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Design Matters: The Future of School Choice

July 9, 2014 in Economics

By Jason Bedrick

Jason Bedrick

Though voucher programs tend to receive more attention, more than six in ten students attending private school through an educational choice program are using tax-credit scholarships. Nearly 200,000 students use tax-credit scholarships in 11 states, and three other states have recently enacted but not yet implemented scholarship tax credit (STC) laws. States looking to expand educational choice are more likely to adopt a scholarship tax credit because STC laws face fewer constitutional obstacles than government-funded vouchers and elicit higher levels of public support.

Policymakers should learn from the other states’ experience when designing their own STC laws. One useful new resource for such policymakers is the Center for Education Reform’s first-ever scorecard for scholarship tax credit laws. The CER report grades every state’s STC law (or laws) on an A-F scale based on their performance in four categories: Eligibility and Availability; Design of Credit and Scholarship; Autonomy; and Budget. The report also rates each state based on the number of participating students and the total amount of scholarship funds expended, but did not count these scores toward the main grade as participation and funding rates depend considerably on the age of the program.

Policymakers should learn from the other states’ experience when designing their own laws.”

The scorecard highlights the importance of good design. The best STC laws allow the widest participation without negatively affecting private school autonomy. Wide participation entails avoiding overly restrictive eligibility requirements for scholarship recipients and allowing the scholarship organizations to award scholarships that are large enough for low-income families to afford tuition. The CER report penalizes states that restrict new scholarships to students who are currently in a public school, who have special needs, or who come from very low-income families. States also receive lower scores for restrictions on the scholarship sizes below the lower of either $10,000 or parity with public school spending per pupil. Only Arizona receives full credit for its eligibility criteria while eight states receive full credit for their maximum scholarship sizes.

Ensuring sufficient funding requires a wide enough donor base, encouraging donations through credits that are as close to dollar-for-dollar as possible, and allowing substantial donations. CER scores each state for the types of taxpayers eligible to contribute (i.e. — corporations and individuals) and deducts points for credit values below 100 percent and for maximum donation sizes below $100,000 for corporations or $2,000 for individuals. Of the states …read more

Source: OP-EDS

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