Ep. 253: The Monthly Debrief – April Looking to May 2021

Note: Since the recording of this episode, lawmakers in both chambers approved House File 847 in Iowa. Please visit our Press page for more information.

Robert Enlow: Hello, and welcome to another Monthly Debrief podcast from your focus state investment team at EdChoice. This is a roundup of what happened in April in states with school choice activities. And we’ve already talked this year about some of the incredible wins, particularly in West Virginia, that passed a nearly universal bill for all families in public schools, and potentially all families in the state, to be able to get an education savings account.

April was no different with this growth of universal choice. And I’m going to take the privilege of the moderator to start here and talk about our home state of Indiana. So as we headed into April, the Indiana budget was going to be full of school choice fights and full of school choice bills. And the revenue forecast came in with an extra $2 billion in the bank. And that led to an amazing, amazing expansion of our Indiana scholarship program. So let me tell you just what we’ve done here in the state of Indiana in April.

So as everyone knows, we already have the Choice Scholarship Program, which allows every family who earns up to 150% of free and reduced-price lunch to receive a scholarship worth either 50%, 70% or 90% of what the state would spend on their children. Sound confusing? Well, it was. So, what ended up happening, in the budget, is the Choice Scholarship Program now expanded to 300% of free and reduced-price lunch. That’s basically $145,000 for a family of four. It’s almost 80% of all families in the state. And it’s almost 1 million children. It’s nearly universal in its scope.

Additionally, it’s unfair that some children get 50% of what the state would spend, and some get 70% and some get 90%. So we changed it so that every single family gets 90% of what the state would spend on their child. This is a dramatic increase and makes Indiana’s Choice Scholarship Program, without a doubt, the largest income-based scholarship program in the country.

We also added another pathway to the program including foster care kids. But we’re not done there in Indiana. Indiana also passed a small special needs education savings account bill. It’s a $10 million program, so it’s not big, but it’s a start, that will allow special needs families to be able to get all of their money to customize their child’s education.

And in addition, we included support for charter schools to the tune of $1,000 per year in the first year of the budget, and $1,250 per year in the second year of the budget, to offset their loss from property tax since they don’t get any. So all that, and we funded K-12 education more than it’s ever been funded in history. So Indiana has shown how you can take the lead on school choice, how you can fund schools. And our legislature also tied the idea of funding schools and school choice to paying teachers more.

So, this state was really on the vanguard this year, along with West Virginia. And we’re really excited about what happened at our home state and we’ll look forward to seeing the growth here. But for all those who are out there, who’ve been supporting Indiana and our work here for a long time, thank you. But Indiana wasn’t the only state to go forward this year, and in fact, this month, right?

So Jason, I’d love to hear you talk about some of your states; some of the big wins, some of the small wins, and some of the expansions.

Jason Bedrick: Yeah. Well, like you said, it’s the year of educational choice. States are still chugging along. It’s been really incredible so far. We have nine states that have passed a new or expanded educational choice program. We’ve got four new programs, three of those are ESAs. There are 10 expanded programs. I mean, it’s incredible progress this year.

And in this past month, I would say the biggest victory was probably HB 7045 in Florida. There were a few different competing bills to do different things that maybe we’ve talked about in previous podcasts. The one that ultimately was sent to the governor’s desk, it raises the income thresholds for the state’s tax-credit scholarship program—which is the largest in the country. It already serves more than 100,000 low and middle-income students and also raises the income threshold for the school voucher program that they have as well. And it takes the two programs that Florida has for students with special needs, the McKay voucher and the Gardiner education savings account program, and it merges them together into a new ESA policy that is going to be a part of what is currently the state’s low- and middle-income voucher. It’s called the Family Empowerment Scholarship policy.

So, this is just going to make it a lot easier for parents to navigate the system because there are going to be fewer programs. And it also, like I said, it expands the eligibility for these programs. So this is really some incredible improvement. And it’s worth noting that all of these programs in Florida have escalator clauses, so that they automatically grow over time to meet families’ needs.

Another state that we’re really excited about is Montana. They passed HB 279, that’s a bill… It makes a number of important tweaks to the state’s tax-credit scholarship program. Their tax-credit scholarship program is, technically speaking, it is universal. Everybody is eligible to receive a scholarship. However, it was very poorly designed, so that donors, those scholarship organizations, could only get a tax credit of up to $150. Which meant that you needed a dozen people just to fund one scholarship. It was very frustrating for them. And this is the one that went all the way up to the U.S. Supreme Court in the Espinoza decision. But there were only a handful of families that were actually receiving scholarships.

Now, they have raised that per donor cap from $150 to $200,000. So it’s going to be a lot easier for the scholarship organizations to actually raise money and to fund families. They’ve also increased the escalator. Previously, if they were to hit their cap—which was $1 million dollars, and the next year it’ll be $2 million—it would go up by 10%. Now it’s going to go up by 20%. So it’s going to allow the program to grow a lot faster to meet the needs of families. And we expect that Governor Greg Gianforte is going to sign it just as we expect that Governor Fon DeSantis in Florida is going to sign the Florida bill as well.

Two other states. Arkansas passed a new program. It’s much smaller. It’s a first step for Arkansas. They’ve been fighting for many, many years to try to get something done, so we applaud them for getting something done; but obviously they have a lot further to go in Arkansas. It is a new tax-credit scholarship policy for low-income families. And they are now the 20th state in the nation to adopt a tax-credit scholarship policy.

Finally, we had some movement in Minnesota. The Minnesota State Senate, in the education funding omnibus bill, HB 10065, they amended it to include an education savings account policy for low- and middle-income families. The House did not concur, so now the Minnesota House and Senate are going to be negotiating over the budget and we’ll see what happens. But we still have a whole bunch of other states out there that are making progress and still have some bills that are live.

Robert Enlow: So that’s, again, great progress in the United States, all the way from Florida’s incredible expansion… And Florida and Indiana keep duking it out for highest income level and grow fastest program. Arkansas joins the fold of Montana, sets the framework to even get bigger and more universal. That’s great.

Unfortunately, as you know, there’s dates that are no longer in play. And we’re going to turn to our state relations director, Lauren Hodge, to talk about some of those in the Deep South about, while there’s still efforts around, there’s not a lot on the horizon in some of her states.

So Lauren, go ahead and talk about North and South Carolina, and others, please.

Lauren Hodge: Absolutely. Thanks so much, Robert. So I think we see the southern states winding down their sessions and really kind of trying to get their heads around what was an absolute crazy legislative session around the country, I think, as we dealt with not only COVID and budgets and everything else. So we’re seeing some states wind down. We’re still watching a few of them. And we’ll start at the Carolinas.

So, South Carolina does have an education savings account. That’s HB 3976, a bill that they have put in. And that would be for a low-income program, that I think the value is around $6,500 for that education savings account. Eligibility would be for low-income families and a couple of other possible carve-outs. We’re watching that one, but it’s not had much movement.

If we head up north to North Carolina, where there has been some movement and still is some possibilities there, HB 32 did cross over from the House over to the Senate. That bill we’ve talked about a little bit previously, it has a host of changes to the programs that are already in existence in North Carolina. The list of the changes to the programs is actually pretty numerous. I’ll highlight just a couple for the purpose of this podcast.

Probably the biggest one is the change from a set amount of the scholarship value—which they’ve had around $4,200, they set them out for their choice programs—to being a percentage of the actual state funding for that child. So, I believe, in HB 32, you have, in year one, 70% of that state funded percentage, and then 80%. So that’ll expand the value of the actual scholarship dollars and allow families some more options and some more purchase power in that state. Also included in that bill is the consolidation of the two special needs choice programs that are in existence in North Carolina into one program that is an education savings account.

So, for those of you that are familiar with North Carolina, you know there’s two choice programs specifically for special needs. There’s one that’s a voucher, and there’s one that’s an education savings account. What the bill’s contemplating is combining those two programs into one supercharged special needs education savings account so that those parents can customize their child’s education the way that works best for that child’s special needs and special abilities.

The third state, I’d just highlight for the podcast, that did introduce an education savings account bill would be Alabama. And that would be HB 633. They introduced it actually pretty recently in April. And it would create the state’s first education savings account. Eligible students on this program are for students who are children of active duty military, students with individualized education plans, IEPs, 504s, or foster children. So it wouldn’t be a low-income program, but it would be a program carved out for special needs population and also children who are dependents of military parents or the foster care system. The amount of that scholarship would be 95% of the state base amount per pupil. So a pretty high value for that actual education savings account, potentially.

So, we’ll be watching these. As things wrap up, we’ll see where things go. But hopeful that some of these states can increase their opportunities for all children in the states. If we’ve learned nothing else from the past 18 months, it has been just how important meeting children’s needs are, and that every child is at a different place and learns in a different way. So hopefully these states will join the trend and we’ll see what happens next.

Robert Enlow: Progress is sometimes slow, but it’s still progress. And that’s what you’re reporting in those states, there’s still progress being made, there’s still educational efforts going on, and there’s still a demand from parents to try and figure out how to get more options. So it’s great to hear that there’s still being progress made in those states. And we’re excited, at EdChoice, to continue supporting them.

But there’s also a lot of states still in play and even more likely to get things done at the end of this year. So now we’re going to turn to Jordan, who has got a bunch of states that are in play that he’d like to talk about and share with you on our April debrief podcast.

Jordan Zakery: Yeah, Robert, as you mentioned, session is not over for everyone, there are still states churning along. And just recently this month, Iowa had some movement on a piece of legislation; and that was House File 847. In that piece of legislation, there is an expansion of the current tax-credit program in Iowa, and that’s the School Tuition Organization Tax Credit. And what that would do, is that would raise the cap from $12 million to $20 million—so that’s a pretty significant increase in the cap—along with an improvement from the credit for donors from 0.65 of their contribution, or 65% to 75% of their contribution. So there’s also that language to help encourage donations along with the cap increase.

Additionally, in that piece of legislation, there’s language for the individual Tuition and Textbook Tax Credit program. So, in that program, in that language, what’s going to happen for that program, is that instead of 25% of your first $1,000 being honored with the tax credit of that value, you get 25% of the first $2,000 spent. So, essentially, you get a credit return now of a maximum of $500, opposed to $250.

So, there’s that in Iowa. There’s also still potential—we’ll see how it goes—there’s still a potential for a publicly-funded ESA. And that’s something we’re going to have to update the listeners on at another time.

But there’s many more states that still have things going on. New Hampshire is one of them that comes to mind. They have a really, really great proposal still alive in the legislature, that’s Senate Bill 130, and that’s for education freedom accounts. Education freedom accounts, they’re going to be available for every student in the state that’s under 300% of federal poverty level. Right now, that’s looking at like 40% of the students in the state. That’s an average account of $4,800. And it would be a really great addition to the current tax-credit program in New Hampshire. What I found really interesting about this program, is that it’s also available to current public and private school students. So there’s no prior public requirement. So everyone just keep your eyes out for New Hampshire, they have great things going on there.

And then, on the horizon, there’s Pennsylvania. They have a couple different pieces of legislation that will be dropping soon. And one of them is going to be a large education omnibus bill that will include an ESA for low-income families, for families in low achieving school districts, and for families that have military background. And that could be current or past military service, that also extends to members of the National Guard and reserve members.

So along with that ESA proposal in Pennsylvania’s omnibus bill, they also have a proposal for expanding the current tax-credit scholarship programs. Those tax-credit scholarship programs are the Opportunity Scholarship and the Educational Improvement Program. For these, the proposal is this: if, in the prior year, there’s been an aggregate of 90% of the total amount of tax credits available under the law, then, for the following year, that amount of tax credits shall increase by 25%.

So, what does that mean? That means more scholarships because there’s an increased cap. Currently, the Educational Improvement Tax Credit Program has a $185 million cap, while the Opportunity Scholarship Tax Credit Program has a $55 million cap. So if 90% of those dollars can be raised, there will be a total of a 25% increased cap to those programs. Just another way that students can have more educational opportunity and have access to the resources they need.

Other than that, there’s still the opportunity in other states to see legislation pop up. But those are some of the states that we’ve been really looking at, that they are still fighting, and parents are still advocating during sessions. So hopefully we’ll be hearing more great things from these states next time we jump on this podcast.

Robert Enlow: It’s really nice and exciting to get to a point. And I’m sure our friends in the charter movement must love this, that every state has some version of charter schools almost, except maybe one or two. I can’t remember right now. But even West Virginia got charter schools, and even Kentucky got some version. Very, very poor bills. We want the good choice bills to pass, but it’s also nice sometimes to see that map fill up. And look, the map is filling up. We have so many states that have seen the growth of school choice and seeing them in, or introduced them in actual choice. And it doesn’t look like it’s going to stop.

And that’s just because parents want it, right? We all know this. Parents and teachers and society wants to get a better educated society so that we can have more successful lives and our society can continue to flourish.

So, great roundup of so many things going on in the states. And I guess I want to do a quick roundup for each you. In five words or less, what do you think the end of the year will look like?

Go, Jason.

Jason Bedrick: Huge. I’ll give this prediction. It’s not five words or less, but I think that there will be at least 15 states that have passed a new or expanded program. And I think there will be at least five new ESAs. We already have three new education savings accounts policies, I think we’re going to have at least five new ones. Which means that, 2021, we’ll have doubled the number of ESAs.

Robert Enlow: That’s incredible. Jordan, five words or less.

Jordan Zakery: The year of school choice, that’s what I’m thinking about. Like Jason touched upon, so many programs. This year’s really been the year of school choice and it’s truly exciting.

Jason Bedrick: Educational choice.

Robert Enlow: Educational choice. Both of you can’t keep the five words.

Let’s see if Lauren can keep to five words or less.

Lauren Hodge: Leave it to the lawyer to follow the brief: more hope for more families.

Robert Enlow: Okay. I love that. Your hope for more families. That’s great.

Look, we’re excited, at EdChoice, on how things are going. We’re looking forward to the end of the year and for next year. Thank you so much for joining us on our April roundup of our monthly state debrief podcast. You can download the podcast at every one of the normal venues to download podcasts.

So, again, thanks for joining us. Hope you have a great day.