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Educational Opportunity Under Attack on Many Fronts

Charlie Arlinghaus

January 30, 2013

As originally published in the New Hampshire Union Leader

Educational opportunity is something we all want for our children but is under threat in New Hampshire in 2013. While the wealthy can choose among many options to find the best fit for their children, two small programs that increase options for poor people in New Hampshire are both under attack. If opponents succeed in killing the state’s modest charter school program and the school choice scholarship program, educational opportunity will still be a reality for rich people but not for poorer members of the Granite State.

For the wealthy, options abound. If you have the means, you can afford to choose among many different choices for your children. While New Hampshire’s has better schools than most states, no one seriously believes that one school is the best possible choice for every student in a particular zip code without exception. More opportunity, more choices lead to better outcomes.

Education reformers passed a public charter school law in 2003. The idea was to create innovative alternative schools that allowed students, particularly those who can’t afford existing alternatives, another public choice in education.

Similarly, last year the legislature passed a modest program of school choice scholarships allowing tax credits for businesses that donate to organizations that give scholarships to students of lower levels of income. The program is just starting but promises to give poorer children another choice.

From the beginning, both opportunity programs have been under attack. The charter school program endured the apathy of lawmakers and the governor who merely shrugged their shoulders when a school district strangled the first charter school by neglecting to pass on the funding appropriated for the school. Enforcing that law was a bridge too far.

Future legislatures and funding formulas changed the law to eliminate the opportunity for criminal mischief but opponents aren’t done. The state board of education has been guided by the odd advice of one state lawyer claiming that the board is no longer permitted to authorize charter schools because the next budget hasn’t been passed so they have no idea if there is going to be funding. Logically, then, they can’t grant any school a five year charter because we only have a two year budget.

This contorted logic, by the way, would also suggest the closure of every other charter school (after all, the next legislature could theoretically not fund them either) and most public schools (the legislature could suddenly decide we’ll only have 14 really big schools and no one else gets money). That’s ridiculous of course, but so is the back door moratorium.

If there is ambiguity (and I don’t honestly believe there is nor did the legislature which passed the law the lawyer claims frustrates the board), it can be cleared up. Funding is the province of the legislature. Approval of schools by the board includes a financial component but the board was never meant to try and prognosticate future funding decisions of the legislature. Any cap or retreat from the policy of opportunity should be decided by the legislature not by administrative fiat or a legal opinion that has not been written down or presented for public discussion. Law is currently being determined by a private, unpublished, oral opinion.

The second attempt to limit opportunity is being conducted openly in the legislature. Opponents are trying to repeal last year’s school choice law. The law limits scholarships to students in the lower half of incomes in the state but would allow tax credits for a group that would let parents use the scholarship at any approved school in the state. This law, like the charter school law, is about opportunity for people who have limited educational opportunities today.

Scholarships will average $2500 but that small amount can make a radical difference in the life of an individual child. Today, every non-public school has some students who pay no tuition and some who pay a small amount based on need. The modest scholarship will allow every school to accept more students who pay zero and more who pay little.

It’s easy to lose sight of the goal of educational opportunity in all the ideological banter. When the liberal Washington Post editorialized in favor of a D.C. opportunity program reminded us all what this debate is about. Their editorial titled “The Right Answer” concluded: “What shouldn’t get forgotten in this seemingly endless fight are the people with the most at stake: parents who simply want what’s best for their children.”

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Choosing to Learn: Scholarship Tax Credit Programs in the United States and their Implications for New Hampshire

By Jason Bedrick

March 2012

(Click here to read the full report)

EXECUTIVE SUMMARY

Access to educational opportunities in New Hampshire is primarily determined by zip code and accident of birth. Though New Hampshire has some of the highest-performing public schools in the nation, performance across school districts is uneven. Public school students in wealthier towns like Windham and Bedford perform highly on standardized tests while their low-income peers in Claremont and Stratford lag behind. Moreover, even New Hampshire’s best public schools are not best for every child. Not all children thrive in the traditional classroom environment. Some students need extra support academically, socially or emotionally. Our public schools may work well for most children, but there is no school that is right for all children.

Unfortunately, tens of thousands of New Hampshire students have only one choice of school. While wealthier families can meet their children’s individual needs by moving to communities with higher-performing public schools or paying tuition at an independent school, most low-income families lack the financial capacity to do either.

In recent decades, legislators and policymakers have implemented several innovative policies to expand educational options, including vouchers, charter schools, education savings accounts, and more.  In the last decade, scholarship tax credit (STC) programs have expanded educational opportunities for hundreds of thousands of students in eight states, particularly those from low-income families. In just the last two years, two states have adopted new STC programs while five others expanded their existing STC programs.

Section I: Scholarship Tax Credits

Nationwide, eight states currently operate corporate scholarship tax credit programs. Program design, levels of funding and student participation vary. STC programs are constitutionally sound and receive strong support from parents and the general public.

  • Scholarship tax credit programs are on firm constitutional ground. STC programs have withstood every single legal challenge to date at both the state and federal levels.
  • Parental satisfaction in STC programs is exceptionally high. More than 95 percent of families participating in Florida’s STC program reported that their schools were good or excellent.
  • Nationwide, support for STC programs is more than double the opposition. Support among parents nationwide is even higher at four-to-one in favor.

Section II: Fiscal Impact

The proposed School Choice Scholarship Act (HB 1607) creates a scholarship tax credit program that is designed to save money by reducing state spending more than it reduces tax revenue. Under even the most conservative assumptions, the proposed STC program will affect approximately one tenth of one percent of the current state and local spending on public education. STC programs in several other states have reduced state government expenditures while expanding choices for families.

Section III: Impact on Performance

  • Studies show that school choice program participants perform as well as or better than their public school peers.
  • Participants in school choice programs graduate from high school at higher rates than their public school peers.
  • School choice programs are associated with a positive impact on public school students’ academic performance.

Section IV: Program Design

While broadly similar, STC programs across the country vary significantly in program design, such as means-testing, disbursement requirements, and corporate credits. These differences affect how well the STC programs are able to effectively and efficiently meet the needs of scholarship recipients. Some of the main findings include:

Means-Testing:

  • Means-testing can help target funds to the truly needy, though evidence suggests that SOs target low-income families even without a means-testing requirement.
  • Income caps that are too low reduce the flexibility of SOs to address the needs of families with exigent circumstances (special needs, serious illness, job loss, etc.).

Disbursement Requirement:

  • Scholarship organizations require some level of allowance for administrative costs, especially when starting up. Over time, most spend less than 10 percent on administrative costs.
  • A more liberal administrative cost allowance allows for the creation of more scholarship organizations. Policymakers should consider greater administrative cost allowances (15 to 20 percent) for new scholarship organizations.

Corporate Credits:

  • Most scholarship organizations reported having little to no trouble soliciting donations from businesses when the tax credits were worth 90 percent of the donations.
  • Policymakers should be able to reduce the tax credit percentage somewhat below 90 percent without a significantly negative impact on fundraising. However, it is not clear at what point there would be a negative effect.

When designed and implemented properly, a scholarship tax credit programs is a constitutional, popular and fiscally sound method to increase educational options for low-income families. STC programs can even improve the academic performance of all students, whether they participate in the program or not. Most importantly, a scholarship tax credit program will move New Hampshire from an educational system where access is primarily determined by a student’s zip code and accident of birth toward a system tailored to meet the individual needs of every child.

(Full Report)

(Appendix)

(Sources)

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Scholarship Tax Credit

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In recognition of School Choice Week, we are releasing the study below on Scholarship Tax Credit programs across the country and how they might work here in New Hampshire. The study is authored by Center Research Fellow Jason Bedrick.

 

Scholarship Tax Credit Programs Analysis

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