Ep. 65: The Monthly Debrief – August Looking to September 2018

Michael Chartier: Well, thank you listeners. Welcome back to another EdChoice Chat. We’re going to be looking back at August and what happened in the month of August in the States. And a little bit about what we can expect in the future. And, I’ll give you a little hint: probably not that much as elections are coming up.

So, we’re gonna probably take a little deep dive into a state, Virginia, this month. Talk a little bit about tax-credit scholarships, how they operate and EdChoice’s thoughts around them—ways they can be improved, strengths, weaknesses, and a little bit about the EdNext poll that came out in the month of August.

So on the phone we have our policy director, Jason Bedrick.

Jason Bedrick: Morning.

Michael Chartier: And in our studio, we have our State Director Lauren Hodge.

Lauren Hodge: Great to be here.

Michael Chartier: And we’re gonna be taking you through the previously mentioned items. So I’ll start off with Jason. Jason, you want to give us our one solitary school choice state update?

Jason Bedrick: Yes, so it’s the summer time. It’s usually slow when it comes to the sorts of bills and other legislative activity that we tend to cover on this podcast. But legislators in Virginia have pre-filed a bill for the 2019 session. That’s SB-1015, and it will expand eligibility for the state’s Education Improvement Scholarship program to certain at-risk preschool students.

So right now, K–12 students who are lower income or who have special needs are eligible. And this is going to allow certain preschool students who have special needs and are from low income families or who are at risk in some various other ways to be eligible. And the bill has been referred to the Virginia Senate Finance Committee. So we will be keeping a close eye on that come January.

Michael Chartier: So Jason, you said that it was pre-filed. Exactly what does that mean in the legislative context?

Jason Bedrick: All right, So this is … the legislators have the opportunity to file bills in advance of the session. And so this bill has been filed over the summer, but it really is not for the current session. It’s going to be for the upcoming session that begins in January.

Michael Chartier: Okay, so just basically gives them a little jump on their homework and makes it easier on them while they’re … the lead-up to session and during the beginning of session?

Jason Bedrick: That’s right.

Michael Chartier: Perfect. Well, good. Well, thank you for that update Jason. And I guess we can go kind of into a little bit of depth about tax-credit scholarships. You mentioned that this is a tax credit scholarship program. And do you want to give our listeners maybe a refresher on how that works? I know that tax-credit scholarship programs might be in the news this month, but would you want to give our listeners just a review on how those work and perhaps some of their strengths and weaknesses?

Lauren Hodge: And a review for your new state director, too. I’ll gladly hear Jason talk about that all day long.

Jason Bedrick: Absolutely. Sure, happy to do so. So, tax credit scholarships began a little more than a decade ago, actually in 1997, so actually, two decades ago in Arizona. And they’re a little bit different from vouchers. So vouchers are publicly-funded scholarships that students received directly from the state to use at the school of their family’s choice.

Tax-credit scholarships are a little bit different. So, depending on the state, either individual or corporate donors make contributions to non-profit scholarship organizations and they receive a tax credit. And that varies from state to state from about 50% all the way up to 100% of the contribution. And then those scholarship organizations fund, usually lower, middle income families or families with students with special needs, to attend the school of their choice.

Currently, there are 18 states that have tax-credit scholarship programs. And that makes them the largest form of private school choice in the nation.

Lauren Hodge: And Jason, how popular are these tax-credit programs?

Jason Bedrick: Well, funny you should ask. We just received the information from the EdNext survey. Every year Education Next does a survey on a variety of different questions, not just related to school choice, but also related to things like teacher pay, satisfaction with the schools, what people think of their local schools. A number of the questions they do ask are about school choice.

And for as long as they’ve been doing the survey and asking question about tax-credit scholarships, tax-credit scholarships have been the most popular form of school choice. So, 57% of the public were in favor of tax-credit scholarships. I believe it was about 52% were in favor of vouchers. But, both Republicans and Democrats have support of 58%. Among parents, that jumped to 62%. And among Hispanics, it was 68% express support for tax-credit scholarships. So they are an incredibly popular way to expand school choice.

Michael Chartier: Now, Jason, you kind of mentioned that they started back in Arizona in 1997. What were the … we’ve talked about we were the Friedman Foundation, Milton Friedman, wrote about sort of vouchers as the original form of school choice. Why did Arizona reject the great Milton Friedman and go with a slightly different form of school choice than what he might have written about. What were some reasons for that? Why did they decide to go that path?

Jason Bedrick: The Arizona Supreme Court had ruled that vouchers were unconstitutional under the state’s Blaine Amendment. So, public funds could not go to private schools. Or, actually, to, specifically to religious schools. But they struck down an entire voucher program on that basis. But, the tax-credit scholarships were upheld by the State Supreme Court even under the Blaine Amendment because the funds never enter the public treasury.

These are contributions made by private citizens and private corporations to private non-profit organizations that then fund private families with children attending private schools. At no point do those monies enter the State Treasury, and, although the state does provide guidelines for how the funds may be used, they have no control over how the funds may be used.

So, for example, they have no control over which scholarship organizations, the donors, decide to contribute to. They have no control over which students receive the scholarships. Again, they have eligibility guidelines, but they can’t say that this student will receive it over that student. And they have no control over which schools the families choose to enroll their children at. So, because of these reasons, the U.S. Supreme Court, the Arizona Supreme Court, and every other state supreme court to address the question has ruled in favor of tax-credit scholarship programs.

So whereas vouchers have a mixed record at the courts, they’ve won at the highest court and usually win at the state court level, but have been struck down in a number of states as well. Tax-credit scholarships have a 100% record of being upheld and so, because of that feature, combined with their popularity, they tend to be a popular vehicle for state policymakers to expand school choice.

Michael Chartier: I think that makes a lot of sense. And if they have a 100% proven track record, that’s obviously something that’s impressive that you don’t find that often. Although it does remind me of Notre Dame football’s track record this year as 1-0, the 100% record there so far against, obviously, our big rival is Michigan. So, similar things here, tax-credit scholarships and Notre Dame football.

Jason Bedrick: Good.

Michael Chartier: Thank you for that. Lauren, did you have any question to add?

Lauren Hodge: You know, I did. So, Jason, you talked about the fact that there’s currently, I think you said 18 states that have these tax-credit scholarship programs. Are there any of these states in particular that are maybe, because of the way their Blaine Amendment is written, this might be an only option for them? Are there states like that out there that we should all be aware of?

Jason Bedrick: Yes. There are actually a number of those states. There’s a great report that the Institute for Justice put out, I believe a year or two ago. It was actually the second in a series where they go through all 50 states and assess the constitutionality. I don’t, off the top of my head, have the list of states where they said that the Blaine Amendment or some other constitutional amendment would prevent vouchers and allow tax credits, but there were quite a few states where that was the case.

Now, that certainly could change. Right now, speaking of the Institute for Justice, they are engaged in a lawsuit in Maine because the … due to the Blaine Amendments that they have in Maine, the … and just to be clear, Blaine Amendments …

Just a brief history on Blaine Amendments. Blaine Amendments were adopted in the late 1800’s. They were a response to Catholic immigration. And at the time, the district schools were essentially non-denominational Protestant schools that taught the Bible and had school prayer, but in a way that most Protestants would be okay with, but that Catholics weren’t so much. So, when Catholics began opening their own schools, and arguing that state dollars should be supporting the Catholic schools just as they supported the Protestant schools, the response of the Protestant establishment was to try and enact these amendments.

They’re known as Blaine Amendments, actually because of Senator James G. Blaine, “continental liar from the State of Maine,” as he was known. It was James Blaine who tried to amend the U.S. Constitution. He failed. But they did amend about 40 state constitutions to say that public funds cannot go to sectarian schools. And sectarian meant wink, wink, nudge, nudge—Catholic.

So, that’s sort of the history.

Now, Maine has one of the oldest school choice programs in the country. It dates back … and it might even be the oldest. But I’d have to double check. It’s either Maine or Vermont. And I always confuse which one was first. But, they both date to before the Civil War. And they have a town tuitioning program. So, if your town say, does not have a … it’s a lot of rural areas, if your town doesn’t have a public school for certain grades, you can essentially get what amounts to a voucher to use at a private school. But because of their Blaine Amendment, you can’t use it at a religious private school.

And like the Lutheran decision, the Institute for Justice is suing because in Trinity Lutheran, the U.S. Supreme Court, and that had to do with also the Blaine Amendment in Missouri where they had a program that would give non-profits or schools a grant to put recycled rubber down as sort of ground covering for playgrounds. And they said, “We’ll give this to any preschool out there unless you’re religiously affiliated.” And the U.S. Supreme Court said that is unconstitutional under the first amendment’s free exercise clause, that it is discriminating against otherwise eligible entities based solely on their religious status, and that the Constitution forbids that kind of religious discrimination.

The Institute for Justice is arguing that that’s the case in Maine. And if this goes all the way up to the U.S. Supreme Court, they might then extend or follow the logic of Trinity Lutheran to its logical conclusion which that Blaine Amendments themselves are unconstitutional under the U.S. Constitution. So, if that would be the case, then every single state except possibly two would allow publicly funded programs.

And those two would be Michigan and Massachusetts where there’s no religious discrimination because they basically banned funds from leaving the pubic system and going to any private school entirely. So they’re not distinguishing between religious and non-religious. They’re just distinguishing between public and private.

Michael Chartier: That was a good in-depth update. I did not know that about of those states. I was gonna actually add an interesting piece of trivia since you went down the path of the historical portion of the Blaine Amendments. Of course, going back to Notre Dame football, Notre Dame, of course, located in the great city of South Bend in Northern Indiana. James Blaine became Speaker of the House actually because a guy by the name of Schuyler Colfax, who represented South Bend, Indiana, and was the current Speaker of the House, left that position to become Vice President for Ulysses S. Grant. And because-

Lauren Hodge: I had no idea.

Michael Chartier: Yes, and because of that James Blaine was voted by his party to be the Speaker of the House. So-

Lauren Hodge: I lived in South Bend for 20 years and never knew that fact.

Michael Chartier: Yes, yes. So we can blame Schuyler Colfax for leaving. And after, we all know the problems that the Grant administration have after that. And Schuyler Colfax was deposed as Vice President after his first term. But there is my South Bend, Notre Dame football tie in to Blaine Amendments. Who would have thought that would happen?

Lauren Hodge: You are on topic today.

Jason Bedrick: There you go. So, not the last Vice President from Indiana.

Michael Chartier: No, that’s true. That’s very true.

Lauren Hodge: It’s a good point. So, Jason, I did have some questions. So, we talked about the tax credit scholarships and the applicability that it may have to states that have these particular Blaine Amendments, but I heard something else when you were talking and it regards to this program in Virginia, with eligibility. And I’m wondering what are the strengths of that tax-credit scholarship program? What are you might consider the weaknesses? Because any time we have eligibility, we’re talking about certain groups. I’d just be curious to get your input.

Jason Bedrick: Sure. I’ll just give a brief overview of the Virginia tax credit scholarship program, which is known as the Virginia Education Improvement Scholarships. So, right now, there are 30 scholarship organizations participating in the program. If you are an individual, they don’t have a corporate credit, but if you are an individual, you can make a donation to the scholarship organization and get a 65% credit.

And then those scholarship organizations fund low- and middle-income families. So, eligibility is up to 300% of the federal poverty line for most families. And that’s about $75,000.00 for a family of four. But if the child has special needs, then the income threshold is up to 400% of the federal poverty line, which is about $100,000 for a family of four.

Right now, the program serves about 3,300 students. So it is a very small program. That’s compared to 1.3 million public school students in Virginia. So we’re talking about one quarter of one percent of the public school student population is participating in the tax-credit scholarship program. And the average scholarship is only about a little more than $3,100. So they are very small scholarships. And again, that’s compared to about $12,000 per pupil that’s being spent in the Virginia public schools. And it’s probably actually more than that today. These figures are from the National Center for Education Statistics. They tend to run about two to three years behind. So, it’s probably closer to $12,500 or maybe even more at this point.

So, again, this is a very, very small program relative to the total school population. There’s a cap. There’s a total credit cap of 25 million dollars, but they tend not to hit it. They usually are getting in the range of about 10 to 15 million dollars. And I believe that’s likely due to the low level of the credits. And just by the way, 25 million might sound like a lot, but Virginia spends more than 16 billion dollars each year-

Lauren Hodge: And that’s-

Jason Bedrick: On their K–12

Lauren Hodge: That’s billion with a “b?”

Jason Bedrick: Billion with a “b.” So, we’re talking about the 25 million comes to less than two-tenths of one percent of the total K–12 spending in Virginia on an average year. Again, very, very small program. And it’s not even hitting the caps because the 65% credit is just not enough of an incentive to induce enough people to donate. So that’s one of the drawbacks in Virginia in particular and in a number of states that don’t have 100% credits.

Arizona does have a 100% credit. Florida, Georgia, and these are states that have the more successful tax-credit scholarship programs. But in states that have lower credits, especially those that are below the 75% threshold, it’s often just not enough of an incentive to get a sufficient number of people to donate to provide a consistent funding stream for a sufficient number of students. So this is one of the reasons that we at EdChoice prefer publicly-funded programs, or at the very least, tax-credit scholarship programs that have a 100% credit because our primary concern is that students have access to the funds that they need to attend the schools their families want them to attend. And that requires either a public commitment or at least a very strong incentive to donate.

So, I think the number one thing that Virginia can do to improve their program would first be to increase the value of the credits and then to allow the … at that point, they should be hitting the cap, so to allow that cap to continue to increase on an annual basis. That’s something that Florida and Arizona and a number of other states do. They have what’s called an escalator clause so if you get within a certain percentage, usually about 90% of the cap in one year, then the following year, the cap increases depending on the state, 20 to 25%. So that allows all of the existing students to keep their scholarships, and also create an opportunity for new students who are entering kindergarten, first grade to then receive a scholarship as well. And it allows natural growth in the program over time.

So those are the ways to improve Virginia’s Education Improvement Scholarship program.

Michael Chartier: Well thanks, Jason. I think that was a pretty good update. I think we’re running out of time here. Anything else you want to add in the meantime before we sign off and let our listeners get back to their daily grind as it were?

Jason Bedrick: Not about Virginia. But things are going to be heating up soon. Education, obviously, we’re in election season. Education is usually not one of the big issues in elections. But, we have seen this year, in a number of states, it is a very hot issue. So, I expect that our updates for next month is going to have a little bit more to do with the election and what’s going on in different states related to education.

Michael Chartier: Perfect. You’re absolutely right. Election season is just around the corner. That’s probably the time for most of us to turn off our televisions and avoid those commercials.

With that, to our listeners, if you have any ideas for podcasts, things that are of interest to you that you want us here to talk about, please email us at media@edchoice.org. Again, that is media@edchoice.org. Subscribe to this podcast on SoundCloud, iTunes, and Stitcher. I have no idea what SoundCloud and Stitcher are. I feel old now. But, if you want to subscribe to them on those apparatuses, please do. Again, follow us on social media at @edchoice. And please go to our website and sign up for our emails at www.edchoice.org.

Thank you everybody for your time. We look forward to speaking with all of you again next month as we look back at what happened in September and a little bit about what will happen in October. So with that, thank you very much and have a good day.