Two Court Cases Plus Two Voucher Studies Equals Four School Choice Wins

June 26, 2017

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(Guest Post by Jason Bedrick)

There’s so much good news for school choice today, it’s hard to know where to begin.

A Legal Victory in the Peach State

I woke up this morning to the news that the Georgia Supreme Court had unanimously ruled that private donations to private nonprofit scholarship organizations that help children attend private schools are (shocker!) private funds, even if the donors receive a tax credit:

We also reject the assertion that plaintiffs have standing because these tax credits actually amount to unconstitutional expenditures of tax revenues or public funds. The statutes that govern the Program demonstrate that only private funds, and not public revenue, are used.

I discuss the case and its implications in greater detail here.

SCOTUS Strikes Down Discrimination Against Religion — But Saves Blaine for Another Day

A couple hours later, the U.S. Supreme Court ruled 7-2 in Trinity Lutheran v. Missouri that it is unconstitutional to exclude religious organizations from benefiting from secular aid programs that are otherwise neutral with respect to religion. As Neal McCluskey explains, the court didn’t go as far as many school choice advocates would have liked, but it is unambiguously a step in the right direction. Writing for the majority, Justice Roberts wrote:

It is true the Department has not criminalized the way Trinity Lutheran worships or told the Church that it cannot subscribe to a certain view of the Gospel. But, as the Department itself acknowledges, the Free Exercise Clause protects against “indirect coercion or penalties on the free exercise of religion, not just outright prohibitions.” […] As the Court put it more than 50 years ago, “[i]t is too late in the day to doubt that the liberties of religion and expression may be infringed by the denial of or placing of conditions upon a benefit or privilege.” […]

Trinity Lutheran is not claiming any entitlement to a subsidy. It instead asserts a right to participate in a government benefit program without having to disavow its religious character. The “imposition of such a condition upon even a gratuitous benefit inevitably deter[s] or discourage[s] the exercise of First Amendment rights.” […] The express discrimination against religious exercise here is not the denial of a grant, but rather the refusal to allow the Church—solely because it is a church—to compete with secular organizations for a grant. [citations removed]

The Court made sure to note that it was not overturning Locke v. Davey, in which the Court held that it did not violate the Free Exercise Clause for the state of Washington to deny funding to a student who was attending a post-secondary religious school to pursue a “devotional theology degree.” Although the “selective funding program” generally allowed students to attend both religious or secular colleges, the funds couldn’t be used to pursue a purely religious education for the purposes of becoming a religious minister. In Trinity, SCOTUS clarified that “Davey was not denied a scholarship because of who he was; he was denied a scholarship because of what he proposed to do—use the funds to prepare for the ministry.”

Left open is the question of whether the state can prohibit families from using school vouchers at religious schools. If the voucher program is intended to give parents more choices among schools that teach reading, math, science, etc., then seemingly it shouldn’t matter whether school that teach those subjects have a religious affiliation. Indeed, Justices Gorsuch and Thomas clearly indicated they wished the majority had gone further (“the general principles here do not permit discrimination against religious exercise—whether on the playground or anywhere else”), while Justice Breyer likened the playground resurfacing program at issue in the case to churches benefiting from police or fire protection, but saw no need to address the question of private school tuition. Tomorrow SCOTUS will announce whether it will consider the Douglas County, Colorado voucher case, which would give it the opportunity to answer that question.

Louisiana and Indiana Voucher Studies: Neutral to Positive Outcomes After a Few Years

I’ve already run long and I know that others will be writing about them soon, so I won’t dive deep into the Louisiana and Indiana voucher studies today. In short, they each find that the negative impacts on test scores that voucher students experience in the first couple years of participating in a voucher program disappear by the third year. Indeed, Indiana finds some positive effects in years three and four.

Given that states spend significantly less per pupil on voucher students than at district schools, performing as well or better after just a few years in the program should be exciting news for choice supporters. However, I confess that I am uneasy. Both Indiana and Louisiana mandate that private schools administer the state test to voucher students and I am concerned about how that mandate might warp how schools educate children — a concern I have about both district and private schools. Test scores measure only a small slice of the value that parents want schools to provide their children, and as Jay pointed out yet again yesterday, there’s a disconnect between educational measures and life outcomes. It’s great if school choice improves test scores, but the ability to choose shouldn’t be predicated on raising test scores — especially if doing so creates perverse incentives that distort education.

In summary: Three cheers for the court victories and one cheer for the voucher studies.

 

 


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.

 

 

 


Sweet Victory in the Peach State

February 8, 2016

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Image: Tim Keller of the Institute for Justice, right, wields his legal fiddle to defend school choice.

(Guest Post by Jason Bedrick)

Great news from the Peach State, where a superior court judge dismissed a constitutional challenge to Georgia’s scholarship tax credit (STC) law. The Institute for Justice intervened to defend the law on behalf of five tax-credit scholarship recipients. Currently, more than 13,000 Georgia students receive tax-credit scholarships to attend the schools of their choice.

School choice opponents alleged that the STC violated the state constitution’s historically anti-Catholic Blaine Amendment, which prohibits the state from publicly funding religious schools, among other provisions. However, citing precedent from the U.S. Supreme Court and several state supreme courts, Judge Kimberly M. Esmond Adams held that tax-credit eligible donations constitute private funds, not public expenditures:

Courts that have already considered whether a tax credit is an expenditure of public revenue have answered this question in the negative. Of particular importance is Arizona Christian Sch. Tuition Org. v. Winn, 131 S. Ct. 1436 (2011), where the United States Supreme Court found that taxpayers lacked standing to challenge a scholarship tax credit program under the Establishment Clause of the United States Constitution that was almost identical to the Program at issue here. Like Georgia’s Program, the Arizona program provided that taxpayers could receive a credit for donations made to independent scholarship organizations which then provided scholarships for students to attend private schools. […] Plaintiffs have not presented any arguments for why this Court should not follow this persuasive authority.

The fact that tax-credit eligible donations are private funds is the primary reason that STC laws have a perfect track record in the state courts thus far. It’s also why tax credits are the most liberty-friendly means of financing educational choice, as the late, great Andrew J. Coulson never tired of reminding us (much to Greg’s chagrin). In response to the U.S. Supreme Court’s similar ruling five years ago, Andrew wrote:

The rationale underlying the Court’s ruling highlights a unique advantage that tax credits have over other ways of funding education: they expand both freedom of choice for parents and freedom of conscience for taxpayers.

Plaintiffs had argued that cutting a person’s taxes is equivalent to spending government money, and so taxpayers were being compelled to support religion when credits were used for donations to religious [scholarship organizations]. The Court said, “that is incorrect.”

Unlike the funding of public schools, which is compulsory for all taxpayers, participation in [a] tax credit program is voluntary. If an individual chooses not to donate to [a scholarship organization], his taxes are collected just as they have always been, and those dollars cannot be used for any sectarian purpose. Furthermore, if a taxpayer does choose to make a donation, he is free to select the STO most consistent with his own values. […]

There are other ways of funding universal choice in education, but only tax credits (either for parent’s own education expenses or for donations to [scholarship organizations]) respect the freedom of conscience of taxpayers as well as the freedom of choice of parents. If we truly wish our schools to help build strong, harmonious communities, there is no better way than to adopt such programs at the state level on a grand scale.

The opponents of educational choice are likely to appeal the judge’s decision. Let us hope their appeal meets the same fate as all of its predecessors.


School Choice Wins in 2008; Unrestricted Eligibility in Georgia

June 18, 2008

(Guest post by Greg Forster)

The Washington Post is now reporting that the House Appropriations subcommittee will fund the DC voucher program for another year. People are saying that the future of the program doesn’t look good, because the subcommittee chairman is blustering about how much he doesn’t like it. But read that Post article carefully. He doesn’t say that the program will be killed next year. The Post reports that he says he’s funding the program for another year “to give District leaders a chance to restructure the program.” He is quoted as saying, “I expect that during the next year the District leaders will come forward with a firm plan for either rolling back the program or providing some alternative options.”

That sounds to me like a man who’s looking for a deal. The DC program is already loaded up with monster payoffs to the District’s patronage-bloated public school system. How hard is it to make those payoffs bigger? And maybe the program will have to accept some more politically motivated restrictions on participation, so that critics will have a trophy to hang on their wall.

Whether those tradeoffs are worth it for the school choice movement – there is a real cost, and not just in dollars, associated with them – is a question I leave for another day. And of course this is just the subcommittee; there could still be more trouble ahead. And maybe next year the critics will get a better offer from the unions than the deal they’re apparently angling to get on behalf of the DC patronage machine.

All I want to do is observe that the program’s chances of survival are now looking a lot better than they did yesterday.

As the political season winds to a close, let’s survey the results:

  • A new personal tax credit for private school tuition in Louisiana
  • A new tax-credit scholarship program in Georgia
  • A new voucher program in Louisiana
  • An expansion of Florida’s tax-credit scholarship program, including a $30 million increase in the cap; a bump up in the value of the scholarship and a linking of the scholarship value to state school spending (which always goes up); and a relaxation of the program’s unreasonably stringent accounting rules (which used to allow not one penny of carryover from year to year in the scholarship organizations’ accounts, and not one penny from eligible donations for administrative expenses).
  • A million-dollar funding increase and guaranteed future funding stream for Utah’s voucher program.
  • Preservation (tentatively) of the DC voucher program in a hostile Congress.

That’s three new programs, two expansions of existing programs and an upset victory in DC. Pretty good for a dead movement, wouldn’t you say?

By the way, how did accountability testing do this year? How many new programs? How many existing programs expanded?

How about instructional and curricular reforms? How’s the Massachussetts miracle holding up?

Anyone? . . . Anyone?

Some of these victories did come at a cost. The two programs in Louisiana are going to score poorly when measured against the gold standard of universal choice. The tax credit is limited to a very small amount of money, which means it offers a very small amount of choice. And the new voucher program is only offered to students who are in grades K-3, low-income, and enrolled in public schools (or entering kindergarten) in a chronically failing school district located in a highly populated parish – which currently means only New Orleans. Plus it’s limited by annual appropriations (currently $10 million). A new grade level will become eligible each year (4th grade next year, then 5th grade, etc.) and Baton Rouge may become eligible if its public schools continue to fail. But this is still an inadequate program. And we can also add the prospect of more restrictions in the DC program to the debit column.

But there was also a huge step forward for universal choice. Georgia’s new tax-credit scholarship program offers school choice for all students. It has no demographic restrictions at all. Any public school student can apply. The only limit is the $50 million program cap – and experience in other states pretty consistently shows that dollar caps rise as programs grow to meet them.

Georgia’s new program is basically the same as the Arizona program funded by individual donations, except that Georgia’s program also allows corproate donations. And that makes a big difference, because it greatly expands the pool of available funds – and hence the size of the program.

Come to think of it, Georgia’s program is the first tax-credit scholarship program to include corporate donations and not place demographic restrictions on who can participate. That’s a potentially powerful combination. It will be exciting to see whether Georgia ends up taking school choice to a whole new level.


Georgia Enacts Nation’s 23rd School Choice Program

May 14, 2008

(Guest post by Greg Forster)

Georgia Gov. Sonny Perdue has signed the legislation sent to him last month creating a tax-credit scholarship program in Georgia. It’s the nation’s 23rd school choice program.

I said it before, and I’ll say it again: Further proof, if further proof were necessary, that school choice is politically more successful than ever.

One thing that’s really gratifying about this program is that it has no demographic restrictions at all. Any student enrolled in Georgia public schools (K-12) is eligible for a private school scholarship. The days of limited choice are numbered.

Having swung from a win in Louisiana to a win in Georgia, all eyes now swing back to Louisiana, where a legislative vote today will determine whether a voucher bill moves forward. Gov. Bobby Jindal recently signed into law an education tax credit in the state.

Details on the new Georgia program, as they will soon appear on the Friedman Foundation’s online program guide:

GEORGIA

Tax Credits for Student Scholarship Organizations

Enacted 2008

Georgia provides a credit on both personal and corporate income taxes for donations to Student Scholarship Organizations (SSOs), privately run non-profit organizations that support private-school scholarships. Individual taxpayers contributing to SSOs may claim a dollar-for-dollar credit of up to $1,000, and married couples filing jointly may claim up to $2,500.  Corporate taxpayers may claim a dollar-for-dollar credit worth up to 75 percent of the taxpayer’s total tax liability. The program is capped at $50 million in tax credits per year.

FAST FACTS

·         All Georgia public school students eligible

·         Both individual and corporate taxpayers may donate

·         Program capped at $50 million

Scholarship or Voucher Value:

SSOs may determine the amount of each scholarship, as in most other states with tax-credit scholarship programs.

Student or School Participation:

No information on participation is available yet.

Student Eligibility:

All Georgia students enrolled in public schools are eligible to receive scholarships. SSOs may set their own eligibility guidelines. Taxpayers may not make contributions earmarked for a particular child.

Legal Status of Program:

No legal challenges have been filed against the program.

Regulations on the Program:

SSOs are required to be non-profit organizations that allocate at least 90 percent of their revenue to private-school scholarships. No more than 25 percent of an SSO’s revenue may be carried forward into the next year before it is spent. SSOs must undergo annual audits by certified public accountants, file audits and fiscal reports with the Department of Revenue, may not use a donor’s money to support that donor’s child and may not restrict their scholarships to a single school. Participating private schools must obey anti-discrimination laws.

Research on Program:

Currently no research items tied to this program.

 

News on Program:

Currently no news items are tied to this program.

 

Governing Statutes:

Georgia Code, 20-2A and 48-7-29.13.


Cajun Choice

April 23, 2008

(Guest post by Greg Forster)

On a much more serious note (see below), the news that America got a new school choice program last month seems to have slipped by under the radar.

On March 24, Louisiana Governor Bobby Jindal signed SB5, providing a deduction off parents’ personal income taxes for qualified education expenses, including private school tuition. The deduction is worth 50% of the total amount spent on qualifying expenses, up to a maximum deduction of $5,000. For more details on the program see here.

The tax deduction became effective as soon as it was signed, so we now have 22 school choice programs in 14 states plus D.C. All eyes are now on Georgia to see if a tax-credit scholarship program passed by the legislature becomes America’s 23rd school choice program; Governor Sonny Perdue has until May 14 to sign it, veto it, or allow it to become law without his signature.

Personal tax credits and deductions for educational expenses are an unusual way to do school choice; Louisiana’s program is only the fourth of this type. But it’s an approach with a long history. Minnesota enacted a tax deduction for educational expenses in 1955; Iowa enacted a tax credit in 1987; Minnesota added a tax credit on top of its deduction in 1997 (the credit excludes tuition but includes other expenses like books and fees – it’s the only program of this type not to include tuition); and Illinois enacted a credit in 1999.

Personal tax credit/deduction programs tend to be broad in scope but miniscule in magnitude. Only the Minnesota program has an income restriction, so the number of people eligible to participate in these programs is typically very large. Almost 650,000 families benefit from the Iowa, Illinois, and Minnesota programs. On the other hand, the Iowa and Illinois programs provide maximum credits of only $250 and $500 respectively. The Minnesota program is slightly more generous, providing a maximum credit of $1,000 and a maximum deduction of $1,625 in grades K-6 and $2,500 in grades 7-12. And the maximum deduction in Louisiana is $5,000. I don’t know what that works out to in tax savings, but since state tax rates are lower than the federal rate it can’t be that much. Moreover, in most cases the taxpayer does not get a dollar-for-dollar credit or deduction for the money he or she spends; for example, in Louisiana you only get 50 cents on the dollar.

One idea behind these programs is to cut out the middleman and provide school choice as directly as possible. For example, the most important drawback of tax-credit scholarships is that they don’t create a parental entitlement to school choice. The scholarship granting organizations act as gatekeepers, generally favoring low-income parents and thus exacerbating the problem of “targeting” in school choice programs. (Of course, a corresponding advantage is that scholarship granting organizations have flexibility in the distribution of resources; one thing I discovered when I did the research behind this report is that scholarship granting organizations will often step up to provide full-ride scholarships to students facing personal crises such as the death of a parent.) By contrast, both vouchers and personal tax credits/deductions create a parental entitlement to school choice.

I have heard some argue that personal tax credits/deductions are better than vouchers because they cut out the middleman even more completely; supposedly it would be harder to add unnecessary regulations restricting the private schools. But I’ve never been able to understand why this is the case. In both voucher and personal tax credit/deduction programs, the legislature defines which private schools are eligible, and in both cases that’s where the unnecessary regulations get inserted. Why is it harder to do in one case than in the other? Is there some political reason why such restrictions are less likely to be written into the tax code than into other laws? That doesn’t strike me as plausible, but I’d be open to correction if somebody could make a case for it.

The major drawback to these programs is in the structure of state income taxes. Until some state enacts a refundable credit,** the benefit families get from these programs is limited to their total state income tax bill. That’s not a lot of money. And fewer dollars means less choice, as this report helpfully reminds us. Of course, you could in theory pass a refundable credit, but the political obstacles to that would be formidable.

For the record, the Friedman Foundation for Educational Choice, where your humble servant is employed, has no position on whether vouchers, tax-credit scholarships, or personal tax credits/deductions are preferable. Our only goal is to provide a full choice to all students, and in theory all three types of programs can do that. They each have their advantages and disadvantages, but we evaluate each program based on how much choice it provides, not its funding mechanism.

That said, until we achieve universal choice, we’re stuck with limited programs, and in that context each of the three types has its own advantages and disadvantages.

Louisiana is a lot better off for having this program as opposed to no program. It will help a substantial number of families send their children to the school of their choice more easily, and it’s a universal program, establishing the important principle that school choice is good for all, not just for some.

That, and the passage of yet another school choice program is further proof, if further proof were necessary, that school choice is politically stronger than ever.

**CORRECTION: George Clowes has reminded me that the Minnesota tax credit is in fact refundable. That doesn’t really affect my point much, since the Minnesota credit doesn’t include tuition (only other education expenses like books and fees) and this is an even bigger limitation than the “unrefundability” (to use a totally real and not-made-up word) of the credits in other states. Tax credits for private school families won’t provide much choice until we get one that 1) is refundable, 2) isn’t restricted to a small amount of money, and 3) includes tution. Nonetheless, I apologize for the error, and I thank George for bringing it to my attention.