School Choice

Overview

Parents are primarily responsible for the education of their children and have the right to make educational decisions for their children. Center for Arizona Policy (CAP) supports a parent’s right to choose from a wide variety of school options, including public, charter, private, online, or home education. Parents are in the best position to make these choices, as they are most familiar with the personalities, learning styles, and interests of their children.

Expanding school choice is the single best strategy for improving education for all children. Fostering a competitive education marketplace improves educational outcomes not only for children in alternative schools, but also for their public school counterparts.^[1] Moreover, school choice encourages parental involvement in their children’s education, which improves academic achievement.^[2]

Issue Analysis

Effective school choice has two requirements:

1. Parents must have options from which to choose. Arizona is a national leader in providing parents with options. Arizona has laws that protect the autonomy of homeschooling parents, allow open enrollment of students in any public school (not just a geographically assigned district), and permit charter schools to develop their own curricula and methods for educating students. Parents have a great deal of freedom in choosing how to educate their children.
2. Parents must have actual access to the education choices. Education is expensive. Public and charter schools benefit from taxpayer funding while parents bear the cost of private and home education. For low- and middle-income parents, this funding disparity excludes them from access to all educational options.

Programs to provide true parental choice must allow parents to direct the funding that is set aside for their child’s education. These programs can include vouchers, education savings accounts, personal-use tax credits, and scholarship tax credits. Vouchers and education savings accounts allow parents to direct government funds for their child’s education to the school of their choice.

Personal-use tax credits give parents a tax break for tuition and costs incurred in a nonpublic school option. Scholarship tax credit programs allow a child to receive a scholarship, funded by corporate and individual donations, to attend the school of their parent’s choice. CAP has played a key role in protecting and expanding Arizona’s scholarship tax credit program to provide more families with educational options.

Vouchers

Vouchers, also known as educational choice grants or opportunity scholarships, are a public policy option for expanding school choice where a parent is given a check for a specified amount (usually some portion of the state allocation for that child’s public education). The parent then endorses the check to a private school in payment for tuition.

Vouchers are not government aid to private schools. Rather, vouchers simply allow parents to direct public funds already available for their children’s education to the schools of their choice.

Many states and municipalities are pursuing vouchers as an option to stimulate educational competition. While several states have failed in their attempts to pass voucher programs,^[3] many jurisdictions have successfully enacted programs.

Maine and Vermont have had voucher programs for over a hundred years.^[4] More recently, Florida, Colorado, Arizona, Georgia, Milwaukee, Cleveland, and Washington, D.C. have passed voucher laws. Cleveland’s school choice voucher system has, perhaps, received the most national attention because it was upheld under the federal Constitution by the U.S. Supreme Court.^[5]

However, the movement to implement and expand voucher programs has been stymied by state court rulings based on state constitutional provisions, including discriminatory “Blaine Amendments.” Blaine Amendments prohibit any state funding of private, sectarian schools.^[6] Programs in Florida, Colorado, and Arizona have been struck down on the basis of these state constitutional provisions.

In other states, political pressure has made maintaining voucher programs difficult. The Washington, D.C., program was recently discontinued by President Barack Obama and Congress but, in response to public outcry, was reinstated as part of a budget agreement.

Education Savings Accounts

Some state court rulings striking down voucher programs have indicated that the school choice program benefits private schools rather than parents and students because the parents can only choose to use the funds at a private school. These rulings fed an innovative new idea: education savings accounts.

With an education savings account, a parent is given a specified amount of money, just like with a voucher program. However, instead of a check that a parent must endorse to a private school, the funds in the account can be spent by the parent on any educational services. This expands the choices for parents who may choose to use the funds for tuition at a private school, tutoring services, homeschool curriculum, and even saving any leftover funds for college. The advantage of the accounts over other school choice options like scholarship tax credits is the certainty in funding and, for some parents, the opportunity to receive more funding than might be available through a scholarship.

Arizona passed a first-of-its-kind Empowerment Scholarship Account program in 2011 which CAP drafted and supported. Several other states are considering similar legislation. The Arizona program is currently limited to students with special needs and is the subject of litigation.

Personal-Use Tax Credits

A personal-use tax credit seeks to resolve the problem of parents “paying twice” for education – once through their tax dollars for public education and once through tuition payments at a private school or through the cost of homeschooling.

The tax credit allows a parent to take a tax credit for the amount spent on his or her own child’s education at a nonpublic school. Personal-use tax credit programs are naturally limited by the fact that private school tuition exceeds the majority of parents’ tax liability. Five states have some form of personal-use tax credit for parents.^[7]

Scholarship Tax Credits

Scholarship tax credit programs allow citizens to take a dollar-for-dollar tax credit for donations to a school tuition organization (STO). The STO, in turn, awards scholarships for students to attend private schools chosen by their parents. Eight states currently have scholarship tax credits.^[8] Arizona has some of the best educational tax credits in the country.

The CAP-supported Arizona Private School Tuition Tax Credit, passed in 1997 and expanded in 2005, allows Arizona residents to claim a dollar-for-dollar credit against their yearly state income tax liability of up to $500 for an individual or $1000 for married couples on donations made to an STO. The credit cannot exceed taxes owed, but the taxpayer may carry any unused credit forward for up to five consecutive years.^[9] The program has been upheld by the Arizona Supreme Court,^[10] and the United States Supreme Court rejected a claim that the program violated the U.S. Constitution because those challenging the program could not show how it injured them.^[11]

The program has been a great success, providing over 26,000 scholarships to students in 2010 alone, and saving the state millions of dollars.^[12] Each student not enrolled in the public schools saves the state what otherwise would have been spent on each student, estimated to be between $3,700 and $8,600.^[13] Furthermore, the tax credit enables an unknown number of students to remain in private schools who would otherwise return to public schools and, thereby, increasing costs to the state.^[14]

In addition to the individual scholarship tax credit, Arizona encourages school choice through two corporate scholarship tax credit programs.[15] Arizona tax law also enables corporations to receive tax credits on a first come-first served basis for contributions made to the STO of its choice for any amount.

Companies that pay corporate income tax or insurance premium tax are eligible for the credit. The donations in the original corporate program fund scholarships for low-income students entering kindergarten or switching from public schools to attend the private school of their parent’s choice. The donations in the Lexie’s Law program fund scholarships for students with special needs and students in foster care.

Under the original corporate program, the total allowable donations are capped at around $20 million for FY 2011, and that cap rises by 20% each year. The cap for Lexie’s Law is $5 million.

“Accountability” in School Choice Programs

Private schools are accountable to parents and when parents have true school choice, good schools will succeed and bad schools will fail. In today’s world, parents do not have true school choice because government-funded schools have an economic monopoly. When there is not universal school choice for parents, taxpayers rightly demand accountability for how public schools educate students. But, school choice programs should never be used as an excuse to introduce government regulation or oversight of private schools or homeschooling parents. By its very definition, school choice is about parents deciding whether the school is giving them what they want.

Government control could take the form of dictating curriculum, requiring standardized testing, restricting hiring decisions, or limiting enrollment practices. These areas are of particular concern for religious schools whose religious character could be altered by any government intrusion.

School choice programs must not precipitate unwarranted state regulation of private schools. Because school choice provides direct aid to parents, not private schools, programs should be structured to allow private schools and homeschooling parents complete freedom to set curriculum and educational standards. Participating religious schools must be allowed to exercise their First Amendment freedoms without any government interference; in other words, no school participating in a school choice program should be required to change its creed, curriculum, or practices in order to participate. Such requirements damage the integrity of choice in the educational marketplace.

School Choice in Arizona

Arizona parents have a number of options for their children’s education. These include:

Public Schools: Publicly-funded schools regulated by local and state governments.
Arizona Department of Education, www.ade.az.gov

Private Schools: Arizona statutes define a private school as “a nonpublic institution, other than the child’s home, where academic instruction is provided for at least the same number of days and hours each year as a public school.” (A.R.S. §15-182) These schools often require an annual tuition and include religious and non-religious schools.
Association of Christian Schools International, www.acsi.org

Charter Schools: Publicly-funded schools with fewer regulations than traditional district schools. These schools are regulated by the Arizona State Board for Charter Schools and the Department of Education and may not charge tuition. Each charter is reviewed every five years.
Arizona Charter Schools Association, www.azcharters.org

Homeschools: Arizona statute defines a homeschool as “a nonpublic school conducted primarily by the parent, guardian or other person who has custody of the child or nonpublic instruction provided in the child’s home.” (A.R.S. §15-182)
Arizona Families for Home Education, www.afhe.org

Online Learning: Publicly-funded online programs that allow students to take public school classes on their home computers. A certified Arizona teacher provides support and accountability via email or telephone.
Arizona Virtual Academy, www.k12.com/azva

Talking Points

• Parents should be empowered to make the best educational decision for their children. Whether they choose to send their children to public, private, charter, online academies, or to home school, Arizona should be a state with diverse options to serve our diverse community.
• The Arizona Scholarship Tax Credit program has been an extremely successful program. Everyone wins with the scholarship tax credits – the State saves money and parents are empowered to choose what is best for their child’s education.
• Education Savings Accounts save the state money. Schools would face significantly higher costs if children with special needs were to be forced back into the public schools. The amount that can go into an Education Empowerment Account is limited to 90% of what the state would have spent on the student, so the cost of the tax credit is more than offset.

Conclusion

Parents have the right and are in the best position to determine what kind of education is best for their children. Every child is unique and has his or her own needs in the classroom, and Arizona is a leader in providing parents with educational options including public, private, charter, online, or homeschool. Selecting the right educational option will have a lifelong impact on the child’s abilities, and a choice of that magnitude should be left to parents, not geography or government bureaucrats.

© October 2011 Center for Arizona Policy, Inc. All rights reserved.
This publication includes summaries of many complex areas of law and is not specific legal advice to any person. Consult an attorney if you have questions about your specific situation or believe your legal rights have been infringed. This publication is educational in nature and should not be construed as an effort to aid or hinder any legislation.