-credit scholarship program is repealed and, miraculously, all of the donations to tuition-providing nonprofits continued allowing all the kids currently enrolled in private schools to stay. Only difference is, those donors no longer get a tax credit from the state.

Because those donors still would qualify for a tax deduction, they’d avoid paying Georgia’s 6 percent state income tax on the amounts donated. That’s $3.5 million. In this scenario, repealing the tax credit would yield $54.5 million in additional income tax collections for the state (which the SEF wants to go to public schools).

Unfortunately for the SEF, because the public schools would see no enrollment growth—remember, we’re assuming all the kids using the tax-credit scholarship program will stay put in private school—public schools will not automatically get any funding increase through the state school funding formula. Thus, public school advocates would have to convince the Georgia legislature to appropriate more money from the $54.5 million in freed up income tax collections. Easier said than done!

If we look at how the Georgia legislature distributes state income tax revenue, 43 percent now goes to fund K-12 education. Being generous, let’s assume the legislature gives 43 percent of that $54.5 million in additional revenue to the public schools—about $23.4 million—even though the public schools would not be serving any more students. With about 1.6 million students enrolled in Georgia’s public schools, even this best case scenario yields less than $15 per student in additional funding statewide. It would be pretty hard to make a noticeable dent in the educational services offered to students with that extra money (but it certainly would provide schools with a little more cash for pay raises).

After examining the numbers, either the SEF didn’t do its arithmetic or its real motivations are not the financial concerns they’ve cited publicly.

Should the plaintiffs in this case be successful, and the Georgia tax-credit scholarship program is repealed, then one of two outcomes would have to occur: Either A) Georgia’s public schools would have to get more cost efficient very quickly to accommodate all the new students they’d be receiving; or B) they’ll be back in front of the legislature asking for even more money.

If the latter, and the state legislature comes calling for more tax dollars, Georgia residents might also be singing another line from Glady’s Knight’s number-one hit: “I got to go!”

By Jeff Spalding

serves as the Director of Fiscal Policy and Analysis at the Friedman Foundation for Educational Choice. The purpose of this fiscal analysis work is to clarify and elevate the understanding of the financial impacts of school choice initiatives on state and local governments, public school corporations, taxpayers, and families of school-age children. Prior to joining the Foundation, Spalding served as Controller/Chief Financial Officer (CFO) for the City of Indianapolis.

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Filed under School Choice, Vouchers

Moving toward School Choice 2.0

To say school choice has been on the march in recent years would be a major understatement. State after state has implemented school vouchers, tax-credit scholarships, and, in especially innovative places like Louisiana and Arizona, course choice and education savings accounts (ESAs), respectively. More students than ever before have access to private school choice options.

As the Goldwater Institute’s Jonathan Butcher and I suggest, states now have the opportunity to make their existing school choice programs even stronger by converting them to innovative Arizona-style ESAs. Specifically, states with voucher and tax-credit scholarship programs have two options for infusing a new level of customization into their programs.

Two Ways to Convert Voucher and Tax-Credit Scholarship Programs to ESAs

1.  Allow parents to deposit those funds into an education savings account to infuse more flexibility into the scholarships. The education savings account option would be distinct from a state’s existing voucher program or tax-credit scholarships, but the accounts would provide an additional vehicle for parents to customize how they use their voucher funds.

This would enable parents to direct every dollar they’re allocated to multiple education services and providers, as Arizona’s education savings accounts allow. Although vouchers and tax–credit scholarships are excellent school choice options for states, structuring those programs similarly to Arizona’s ESA program would allow parents to finance private school tuition as well as textbooks, curricula, private tutoring, online learning, educational therapies, and a host of other education-related services and products. Moreover, parents could be empowered to roll over unused funds from year to year (putting downward pressure on private education prices) and save unused funds for future college expenses.

Because such a transition would be legislatively approved but administratively driven, state leaders interested in this change should consider contacting Arizona’s Department of Education and Department of Revenue to obtain best practices on how ESA funding can work.

2.  A second option for states with existing voucher or tax-credit scholarship programs would be to expand the approved expenses covered by a voucher or scholarship. That would slowly expand the allowable uses of the voucher/scholarship, transitioning the program into an ESA. Perhaps a state first considers expanding their existing voucher program to allow parents to roll over funds. A second expansion might include textbooks and curricula as allowable expenses. Additional allowances for the use of a voucher or scholarship program could be phased in over time, but each successful expansion would be a new use for a family’s voucher.

This path likely would require policymakers to revisit funding models for existing voucher and tax-credit scholarship programs—as such plans typically are funded at the “lesser of” a program’s per-student funding or private school tuition. If parents were able to receive the maximum voucher/scholarship funding for their child(ren), any funds left over after paying for private school tuition could go toward other educational expenses. Again, should policymakers make such a move, the way parents would access the funding likely would be determined by a state agency.

How to Create a Public School Education Savings Account Program

For states that don’t have a private school choice program in place yet, or those that have restrictions such as Blaine amendments and compelled support clauses, creating a public school education savings account is an option. This would take the same financing structure as Arizona’s education savings account (with state funds being deposited into a parent-controlled account), but parents would be empowered to use funds at any public education option of choice.

As Butcher and I explain, the state legislature would provide an appropriation for a per-student allocation, weighted by specific student characteristics, such as poverty and disability. Funds would be deposited in an ESA and could be used to pay course fees at public schools and public charter schools, in a state online learning program, and at a community college or state university. Utah Rep. John Dougall (R-Highland) introduced a similarly structured proposal for his state during the 2012 general legislative session.

Education savings accounts are the way of the future, not only in school choice but in education financing overall. By transitioning existing programs to ESAs or creating new ESA programs, policymakers have the power to bring a vision of customized learning for every child to fruition.

serves as a policy analyst at The Heritage Foundation where she researches and writes on education issues. Burke is the author of “The Education Debit Card: What Arizona Parents Purchase with Education Savings Accounts” among other noted reports. Her research has been cited by The Washington Post and The Wall Street Journal, and she has been quoted in Time and Newsweek, among other major media outlets.

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Filed under Heritage Foundation, School Choice, Vouchers

Kansas Gov Signs Tax-Credit Scholarships Into Law

Governor Signs Tax-Credit Scholarships, Makes Kansas 24th School Choice State

Governor Sam Brownback signed HB 2506, ushering Kansas into the school choice club. Now, 24 states and the District of Columbia allow publically funded private school choice.

This a culmination of years of work and an ever growing coalition. Just last month, Kansas parents and supporters hosted a rally at the capitol showing their elected representatives that there is a demand for school choice, and today the governor is beginning to provide them long-awaited educational options.

How does this new tax-credit scholarship program work? Learn more of the details of the bill below.

Each scholarship can amount to $8,000 to offset the cost of tuition, fees, and expenses and, if applicable, transportation to a qualified school.

Eligible students must be attending “failing schools” as designated by the state board of education, and qualify for free lunch under the federal free and reduced-price lunch program. That income requirement equals 130 percent of the federal poverty level or $30,615 for a family of four. Additionally, low-income kindergarteners who would be assigned to a failing school are also eligible as well as children coming in from out of state. A very conservative estimate suggests approximately 35,000 Kansas students could receive scholarships should the funding cap be met by business contributions.

The legislation did not add any additional regulations to private schools. Scholarship Granting Organizations (SGOs) are required to be a 501(c)(3) nonprofit and hold a surety bond after receiving $50,000 in contributions. Additionally, each year the SGO is required to be audited by a certified public accountant.

Kansas’ tax-credit scholarship program started out as HB 3777, which ultimately stalled in committee. After that process the Kansas Supreme Court issued a ruling in the Gannon case, which required the state to spend an additional $120 million on education to boost equity funding. To comply with the ruling, the legislature created a bill that appropriated the money, but added some additional measures as part of the package. One of those measures was the newly resurrected tax-credit scholarship program. This bill was later authored in a conference committee of both the House and the Senate, and the resulting legislation was voted on by the full House and Senate. That conference committee report was adopted 63-57 in the House and 22-16 in the Senate.

Michael Chartier serves as a State Programs and Government Relations Director for the Friedman Foundation. Prior to working at the Foundation, Michael served as the Director of Intergovernmental Affairs for Indiana Gov. Mitch Daniels, as well as Policy Director for the Professional Licensing Agency.

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Filed under School Choice, Vouchers

Over DOJ Objections, Parents Allowed to Intervene in Louisiana School Choice Case

School Choice
School Vouchers

Last week, the United States Court of Appeals for the Fifth Circuit overturned a federal district court ruling in a victory for school choice in Louisiana.

As we’ve written before, the Department of Justice (DOJ) has been particularly hostile to Louisiana’s school choice program. So hostile, in fact, that last August DOJ trotted out a decades-old open desegregation case to try to block the program.

After public pressure—including from school choice advocate Speaker John Boehner (R–OH)—DOJ “backed down,” arguing that it wasn’t intending to block the program but merely to gather data to ensure that the program comports with the open desegregation case and the Equal Protection Clause of the Fourteenth Amendment. And, on that basis, DOJ opposed intervention by a number of parents whose children receive school vouchers under the program. DOJ argued that the case was just between DOJ and Louisiana—no parents or students would be affected by the outcome of the case, and a federal district court judge denied parental intervention on that basis.

In last week’s decision by the Fifth Circuit overturning this decision, the court noted: “It is not credible for the United States to claim that the relief it is now seeking differs from the relief the parents opposed in the August motion.” In other words, the court said that, despite DOJ’s attempts at rhetorical sleight of hand, DOJ is continuing to seek the same relief it has always sought: to stop Louisiana from continuing its voucher program “unless and until” a federal court orders the state to turn over reams of data and gives its “authorization.”

In short, as the Fifth Circuit recognized, DOJ has never “backed down,” and the views of the parents of children who have received vouchers, and who would be most affected, ought to be heard and considered.

In pointing out why parents of students in the school choice program ought to be allowed to intervene in the case, the court further stated:

The purported aim of the United States is to enforce the Equal Protection Clause of the Fourteenth Amendment. If any group can be described as within the zone of interest protected by that clause, surely it is these mostly minority parents who believe that the best way to ensure equal protection of the laws is to give them the opportunity—along with other parents who live in poverty and whose children are in failing schools—to send their children to better schools.

DOJ’s attack on Louisiana’s school choice program will likely continue, but at least now parents will have their voices heard in federal court.

Andrew Kloster
Heritage Foundation

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Filed under Heritage Foundation, School Choice, Vouchers