Friday, September 14, 2007

The Best Way to Fund School Choice

The Cato Institute’s Adam B. Schaeffer has a series of four articles on school choice funding that were published this week in the National Review Online (1, 2, 3, 4). The entire series is worth reading.

The gist of Schaeffer’s series is that tax credits are a far better vehicle for empowering parents with functional and sustainable school choice than are vouchers. I don’t get the idea that Schaeffer is completely opposed to vouchers, but he thinks they are not as good as tax credits.

Tax credits simply let parents keep money they spend on private schooling instead of paying it as taxes. That is, their tax assessment is reduced by some of the amount they pay for their children’s private school tuition. Vouchers, on the other hand, are money that government disburses to parents to help cover the cost of their children’s private school tuition. (In some voucher programs it is paid directly to the school of choice as directed by the parents.)

The big difference between the two programs is that in the case of tax credits, the money never goes through the government. Even school choice opponents agree, says Schaeffer, that tax credits are not technically government money. As voucher proponents in Utah have discovered, it’s difficult to get past the idea that vouchers are a form of government handout.

But Schaeffer argues that avoiding the use of direct government money is just the beginning of the advantages tax credits offer. He notes that tax credits are substantially favored over vouchers in pretty much every study. He writes, “Even current and former public school employees support education tax credits by a margin of nearly two to one.”

Popularity aside, Schaeffer argues that tax credits (when businesses are permitted to participate by creating scholarship funds) end up spawning robust, self-sustaining institutions that support and help expand the program. “Tax credits establish a self-implementing form of school choice that relies on the private-sector alone,” he says. “Voucher programs,” on the other hand, “do not create these institutions, and thereby their beneficiaries have difficulty overcoming collective action barriers to organize and defend school choice.”

After reading Schaeffer’s articles, it would seem that proponents of school choice should be ready to dump vouchers and jump on the tax credit bandwagon. But there seems to be a significant issue that education tax credits fail to address. What about those that are less well-off?

One of the major complaints by school choice opponents is that programs that help parents pay for private school tuition help mainly wealthier families that can already afford to send their kids to private schools. Those that can’t afford to send their kids to private schools without the programs, they argue, would still be unable to afford to send their kids to private schools with the programs.

While allowing businesses to offer scholarships probably answers some of this, tax credits seem to favor those that pay more taxes, which happens to be those that make more money. A tax credit of up to $4000, for example, wouldn’t be very helpful in paying for private schooling if your total state tax assessment (and therefore your total credit) amounts to $400. And if you’ve got three or four kids, the disparity only gets worse. Schaeffer seems to completely ignore this problem.

Utah’s voucher law would pay a maximum of $3000/child and a minimum of $500/child. But this is on a means tested sliding scale, with the poorer folk getting the most and the richer folk getting the least. Opponents argue that even a $3000 voucher wouldn’t be enough to help poorer people afford private school tuition, so only the rich will take advantage of it. That’s poppycock. The largest private school in my area (a Catholic school) draws a significant number of its students from families that earn below median income. And yet these people somehow make enough sacrifices to send their kids to private school. Think of how many more families that are less well-off could make it work with the voucher system.

My point is that education tax credits would benefit the rich far more than the poor, and that this is exactly the inverse of how Utah’s voucher system is designed to function. I think that most Utahns that favor school choice favor a progressive system that provides more aid to those that need more aid. I realize that this goes against pure libertarian philosophy, but I also believe it to be a political reality.

Those that oppose any kind of taxpayer funded school choice as a matter of principle will completely disagree with me. (And don’t give me any of that guff about parents having plenty of choice within the present public system.) But it seems that a combination of education tax credits and vouchers could be designed to create a school choice program that would maximize opportunities for the greatest number and broadest spectrum of school children. I see no reason that both vehicles can’t be pursued or why one of them should be excluded. The idea is to provide the highest quality of education for each student.


Charles D said...

What happens to public education under this plan? Does it go away, or is it merely left with the poor, the problem kids, and those with learning problems? Where is the money coming from - those same public schools?

Is the aversion to public education based on political ideology or is it about control?

Education is not about choice, it's about learning, learning to think, and learning to love learning. Sure there are problems in many public schools, but do we somehow think that private schools will avoid those problems? Are they immune?

If you want to "maximize opportunities for the greatest number and broadest spectrum of school children" try fixing the public school system that already serves the greatest number and broadest spectrum.

Scott Hinrichs said...

The questions you raise have been under discussion in Utah for quite some time now as people grapple with how they will vote on the upcoming referrendum on the voucher law that was passed by the legislature earlier this year. The purpose of this post is not to rehash those arguments, but to compare the possible funding mechanisms for those that support school choice.

There are untold numbers of sites you can visit to see both sides of the school choice debate that address your questions. However, the vast majority of these sites (on both sides) are little more than demagoguery of the opposing point of view. Sadly, a fair and balanced discussion of these issues is harder to find than a needle in a haystack.

y-intercept said...

Taxes and vouchers simply let the money follow the students. It does not take all of the money out of education. All of tax money from people without children, homeschoolers, the elderly and people with children in public schools would still be going into the public schools.

For that matter, the tax credit and voucher systems will continue to transfer a sizeable amount of money from rich people with kids in private school back into the public school system. A person who makes $200k a year would still be paying a boat load of taxes that go to public schools.

The vouchers and tax credits simply allow a portion of school money follow the student.

It is a bizarre to assume that if you let some of the money follow the kids, all of the money would leave public education.

Charles D said...

So Utah is only discussing which method they will use to fund the destruction of their public education system?


Scott Hinrichs said...

Actually, Utah will be voting on whether to keep the voucher law enacted by the legislature or drop it altogether. Education tax credits are not on the docket.

The whole point of education is to properly educate each child. If our public education system did such a fine job of that, I doubt many would clamor for school choice. But our government-run education monopoly is increasingly churning out bad results. It seems to work well for about 60% of the students, but the 20% on the top end and the 20% on the bottom end are ill served.

Since government-run schools can't adequately provide for these students' needs, what's wrong with employing other methods to do so? School systems were created to educate students. If they don't do that properly, changes need to occur and/or outside intervention is required. The idea that students exist for the sake of the school systems is ludicrous. Monopolies produce inferior products, even when they're run by the government.

y-intercept said...

"the 20% on the top end and the 20% on the bottom end are ill served."

I spoke with a guy (he wrote a book called Schools Out) who did extensive research on this. He concluded the opposite. Kids with special needs and those at the top of their game do well in big public schools. It is the middlesome students that go under-served.

The reason for this is interesting. In public schools, resources are distributed politically. The super motivated kids learn to play the system and get the resources spent on them.

Likewise, when a special needs kid tweaks the right hearts, they get lavished with attention.

In other words, since funding is divorced from reality, teachers in public schools play favorites.

It is not uncommon to see public schools giving their star students and special needs students $20k in education while short changing the the middle.

This also makes sense in a broader context. The overall goal of the left is to play the ends against the middle.

The private school is different. When parents fork out $6k a year for their child's education, the school is obliged by the market to give each and every student a $6 a year education.

Cash is a great equalizer. It is more difficult for private schools to pay favorites.

If you have a child who simply is not motivated, that child would simply waste away in the public school system. Students like that often turn around in private schools.

Conversely, a really super bright motivated student would do better taking advantage of the free stuff in public schools.

Jeremy said...

Reach Upward,

Do you have anything other than anecdotal evidence or your opinion to support your contention that public schools are bad for 40% of Utah's students? I'm against vouchers in Utah because I think Utah's schools are doing well enough that the marginal cost incentives vouchers will give to parents of kids in our successful school system won't be used by enough people to make vouchers worth the taxpayer money spent on those who never would have gone to public schools in the first place. In effect the current voucher plan will likely end up being little more than a subsidy for those who don't need help while everyone else will keep sending their kids to the public schools they are still happy with. The plan itself isn't that just isn't a good fit for Utah where our schools are doing pretty well.

Utah currently has a smaller percentage of our students in private schools than nearly any other state in the country. We don't maintain that statistic by having crappy public schools.

Getting back to the topic of your interesting post I prefer tax credits to vouchers but agree with you that they aren't as directly helpful to lower income students as the proposed voucher plan would be. A cool thing about tax credits is that people without any kids in public schools could donate up to the tax credit amount (or more if they chose) to families they know who are in need. It would be cool to know that your school tax dollars were being spent directly on someone you know to help pay for their education instead of going into what can sometimes seem to be a wasteful public system. I still don't think Utah needs government subsidized school choice even in the form of tax incentives but if we have to have some sort of “school choice” tax credits are way better than vouchers.

y-intercept said...


I think Reach made up the percent. 43.76% of all statistics are made up on the spot. I think Reach was simply trying to imply that there are people underserved by public schools.

I would venture that both public and private schools underserve different groups. The group that is underserved varies by school. This is why school choice is important. When a child is being underserved by a school, it is in everyone's* interest for the child to move to a different school.

*by everyone, I mean everyone by the Teachers' Union which is always best served by mediocrity.

Charles D said...

I will admit that many public school systems are inadequate, or poorly managed, or in other ways fail to deliver a quality education. The answer is not to lower their funding by channeling it to private schools or remove those students who are motivated and whose parents are interested in their child's education. Why not fix the public schools?

I would submit that we don't take that route because of two or three factors.

1. Public schools are funded by local regressive taxes and very few communities are willing to raise taxes.
2. Public schools have long been at the heart of the competition between localism and federalism. Left to their own devices, far too many local schools would be segregated, or would shortchange challenged students, or would cut important programs to save money, etc. The response has been to give them federal money with huge bureaucratic burdens to insure it is used properly - often the bureaucratic cost outweighs the subsidy.

3. Schools are usually mandated to educate students and a significant and vocal minority of parents don't want their children educated if it means they may discover that certain religious beliefs of their parents are simply incorrect.

Fundamentally, however, we have lost sight of what education is. Thanks to Bush and Ted Kennedy, we are teaching our children how to pass standardized tests and failing to teach them how to think. We need to correct these problems for ALL our children, not just let those parents with enough money opt out and leave the rest to fate.

y-intercept said...

DL, What makes you think the school choice takes the motivated kids out of the local school?

The primary reason people move kids to a different school is because the kids are not motivated in their current school, or because the child has fallen into a destructive click.

Let's say you have a child who is super motivated in a given school who has great friends, loves his teachers and is excited about learning.

Do you really, seriously think that the parents of that child is going to yank them out of that school? The very last thing any parent wants to do is to move a motivated child out of an environment that spawned that motivation!!!!!

Parents move their children to a new school when the child in not motivated in the current school.

This was a premise from your first post: "Education is not about choice, it's about learning."

You do know that that statement is diametrically opposed to Rousseau, Montessori, Dewey, Friere and other icons of the progressive world. These folk pretty much hold that a child won't learn until they choose to learn.

But, don't worry, DL, I don't expect any logical consistency from you. I understand the foundations of modern progressive discourse. In the method, you simply form a pack then attack until one of the sharks is able to rip a little skin.

Your final attack is that school choice is all about conservatives wanting to protect their ideology.

Progressives are as, if not more worried about people challenging their belief systems than Conservatives. Try suggesting to a goateed liberal professor that we teach logic in school. Progressive educators because progressivism cannot withstand the light of reason. A good logic class would show a student how to detect all of the ad hominem attacks, projections and logical fallacies made by the left.

The culture war aspect of the voucher is both sided. You have the left wanting to defend their hegemony and the right wanting diversity. It is an interesting reverse of what the pundits usually say about left and right. One usually thinks of conservatives as trying to defend a hegemony and progressives defending diversity.

Charles D said...

Y, you show good reasons why we should just simply drop the right/left, progressive/conservative labeling and just talk about the issues.

If middle class parents who actually have books at home and read them, sit with their children and help with their homework, and go into school for parent-teacher meetings take their kids out of the public system, that will be a loss to the system. It is precisely these parents who will take advantage of vouchers. While some may leave their happy children there for a year, when all the kids friends leave for Happy Valley Academy, they'll pull theirs out too.

Dewey,, are right that a child won't learn until he/she choose to learn and the school should entice and excite them about that possibility. My point is that memorizing the answers to a standardized test is not going to impart a love of learning or teach a child to think. Neither is a curriculum that is crafted to improve test scores rather than educate students. Those are part of the failed NCLB strategy.

Your faith in the market is fascinating. I guess you think that any one selling you something is going to give you your money's worth because it ought to work that way. The free market ideology fails to look at the other side. If I am in the private school business (particularly after I'm acquired by the education corporation), I am interested only in my bottom line. I can only charge so much to parents and my facilities costs are pretty much fixed, so increasing profit means keeping teacher's salaries low and removing frills. A sure-fire recipe for motivating kids to learn.

Cameron said...

The difference between a public school and private school is one is directly responsible to me as a parent through the tuition money I represent. If a teacher tells my child he is just too dumb for math, I will complain. In a public school, little is likely to be done (This has, in fact, happened to a few members of my family). In a private school, either the problem is resolved, or my tuition can leave. In private schools, crummy teachers won't last long, as they cost the school revenue. In public schools, crummy teachers abound regardless of how motivated and involved parents are.

Bradley Ross said...

DL wrote, "The answer is not to lower [public school] funding by channeling it to private schools..."

I'm honestly puzzled by this statement. We do lower the overall funding for public schools with the voucher system, but we also give them fewer students to educate so that the per pupil spending INCREASES. Why is that bad?

Reach, I don't like the tax credits as much for exactly the reason you cited: poor kids don't get as much help. If a poor kid is lucky enough to know someone wealthy, they can get some help, but poor people tend to know poor people and wealthy people tend to know wealthy people.

y-intercept said...


Sadly there's a large number of teachers and even entire schools that teach by holding up a person or group of people in the school as the bad example. When you are in a school and the powers that be have decided that you are their bad example, you have to find a way to run. (To pre-empt DL, they exist on both left and right. The left is worse at this moment in time.)