A new proposal being considered in Maryland would grant businesses tax credits in exchange for donations supporting non-profit scholarship programs for students to attend a private school. If passed, the program would establish the $15 million Maryland Education Tax Credit Reserve Fund, from which businesses would receive tax credits equal to 60 percent of those donations, not exceeding $200,000 in a taxable year.
Tax-credit scholarships (TCS) would be administered by non-profit Student Assistant Organizations (SAOs), which would work as middlemen that distribute contributions as scholarships for low-income students to attend private schools. Extracurricular programs at public schools would also be funded using SAOs.
A TCS differs from other school choice options in two significant ways. First, the money a TCS uses comes entirely from private sources. This allows a TCS program to avoid state or federal prohibitions against sending money to religious institutions. Second, these programs offer the “cleanest” school choice option, meaning the one with the least burdensome government regulations, because they are not funded by tax collections. Currently, TCS programs are the most popular form of private school choice in the country. According to the Friedman Foundation for Educational Choice, 16 states currently offer 20 different TCS programs.
Only 40 percent of Maryland 4th graders and 35 percent of 8th graders tested “proficient” in math on the 2015 National Association of Education Progress (NAEP) test, also known as the Nation’s Report Card. Only 37 percent of 4th graders and 8th graders tested proficient in reading. These results show Maryland’s public school system is failing to educate roughly six out of 10 4th grade and 8th grade students to a proficient level in reading and mathematics. Further, these scores have been declining over the past four years.
Maryland’s sub-standard performance on NAEP underscores the desperate need for the state to expand school choice opportunities far beyond what is currently available. Too many public schools in Maryland are failing to adequately prepare students for productive lives. Parents should be allowed to choose the schools their children attend and should not be penalized financially if that choice is a private religious or secular school.
School choice opponents criticize education tax credits for the same reasons they criticize school voucher programs. They say giving families more options will take students, and therefore money, away from public schools, and opponents say it is not fair or beneficial to have private schools operate with different rules compared to those imposed on government schools. School choice opponents also claim school choice does not improve students’ academic achievement.
Proponents of TCS programs and school vouchers can point to a large number of gold-standard research studies that show these programs increase student achievement for voucher students and those remaining in traditional public schools, producing an increase in social harmony, citizenship, and racial and economic integration.
School choice offers families equal access to high-quality schools that meet their widely diverse needs and desires. Instead of unjustly condemning millions of children to failing and dangerous schools because their parents cannot afford to pay private school tuition rates, tax-credit scholarships give all families a greater opportunity to meet each child’s unique education needs.
The following documents offer more information about voucher programs and school choice.
Ten Principles of School Choice
https://heartland.org/policy-documents/ten-principles-school-choice
Since the U.S. Supreme Court ruled in 2002 school vouchers are constitutional, grassroots activists around the country have been organizing to support passage of school choice programs. Legislatures passed statewide programs in Colorado and Florida, and other states are expected to follow their lead. At least 35 cities have privately funded voucher programs. This booklet from The Heartland Institute provides policymakers and civic and business leaders a highly condensed and easy-to-read guide to the debate. It presents the 10 most important principles of the school choice movement, explaining each principle in plain and precise language. It also contains an extensive bibliography for further research, including many links to documents available on the Internet and a directory of the websites of national organizations that support school choice.
Taking Credit for Education: How to Fund Education Savings Accounts Through Tax Credits
https://heartland.org/policy-documents/taking-credit-education-how-fund-education-savings-accounts-through-tax-credits
This paper from the Cato Institute explains how legislators can design an education savings account (ESA) program that is privately funded through tax-credit-eligible contributions from taxpayers, which is similar to models used in many tax-credit scholarship programs around the country. Tax-credit-funded ESAs would empower families with more educational options while enhancing accountability and refraining from coercing anyone into supporting ideas they oppose. Because they are funded through voluntary contributions rather than public funds, tax-credit scholarships have a perfect record of constitutionality at the U.S. Supreme Court and at every state supreme court that has considered the issue. In states that have adopted a Blaine amendment, tax-credit ESAs could be a lifeline to families in need.
The ABCs of School Choice – 2016 Edition
https://heartland.org/policy-documents/abcs-school-choice-2016-edition
The ABCs of School Choice, produced by the Friedman Foundation for Educational Choice, is a comprehensive, data-rich guide to every private school choice program in America. This annually updated publication may not reflect developments past January 25, 2016.
The Fiscal Effects of School Choice Programs on Public School Districts
http://news.heartland.org/policy-documents/fiscal-effects-school-choice-programs-public-school-districts
This report by Benjamin Scafidi is the first-ever study of public school districts’ fixed costs in every state and the District of Columbia. Scafidi concludes approximately 36 percent of school district spending cannot be quickly reduced when students leave a school to enroll elsewhere. Scafidi finds the remaining 64 percent, or approximately $8,000 per student on average nationally, are variable costs that change directly with student enrollment. This means a school choice program attaching less than $8,000 to each child who leaves a public school for a private school leaves the district with more money to spend on each remaining child. Scafidi says in the long run, all local district spending is variable, meaning all funds could be attached to individual children over time without creating fiscal disasters for government schools.
How School Choice Programs Can Save Money
http://www.heritage.org/Research/Education/wm727.cfm
This Heritage Foundation study of the fiscal impact of voucher programs notes Washington, DC vouchers cost only 60 percent of what the city spends per pupil in government schools. The study estimates if the states with the top eight education expenditures per pupil adopted voucher programs similar to the one in Washington, DC, they could save a combined $2.6 billion per year.
How School Choice Can Create Jobs
https://heartland.org/policy-documents/how-school-choice-can-create-jobs
Examining five South Carolina counties, Sven R. Larson found school choice programs were associated with gains of up to 25 percent in youth self-employment. Larson writes, “School Choice raises academic achievement and reduces the problems and costs associated with high school dropouts. But it also has a decisively positive impact on youth entrepreneurship and could provide a critical boost for the economies of poor, rural counties.”
School Choice by the Numbers: The Fiscal Effect of School Choice Programs, 1990-2006
http://www.schoolreform-news.org/article/21956/
Examining the fiscal effects of school choice programs, Milton and Rose D. Friedman Foundation Senior Fellow Susan Aud found $444 million in savings in the years 1990–2006, $422 million of which was from local school corporations. The direct passage of savings to school districts has a profoundly positive net benefit on districts, but not enough to enable them to compete with the high performance of private schools or charter schools.
The Legal Landscape of Parental-Choice Policy
https://heartland.org/policy-documents/legal-landscape-parental-choice-policy
The U.S. Supreme Court decision Zelman v. Simmons-Harris cleared away the most significant obstacle to the expansion of private school choice programs by ruling the First Amendment’s Establishment Clause does not preclude faith-based schools from participating in private school choice programs. Other important legal questions fall into four categories: the scope of students’ right to an education and parents’ right to choose their children’s schools; state-constitutional obstacles to private school choice; the effect of laws governing racial integration and the inclusion of disabled students; and the religious-liberty implications of faith-based schools participating in such programs. This report from the American Enterprise Institute notes the lack of clarity on these questions poses challenges, but the report says they also create opportunities for proponents of private school choice to scale existing programs and expand program options.
The Integration Anomaly: Comparing the Effects of K–12 Education Delivery Models on Segregation in Schools
https://heartland.org/policy-documents/integration-anomaly-comparing-effects-k-12-education-delivery-models-segregation-sc
Kennesaw State University economics professor Benjamin Scafidi, also a senior fellow at the Friedman Foundation and director of Kennesaw State’s Education Economics Center, examines the relationships among traditional public schools, school choice programs, and racial diversity. Although in many cases neighborhoods are becoming more racially integrated, traditional public schools are actually becoming less so. Scafidi concludes existing evidence indicates school choice is a diversifier, leading to greater racial integration in schools.
Nothing in this Research & Commentary is intended to influence the passage of legislation, and it does not necessarily represent the views of The Heartland Institute. For further information on this subject, visit School Reform News at http://news.heartland.org/education, The Heartland Institute’s website at http://heartland.org, and PolicyBot, Heartland’s free online research database, at www.policybot.org.
The Heartland Institute can send an expert to your state to testify or brief your caucus; host an event in your state; or send you further information on a topic. Please don’t hesitate to contact us if we can be of assistance! If you have any questions or comments, contact John Nothdurft, Heartland’s director of government relations, at [email protected] or 312/377-4000.
Tim Benson joined The Heartland Institute in September 2015 as a policy analyst in the Government Relations Department.
