The Rich Get Richer under Tax Credits-Public School Tax Credits that is

May 4, 2015

(Guest Post by Matthew Ladner)

Arizona passed individual scholarship tax credit donations for children to attend private schools, and for public school extracurricular activities, in 1997. Since that time the newspapers have felled many trees and spilled much each printing columns and letters bewailing the injustice of the private side credits- they are destroying public education, they are going to help rich people send their kids to private school, they are engaged in dark rites to bring Cthulu back into our plane to wreak his horrible revenge on all living things, etc.

This is all nonsense of course– but I think I see now the origin of the “mostly benefiting the rich” narrative- projection. Benefiting the rich far more than the poor is in fact precisely how the public school credit operates. The public school credit goes to support sports, arts, field trips and all of the various things that Jay has been researching lately. The Center for Student Achievement very helpfully crunched the numbers in Arizona Department of Revenue reports and found the following:

So if you are having to squint at your Ipad, the chart has data from both 2005 and 2013, and calculates tax credit revenue by quartile of public school- from the poorest schools (75% and up FRL) to the lowest (< 25% FRL). In 2005, the poorest schools raised a meager $14 per child in tax credit donations, while the wealthiest raised more than 4 times as much at $57 per child.

By 2013, the poorest schools raised a smidge more per student ($16) which is not enough to keep up with inflation. Meanwhile, out in the leafy suburbs, schools collected $96 per pupil. Thus the gap went from $4 for rich kids for every $1 for poor kids, to $6 for rich kids for every $1 for poor kids.

Hmmmm…so the public credit gives to the most to the kids who have the most, gives the least to the kids who have the least.

Well the private school credit might be even worse! Except, it isn’t. All of the corporate scholarship tax credit money is means-tested in Arizona, and some of the individual credit is as well. Even among the individual tax credit money that is not means tested de jure is means tested de facto by the Scholarship Tuition Organizations (STOs). Page 49 of this Arizona Department of Revenue report shows that 70.4% of the original individual tax credit funds (the non-means tested program) go to students with a family income (family of four) of less than $79,000 and 38% of that goes to families making less than $45,000. All of the rest of the money goes to either low/middle income or kids with disabilities.

In fiscal year 2013 STOs raised about $108m from all credits, and we can safely estimate that between 80% to 90% of scholarship funds went to low and middle-income children, which beats not only the stuffing out of the public school credit, but also out of AZ public school system’s spending overall.

 

Go down or I’ll put you in Expendables 4!

 


Indiana Allows Greg to Once Again Put Mathews on the Canvass

April 30, 2015

(Guest Post by Matthew Ladner)

Indiana session has ended with both an increase in the size of the tax credit and separately an increase in the voucher program amounts. For those scoring at home:

AR: New special needs voucher

AZ corporate tax credit improvement

AZ expansion of ESA to tribal areas

Indiana- increase in corporate scholarship credit cap

Indiana-increase in voucher amounts

MS New ESA for special needs students

NV New corporate tax credit

TN New ESA for special needs students

Down goes Frazier Mathews!

P.S.

 


Nevada Joins School Choice Family

April 7, 2015

(Guest Post by Matthew Ladner)

The Nevada Senate approved a scholarship tax credit today, initially capped at $5m with annual cap increases of 10%, sending the measure to Governor Sandoval. This puts the enactments from out West at 3 (corporate tax credit expansion in AZ, ESA expansion in AZ, new corporate credit in NV). Down south I’m aware of the Arkansas legislature passing a special needs voucher bill and Alabama increasing the tax credit cap.

Greg 5, Mathews 0

 


Raising the Bar on the Forster-Mathews Bet

April 1, 2015

(Guest Post by Matthew Ladner)

Thus far I am aware of a tax-credit improvements in Alabama and Arizona, new special education scholarship programs in Arkansas and Mississippi, and many other measures pending in many other states. I think it is safe to say that Greg will once again defeat Jay Mathews in the over/under of 7 enactments.

WSJ choice

 

While we celebrate yet another Greg victory, it may be a good time to pose a different question for ourselves: how many states have enacted a choice program or a combination of choice programs sufficiently robust to see a growth in private education in the face of a strong charter school law? A Rand Corp study found private schools will lose one student for every three gained by charter schools in Michigan.  We would not expect to find an exact match for this nationwide, but charter schools do by definition draw upon the universe of would-be choosers: parents who are looking for alternatives outside of their zoned district school. It makes sense that they would have a larger impact on private education.

If we assume the Michigan finding to be roughly equivalent to a national average, then we can proceed to check the tape. First charter school enrollment by state:

Charters school enrollment

Next private choice program enrollment by state (from the Alliance for School Choice Yearbook):

Private choice students 1

 

And…

Private choice students 2

So how many states have one-third or more as many private choice students as charter school students? Indiana is matching private choice students with charter school students despite a strong charter law thus far, and so is the leader in the clubhouse. Florida barely met the 1 private choice for 3 charter school students standard between the combination of the corporate tax credit program and the McKay Scholarship program. Without new revenue sources however growth in the Florida tax credit will stall in the next few years even as statewide student growth continues. Moreover Florida charter schools have almost certainly drawn a relatively advantaged group of students from private schools (charter schools have universal eligibility). The private choice programs have been aiding only low-income and children with disabilities and providing significantly fewer resources than those students receive in public schools (smaller tax credit scholarships in the case of low-income children, no local top-up funds in the case of McKay students).

Florida lawmakers have been busy improving the ability for high quality charter operators to open new schools (as they should) but balked last year at providing new tax credit revenue sources. Absent some large policy changes Florida will soon slip below the 1 to 3 ratio.

Iowa met the standard because of a healthy and growing tax credit program and a weak charter school law (3 total schools), so give them an *. Wisconsin meets the bar with the combination of private choice programs and a charter school program that (last I heard) is still bottled up in Milwaukee, so kind of an * too.

The Illinois and PA programs would require some sort of estimate regarding the price elasticity of demand for private schooling, but I’ll just heroically guess that charter schools have the better end of the deal in those states. Arizona and Ohio have more than three charter students for every private choice student. Other states like California, Michigan, New York and Texas seem content to watch their charter school sector batter their private school sectors into gravel.

Bear in mind that this comparison would look even more lopsided if we counted dollars rather than students. For instance the average tax credit scholarship in Arizona runs around $2,000 while the average charter school receives around $7,000 per pupil. Very few of the private choice programs come near to matching the per pupil level of subsidy provided to charter, much less district schools. Emblematic of this failure was the choice of 12 Catholic schools in Washington D.C. to give up the ghost and convert to charter schools after a (poorly designed) voucher bill had passed.

The goal of the private choice movement should not be to preserve a preexisting stock of private schools per se, but rather to allow parental demand to drive the supply of school seats. Those District of Columbia Catholic schools did not convert to charters because the parents were clamoring for it, but rather because the Congress had offered almost twice as much money per pupil to do it. States like Texas invest hundreds of millions of dollars per year into a charter sector that draws disproportionately from private schools while providing parents who would prefer a private education for their child nothing but the prospect of struggling to pay their school taxes and private school costs simultaneously.

Seen in this context, many private choice victories seem worthy but incremental. Incremental change is the equilibrium point of American politics, but the choice movement needs more Indiana style successes. Once more unto the breach dear friends…


The New School Choice

March 31, 2015

schoolchoiceweek

(Guest Post by Greg Forster)

The new issue of OCPA’s Perspective carries my article on how more recent school choice programs are moving us slowly but surely closer to universal school choice:

The huge wave of new school choice programs enacted in 2011-13 went far beyond earlier programs in expanding student eligibility pools, providing larger vouchers, and reducing unnecessary regulations on participating schools. Education savings accounts, probably the best program design yet devised, have been enacted in Arizona and Florida; as I write, new programs have just been approved by legislative chambers in Virginia and Mississippi. These programs, while still limited in eligibility, give parents much more control over education dollars than traditional school choice.

I argue there are both educational and civic reasons to embrace universal choice:

Two of the great pillars of our country are equal rights and freedom for diverse beliefs. Neither of these pillars is consistent with a government school monopoly, nor with the educational oligopoly of limited school choice.

A monopoly or oligopoly exists by stamping out the rights of challengers in order to protect the privileges of the powerful. When educational entrepreneurs are denied the right to start new schools on equal terms with dominant providers, all of us lose. A society where the education of children is controlled by the few is a society that doesn’t respect equal rights.

And the education of our children is at the very heart of how we all live out our most central beliefs about life and the universe. Our country can never fully live up to its commitment to freedom for diversity until we undo the monopolization of education. Part of the reason we created the government school monopoly in the 19th century was bigotry and a childish fear of religious diversity. It’s long past time we, as a nation, grew up. Let’s leave those fears behind us, in the nursery of our national history.


Destruction of Public Education or Pressure Release Valve? You Make the Call…

February 16, 2015

AZ enrollment trends

(Guest Post by Matthew Ladner)

This is what the “destruction of public education” looks like in extremist, wild west Arizona…oh….wait…what? The increase in district enrollment is greater than the growth in charter school students since the creation of the law charter law in 1994 and 2012-176,989 to 128,427?

Yeah, but…

What is that you say? Even if you combine all of Arizona’s private choice students with all the charter school students, the increase in district enrollment still outstrips the increase in choice enrollment 176,989 to 159,014?

Ok but if those choice programs didn’t exist, the number of students and the amount of money going to districts would be higher than it is now. So…

High demand schools surrounded by portable buildings? C’mon that would never happen! Already common in Texas? Arizona has been broke since 2007, unable to afford much new district building space eh? Well we could just raise taxes…what? Arizonans raise millions of private dollars to finance charter and private school spaces? Census Bureau projects hundreds of thousands more students over the next 15 years? Already high elderly population set to vastly expand too?

Ok, sign me up.

 


The 123s of the ABCs

February 3, 2015

Print

(Guest post by Greg Forster)

We are now up to an astonishing 51 school choice programs in 24 states plus DC. We are one state short of having private school choice in half the states. Who wants to put us over the top?

Check out all the latest stats on all these programs in the 2015 edition of The ABCs of School Choice, just released from Friedman.


Follow

Get every new post delivered to your Inbox.

Join 2,858 other followers