We’re Going STREAKING! Down to the Federal School Choice Quad!

March 30, 2017

“It is just you Frank!” “There is more coming…”

(Guest Post by Matthew Ladner)

The American film classic Old School features a scene in which Frank the Tank (Will Ferrell) believes himself to be leading a streaking crowd. Frank learns in an awkward fashion that there is no crowd following him when his wife and her friends spot him on the road. The relationship between that scene and this Greg Toppo article should be readily apparent when you read it. 

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Kevin Carey Flashes Back to 2009 for a Wild West tax credit tale

March 3, 2017

(Guest Post by Matthew Ladner)

Kevin Carey is at it again- this time by flashing back to eight year old allegations about the Arizona tax credit program as a dire warning about the dangers of a federal tax credit. When these stories ran in 2009, here is what I had to say about it here on the Jayblog:

When presented with this type of information, the first instinct of some will be to deny it, to hunker down, to accuse our enemies of far greater misdeeds, or to otherwise try to put lipstick on a pig. Good luck with that.  It is blindingly obvious to me that Arizona’s tax credit is system is a good program overall that suffers from specific weaknesses that can and must be addressed.  Otherwise, writing articles like this one will become the journalistic equivalent of using a shot-gun to shoot fish in a bucket.

Since then, things have improved substantially, but Kevin did not get the memo. Here are a few items that Kevin left out:

Subsequent to 2009, the state enacted new legislation to require STOs to both consider financial need in the granting of scholarships, and to report to the Arizona Department of Revenue on the family income of recipients. When you examine the Arizona Department of Revenue Reports, you find that approximately 80 to 90 scholarship funds went to middle and low-income students. This not only is a more progressive distribution than many public schools and school districts, it beats the living daylights out of another Arizona tax credit for public school kids that overwhelmingly goes to advantaged public schools. Quite frankly it is likely that a large majority of private choice funds were going to middle and low-income children before the state required reporting. It’s just nice to have an Arizona Department of Revenue report that confirms it.

Carey wrote “Some states, like Alabama and Indiana, limit tax credit vouchers to low- and middle-income families, or to students who were previously enrolled in public school. But others, including Arizona, do not, subsidizing private education for the well-off.” Two of Arizona’s credits are means tested, and two are not. One of the two that is not means tested exclusively serves children with disabilities. I’ll be for completely means-testing private choice programs the very instant that Kevin gets means-testing passed for district schools. Until such time, let’s note for the record that the Arizona private tax credit programs serve provide far fewer dollars to “well off” kids than say, Scottsdale Unified. Someone please wake me up when the Times runs a breathless expose about rich kids getting exclusive access to fancy and abundantly funded public schools.

In addition to the state taking action, donors apparently expressed their displeasure with what they read about in the East Valley Tribune as well during the next donation cycle (see page 8.) If donors don’t like the way scholarship groups run their business, they have the option of not donating, or donating to other groups. 2010 was a rough year for scholarship groups. Decentralized accountability strikes again!

Reasonable people can disagree about the degree and extent of oversight and other devilish details in a program like this. Even we in the Wild West have to make adjustments on occasion, and the democratic process is ultimately pretty good at hashing these sort of things out. I’ll be happy to make my donation this April to help a low-income parent choose a school for their child.

 


Do tax-credit scholarship programs drain money from district schools?

November 15, 2016

(Guest Post by Marty Lueken)

Perhaps the most-cited criticism of educational choice policies is that they “siphon” resources from district schools. High-quality research reveals numerous benefits stemming from educational choice, including benefits for participants, positive competitive effects, and fostering civic values. Policymakers, however, are concerned about the fiscal impact on district schools. A new report, The Tax-Credit Scholarship Audit, finds that such claims about “siphoning” are unfounded.

This report follows up on an earlier report, The School Voucher Audit, which examined the fiscal impact of school voucher programs. In the report, I estimated the fiscal impact of 10 tax-credit scholarship programs in seven states (AZ, FL, GA, IA, IN, PA, and RI) on state governments, state and local taxpayers, and school districts combined. There are currently 21 tax-credit scholarship programs operating in 17 states. Programs with less than three years of data were not included in the analysis. This sample includes the largest tax-credit scholarship programs in the country. These programs accounted for 93 percent of all scholarships awarded in 2013-14, the final year included in the analysis.

Here’s a summary of the results:

Participation

Since the first tax-credit scholarship program was established in 1997, more than 1.2 million scholarships were awarded to students through 2014. Participation in tax-credit scholarship programs has grown every year since 1997. Participation in these programs grew, on average, by 20 percent each year since 2000.

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Tax-credit scholarship programs require time to establish. Looking at the programs by year in operation, the number of scholarships awarded more than tripled after their fifth year in operation, from 28,000 to more than 95,000.

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Educational choice programs are popular and continue to expand, though not to the detriment of the current district school system, as critics argue. Even in states where eligibility for school choice programs is expansive, we haven’t seen a mass exodus of students from district schools. Moreover, the best evidence on the effects of school choice on district schools shows that district schools improve in response to competition.

Fiscal Impact

Depending on assumptions about the number of students switching from district or charter schools to private schools and the share of students who receive multiple scholarships, I estimated that these 10 tax-credit scholarship programs saved taxpayers between $1.7 billion and $3.4 billion since Arizona enacted the first such program in 1997. That equates to between $1,650 and $3,000 in savings for each scholarship recipient.

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This paints a starkly different picture from the “siphoning” argument that school choice critics like to make. Context is useful when discussing the fiscal impacts of these programs. For all the controversy that sometimes surrounds school choice programs, the fact is that these programs make up a very small share of states’ K-12 revenues. The cost of the taxpayer subsidies for the programs covered in the report range from 0.1 percent each for Rhode Island and Indiana’s programs to 1.5 percent for Arizona’s four programs.

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When critics claim these programs are costly or drain funds, they usually focus on just the cost of the taxpayer subsidy without giving any consideration to savings. But that tells only one part of the story. It’s also true that districts are no longer responsible for educating students that leave via these programs. In the short-run, they incur variable cost savings. My analysis accounts for this and even takes a more conservative approach to estimating variable costs than in other work by economists.

These savings don’t usually show up in budget reports, however, though public officials make choices—whether implicitly or explicitly—about what they do with the savings. As I note in the report:

“When school choice programs are enacted, however, it is usually the case that savings do not automatically materialize as reductions in K–12 expenditures because public officials must actively make decisions to reduce such expenditures. When students leave public schools, officials have more room in their budgets to allocate resources for educating students that remain in those schools.” (pp. 15-16)

Government officials have many options regarding what to do with these savings. They can reinvest them in district schools, which means more resources for the fewer number of students who remain in them, or they can also reallocate those savings to other public services. They can also choose to hold all or some of the funds rather than spend them. They can subsequently lower property taxes or save and invest these funds. Typically, however, it’s not clear how these freed-up resources are used.

It is a worthwhile policy goal to provide and expand quality educational options so that parents can match their children to the education provider that works best for them. Tax-credit scholarship programs offer one way to help achieve this goal by providing avenues for states to attract capital and invest in their state’s education system without harming taxpayers or students.

 

Martin F. Lueken, Ph.D. is the Director of Fiscal Policy and Analysis at EdChoice.


The Legal Battle for Choice in Georgia

November 4, 2016

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(Guest Post by Jason Bedrick)

Georgia’s tax-credit scholarship helps more than 12,000 students attend schools of their choice rather than their assigned district school. Predictably, defenders of the government education establishment sued to block parents from exercising educational choice. Thanks to the efforts of the state attorneys and the Institute for Justice, which intervened in the case on behalf of several parents of scholarship students, a lower court ruled against the challengers earlier this year. However, the challengers appealed and the case is now before the state supreme court.

Yesterday, the Cato Institute filed an amicus brief in the case urging the Georgia Supreme Court to uphold the constitutionality of the tax-credit scholarships. Cato’s legal eagle, Ilya Shapiro, has more at the Cato-at-Liberty blog:

We urge the court to affirm the determination that the tax-credit program does not violate the state constitution, focusing on the fact that it does not involve spending public funds for any sectarian purpose. Because the program makes no expenditures from the public fisc, it cannot violate the No-Aid Clause. Taxpayers choose to donate voluntarily using their own private funds and receive a tax credit for the amount of the donation; no money ever enters or leaves the treasury.

The challengers attempt to get around this fact by claiming that the credits constitute anindirect public expenditure, but this argument relies on a budgetary theory known as “tax expenditure analysis” that finds no support as a legitimate means of constitutional interpretation under Georgia (or federal, or any other state) law. Indeed, the U.S. Supreme Court rejected this type of reasoning in Arizona Christian School Tuition Organization v. Winn (2011).

The argument that the program constitutes an unconstitutional gratuity is likewise incorrect because the tax credits are not public funds, and the government cannot give away that which it does not own. Even if Georgia were giving up something of value, it would not be a “gratuity” because the state receives a substantial benefit in return: increased educational attainment, plus the secondary effects that increased competition and a more educated citizenry create.

The Georgia Supreme Court should affirm the lower court’s decision and uphold the state’s Qualified Educational Tax Credit Program—ensuring educational choice for Georgia families, regardless of how much money they make.

 

 

 


Setting the Record Straight on Florida’s Tax-Credit Scholarships

August 30, 2016

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(Guest Post by Jason Bedrick)

Opponents of school choice spend a great deal of time and energy perpetuating all sorts of easily debunked myths about choice programs. In Florida, the state teachers’ union has worked very hard to spread two such myths about the state’s tax-credit scholarship program, which Mark Pudlow of the Florida Education Association calls a “scheme”:

“It’s a scheme because this tax credit voucher [sic] was enacted by the Legislature to circumvent a previous state Supreme Court ruling saying that public money could not go to fund vouchers,” he said. “So the Legislature set up a scheme that would allow certain types of taxes to be ‘donated’ to the groups administering the voucher program. So instead of paying taxes to the state, they were forgiven their tax obligation if they donated the exact same amount of money to the voucher administrators.”

Fortunately, the Daily Commercial gave Ron Matus of Step Up for Students, Florida’s largest scholarship organization, the opportunity to set the record straight:

“The union kept saying the tax credit scholarships were done to circumvent the ruling,” he said. “Their timeline is off. The fact of the matter is the tax credit scholarship program was passed by the legislature and signed into law in 2001, five years before the Supreme Court ruling. The opponent keeps arguing the program drains money from public schools. Every single study that has been done over many years by multiple different parties that has looked at the fiscal impact says it does not harm public schools or drain money from public schools.”

The Office of Program Policy Analysis and Government Accountability estimated the Florida Tax Credit Scholarship Program saved the state $36.2 million in 2008.

Government Accountability stated that while the program “reduces the amount of tax revenues received by the state, it produces a net fiscal benefit.”

This academic year, Step Up for Students will provide more than 90,000 tax-credit scholarships to students so that they can attend the school of their choice. Additionally, they will administer nearly 6,000 education savings accounts. Florida also has a second scholarship organization, AAA Scholarship Foundation, so it’s likely that more than 100,000 Florida students will receive tax-credit scholarships this year.

As Step Up demonstrates, scholarship organizations do much more than just cut checks. They also can provide parents with vital information about their educational options, help connect parents and schools, and–when necessary–they can organize to defend the scholarships from outside attacks. As Jay noted in a recent post, politically viable policies require “constituents who can then be mobilized to protect and expand” them. School choice policies generate those constituents, and as Step Up has amply demonstrated, scholarship organizations can mobilize them.


Lawsuit Losers’ Ostrich Act

August 17, 2016
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Anti-school choice plaintiffs pretending that the court didn’t reject their arguments on the merits.

(Guest Post by Jason Bedrick)

As I reported on Tuesday, a Florida appellate court threw out a challenge to the state’s tax-credit scholarship program. In response, one of the plaintiff groups, Americans United for Separation of Church and State (AU), published a disingenuous and factually challenged blog post whining about the case being dismissed and pretending that the court didn’t actually address the merits of the case. I’ll address their assertions in order:

A Florida court just threw out an appeal brought by Americans United and its allies challenging a school-voucher-like program that provides taxpayer support for religious organizations. As disappointing as that outcome is, it’s doubly frustrating to see a second Sunshine State court fail to even consider the merits of the case.

The program provides tax credits for donations to scholarship organizations that help students attend any private school, religious or secular, so that’s not quite an accurate description of the program.

Moreover, as I will explain below, the court did consider the merits of the case. Although courts often avoid addressing the merits of a case when rejecting the plaintiffs’ standing to bring the case, here the court directly addressed the central issues in the process of dismissing the case on standing.

In case you’re not familiar with tuition tax credits, they are a type of voucher scheme that allows individuals or corporations to donate money to a middle-man “scholarship” organization in exchange for a generous tax credit. The “scholarship” group then writes a check for tuition at a private school. It’s essentially a way to launder government funds through a private entity.

What an odd use of scare quotes. Are these somehow not scholarships? Let’s consult the dictionary. Merriam-Webster defines a “scholarship” as “an amount of money that is given by a school, an organization, etc., to a student to help pay for the student’s education.” So yes, AU scare quotes notwithstanding, these are bona fide scholarships.

But are they “laundered government funds”? According to the unanimous Florida appellate court, the U.S. Supreme Court, and every state supreme court to address the question, the answer is a resounding “No.” The courts all held that a private individual or corporation’s money is their own, and not the government’s, until the government has actually collected it. When people keep their own money through tax deductions, tax credits, or tax exemptions, it remains exactly that: their own money.

Does the AU believe that all churches run on “laundered government money” because their donors receive tax deductions or because they receive 100% property tax exemptions? No? Interesting.

The overwhelming majority of private schools participating in the tax credit program are religious, which goes against the Florida Constitution’s “no-aid” clause, which says: “No revenue of the state or any political subdivision or agency thereof shall ever be taken from the public treasury directly or indirectly in aid of any church, sect, or religious denomination or in aid of any sectarian institution.”

Again, as the court ruled, it’s not government money, so the historically anti-Catholic Blaine Amendment (“no-aid” clause) is not implicated. Moreover, the percentage of schools that are religious versus secular is constitutionally irrelevant. The law is religiously neutral. What matters is only that families may choose either religious or secular schools. It makes no constitutional difference whether the majority select one type or the other, or whether the market (responding to demand) supplies more of one type or another.

The U.S. Supreme Court has repeatedly rejected AU’s religious bean counting, including in the landmark Zelman v. Simmons-Harris decision more than a decade ago:

Respondents and Justice Souter claim that even if we do not focus on the number of participating schools that are religious schools, we should attach constitutional significance to the fact that 96% of scholarship recipients have enrolled in religious schools. They claim that this alone proves parents lack genuine choice, even if no parent has ever said so. We need not consider this argument in detail, since it was flatly rejected in Mueller, where we found it irrelevant that 96% of parents taking deductions for tuition expenses paid tuition at religious schools. Indeed, we have recently found it irrelevant even to the constitutionality of a direct aid program that a vast majority of program benefits went to religious schools. See Agostini, 521 U.S., at 229 (“Nor are we willing to conclude that the constitutionality of an aid program depends on the number of sectarian school students who happen to receive the otherwise neutral aid” (citing Mueller, 463 U.S., at 401)); see also Mitchell, 530 U.S., at 812, n. 6 (plurality opinion) (“[Agostini] held that the proportion of aid benefiting students at religious schools pursuant to a neutral program involving private choices was irrelevant to the constitutional inquiry”); id., at 848 (O’Connor, J., concurring in judgment) (same) (quoting Agostini, supra, at 229). The constitutionality of a neutral educational aid program simply does not turn on whether and why, in a particular area, at a particular time, most private schools are run by religious organizations, or most recipients choose to use the aid at a religious school. As we said in Mueller, “[s]uch an approach would scarcely provide the certainty that this field stands in need of, nor can we perceive principled standards by which such statistical evidence might be evaluated.” 463 U.S., at 401. [emphasis added]

The SCOTUS majority goes on to note that the other side’s obsession over how many private schools have a religious affiliation ignores that they are but a tiny slice of all the available school choices, including the secular district schools that the vast majority of students attend. Students do not lack secular options.

Returning to the AU blog post, the author claims:

The program also violates the state constitution by taking money away from public schools.

No, the appellate court specifically and repeatedly rejected this argument, noting that any reduction in aid to the district schools is entirely speculative. As the appellate court detailed at length, the AU and their allies proved unable time and time again to demonstrate any harm that the district schools incur from the scholarship program.

Despite those problems, two Florida courts have now kicked the case on standing – that is, the right to sue – saying that the plaintiffs, which include interfaith religious leaders as well as educators, don’t even have the right to bring this case. As a result, neither court weighed in on the actual facts of the case.

Incorrect. As noted above, like the district court before it, the appellate court addressed the main issues that plaintiffs raised:

  1. Does the scholarship program violate the Blaine Amendment? A: No, it relies on private funds so the Blaine Amendment is not implicated.
  2. Does the scholarship program unconstitutionally create a parallel system of public schools? A: No, this is a privately funded and privately administered program, not a separate government school system.
  3. Does the scholarship program harm the district school system? A: No, there is no evidence of any harm to the district schools.

The AU and their union allies don’t like the answers that the appellate and district court gave, so they simply pretend that they didn’t give them.

Since the court didn’t weigh in on the facts, here are some other things to consider: Sometimes “school choice” advocates claim low-income students need government assistance to escape “failing” schools. But here, some parents openly admitted that the public school options available to them are actually good.

Here we have a straw man argument. The question isn’t whether the district schools are “good” but rather whether they’re the best fit for all the kids who happen to live nearby. Even a school that performs very well on average can’t be all things to all students, which is why the system should empower parents to choose the schools that align with their values and work best for their children.

So why do they want help paying private school tuition? The short answer is that many of them want education infused with their faith. […] That’s perfectly fine. But Florida taxpayers should not be forced to contribute to the religious education of any child.

Again, as the court ruled, these are private funds. No taxpayer is forced to contribute to a scholarship organization. If a taxpayer doesn’t want to support religious education, they need only refrain from donating to the scholarship organizations, which is certainly their right.

By contrast, all taxpayers are forced to pay into the district school system, even if they have moral objections to what is taught there. If the AU really cared so much about coercion, they should support entirely privatizing education so that no one is forced to subsidize an education with which they disagree.


Case Dismissed Again: Another Victory for School Choice in Florida

August 16, 2016

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(Guest Post by Jason Bedrick)

It seems Friday’s update on pending school choice lawsuits came a few days too soon. Today, a three-judge panel of appellate court judges in Florida has unanimously dismissed the teachers’ union’s lawsuit against the Florida Tax Credit Scholarship Program, holding that the plaintiffs lacked standing because they were unable to prove that they were harmed by the program and because the program is privately (not publicly) funded.

No doubt the thousands of parents and students who rallied earlier this year, calling on the union to #dropthesuit, are smiling today.

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Three out of three appellate judges agree with these scholarship kids: #dropthesuit.

I expanded upon the decision at Cato-at-Liberty, but I’ll leave you with the the judges’ conclusion:

Appellants failed to allege that they suffered any special injury as a result of the operation of the Florida Tax Credit Scholarship Program and failed to establish that the Legislature exceeded any constitutional limitation on its taxing and spending authority when it authorized the program. At most, Appellants quarrel with the Legislature’s policy judgments regarding school choice and funding of Florida’s public schools. This is precisely the type of dispute into which the courts must decline to intervene under the separation of powers doctrine.

BOOOOOOOOOOOOOOOOOOOOOOM!!!!!!!

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[h/t Travis Pillow at RedefinED.]

UPDATE (Aug. 17, 2016): See here for my discussion of one plaintiff group’s response to the ruling.