The Case For School Choice: United States

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No country in the developed world needs school choice more than the United States. By grade eight, American children rank last among all the major industrialized countries in mathematics and science (Martin 1997), and the longer students stay in school, the worse the disparities become. The statistics are far worse than the national average among the low-income and minority populations in inner cities. Most inner-city children have no alternative but to attend some of the world's worst schools, many of which fail to graduate more than half of incoming high-school students and do graduate many who, after 12 years of schooling, are still illiterate and innumerate. It is no exaggeration to call this a national crisis, which decades of centralist reforms have done nothing to alleviate.

History

New paradigms of public education are developing in the United States from a collection of reform movements, each with growing numbers of proponents, in states across the union, each challenging the hegemony of the government monopoly and leading towards legislative change. These movements differ from those school-choice movements in other countries, where major popular support developed after changes in legislation. In the United States, changes in public policy have generally been instigated by the popular support of grass-roots actions for education reform. The continuous growth of these movements has been fostered by concerned business people, charitable foundations and non-profit groups, teachers, civil rights activists, politicians, and hundreds of thousands of parents.

Support for school choice in the United States is not linked to any social or demographic group--its proponents are poor, middle-class, and rich; black, white, and Hispanic; Republican, Democrat, and independent. Its growth has been slower than in the other countries because, until recently, the popular ground-swell has lacked financial and political clout. Because advocates of school choice represent a variety of social, economic, cultural, and political perspectives, they have never before united on a political issue. Its opponents, conversely, have been well financed, well organized, and cohesive. These opponents include the two national teachers' unions, the National Education Association (NEA) and the American Federation of Teachers (AFT)--groups that do not distinguish between publicly controlled schools and public education.

The school-choice movements began to form a decade ago in response to the declining quality of public education in the United States.2 Of particular concern was the state of education in the inner cities, where children from minority and low-income families in government schools seldom finish high school, learn to read, or acquire the basic skills needed to earn a living (Fuller 1997). Each movement began with the recognition that the management of education by municipal monopolies rather than by parents is deeply flawed. Central authorities imposed increasingly rigid and detailed regulations, which cost ever more and produced even worse results. The initiatives that developed from these movements all focus on parental choice and educator accountability.3 They were charter schools, public vouchers, private vouchers, and education tax incentives.

American school-choice initiatives are particularly useful for this study because they have been carefully evaluated. Several well-regarded American universities and institutes have undertaken detailed, scientific studies of the effects of these reforms on student learning. For the first time in education history, researchers studying the effects of vouchers have been able to control for the effects of selectivity on student test scores. That is, researchers were able to make sure that the students who used vouchers were not brighter and did not have more motivated parents or more advantageous family backgrounds than did the students at government schools to whom they were compared. The studies were thus able to determine that the improvement in voucher-student test scores was due to the voucher and not to the students' greater inherent aptitude for learning. This is a landmark in education research. It predicts the impact that systemic education reform might have on the student population as a whole if parental choice became more widely available.

The Charter School Movement

Charter schools are a means of encouraging school diversity and choice within the publicly controlled system. A public sponsor, usually the state board of education or the local school board, grants the school a charter to supply a clearly defined educational program. Publicly funded, these schools cannot charge tuition, and their charters are subject to periodic renewal by the public sponsor. The best charter schools are much like tuition-free independent schools: they are exempt from many of the local and state regulations governing municipal schools, they have fiscal and legal autonomy, and they can hire and fire teachers as they see fit, regardless of certification. Like independent schools, they will close if parents do not actively support them. Strong legislation sometimes guarantees charter schools funding per student equal to municipal schools and a sponsor that grants and renews charters on sound, objective grounds. However, financial and political conditions are often more challenging for charter schools. The laws governing their establishment vary: some states provide start-up grants, on-going technical assistance, or both; many states do not. In some states, existing non-sectarian independent schools have been allowed to convert to charter status (Finn, Manno, and Bierlein 1996: 48).

The charter school movement has grown exponentially since Minnesota enacted charter legislation in 1991 (see figure 1). By the spring of 1999, there were 1,205 charter schools in operation across the country, serving more than 300,000 students, more than tripling the numbers of schools and quadrupling the number of students in two years (US Department of Education 1998; Center for Education Reform 1999).

Growth has not been evenly spread. States that provide charter schools with autonomy and support have a strong and rapidly growing charter school movement; in other states, the education monopoly has paid only lip service to choice, agreeing to charter schools in principle but denying them in practice. As a comprehensive survey by the Hudson Institute stated, "some state laws are more generous in bestowing the charter designation than in actually liberating schools to make key decisions about programs, staff, and resources" (Finn et al. 1996:16). Not surprisingly, the states with strong charter legislation, that is, policies that encourage distinctive schools, have 100 times the number of charter schools of states with weak legislation (Finn et al. 1996: 47).

As of August 1999, 37 states had charter legislation and several more were considering it. There were charter schools operating in 27 of these states (Center for Education Reform 1999). Arizona, with one of the strongest charter laws, leads the country with more than four percent of its students studying in charter schools. California, Michigan, Colorado, and Massachusetts also have strong legislation and a growing supply of these schools. California is the first state to have implemented districts where all publicly funded schools are charter schools: Pioneer District and the Kingsburg Joint Union Elementary School District in northern California. A few states, however, have such weak legislation that no charter schools have been established at all. Despite President Clinton's endorsement of this educational alternative, currently less than one percent of American students attend charter schools (Vanourek 1998).

The educational establishment in the United States was initially resistant to the concept of charter schools. Opponents feared that they would become schools for the social and economic elite. They predicted that charter schools would skim off the best students from government schools leaving only the most difficult pupils behind: the slow learners, those with behavioural problems, and the underachievers. Perhaps the teachers' unions feared that these new schools would demand more from teachers in exchange for inferior pay and worse teaching conditions. They certainly meant a loss of members for teachers' unions as union membership is not required for teachers in charter schools.

Charter School Accomplishments

A growing body of research on charter schools has succeeded in putting these fears to rest. A study conducted in 1997 by the United States Department of Education compared the demographic characteristics of charter schools with other government schools (see figure 2). It found

no evidence to support the fear that charter schools as a group disproportionately serve white and economically advantaged students . . . Charter schools are similar to their districts on student racial/ethnic and income level characteristics, but about a third are more likely to serve students of color and low-income students. (U.S. Department of Education 1998: 7-8)

Also contrary to forecasts, charter schools are serving many disabled or impeded children.4 The Hudson Institute's study finds that charter schools attract low-income children, children with learning and behavioral disabilities, and children at risk, who were often served inadequately by their municipal schools.

Parental satisfaction is manifested by the waiting-lists at nearly all charter schools and by the intention of the vast majority of parents to keep their children in charter schools as long as they are available (Vanourek et al. 1997: 8).

Studies find that charter schools provide a range of benefits for children and teachers. Perhaps the most significant finding is that students in charter schools make greater academic strides than do their peers in municipal schools. According to research conducted by the Center for School Change at the University of Minnesota, charter school students are making remarkable academic gains. The 20 charter schools in their multi-state sample administered at least two rounds of the same test to their students. They found that charter school students made gains of 1.3 to 2 years in various subjects (Cheung, Murphy, and Nathan 1998).

In only a few years, charter schools have won the approval of many teachers and have even gained the support of teachers' unions. When they switch from the existing government school system to charter schools, teachers sacrifice job security but are well compensated in other ways. The charter-school teachers interviewed for the study by the Hudson Institute stated that they preferred the more "familial school atmosphere, sensible management decisions, dedicated colleagues, and enhanced personal and institutional accountability" found in the charter schools (Finn et al. 1996: 4). Researchers at the Center for Market-Based Education at the Goldwater Institute found in a study of Arizona's charter schools that "most established charter schools set their salary schedules 5 percent higher than traditional public schools, with merit pay and pay for special skills raising the overall average to 6 percent higher" (Solomon and Gifford 1999). Performance-based incentives, flexibility, the teaching environment, and the opportunity to participate in important educational decisions attract teachers to charter schools.

Charter schools have also attracted a significant number of students back to "public" schooling. Four percent of students enrolled at charter schools had previously dropped out, eight percent came from independent schools, and two percent had been home-schooled (Finn et al. 1996: 3). Nearly all charter schools receive less money per pupil than other government schools, and some school districts even profit financially from them. Despite this, many superintendents and school boards feel threatened by the competition that charter schools present. (Finn et al. 1996: 4).

American charter schools have been aptly dubbed "America's educational research and development centers" (Manno et al. 1998: 2). It would be impossible to describe adequately the myriad educational innovations taking place between their walls. Many create new learning environments by organizing school time, spaces, and structures differently, in ways that meet their educational goals better than the usual timetable of 40-minute lessons, six-hour days, and nine-month years. Some, like the Livingston Technical Academy in Howell, Michigan, focus on school-to-work skills and combine technical and academic tuition with apprenticeship programs. Some focus on the arts or sciences, some on international studies, many on students with learning challenges or those at risk of dropping out of school. Nearly all charter schools have high expectations for their students and a clear educational philosophy, and demonstrate improved results by their students.

Not all charter schools have been successful. Twenty-nine have been closed for failing to meet minimum standards agreed upon in their charter (Pennar 1999). The closure of failing charter schools is unfortunate but if the movement is to live up to its promise of public accountability, closures will occasionally be necessary. Charter schools must be held rigorously to account if they are to maintain their integrity and offer the public an alternative more promising than existing government schools.

Though their numbers are small, their challenges great, and their eventual impact unknown, charter schools have already accomplished two important feats. They have brought to the United States a new generation of accountable, independent, government-funded schools; and they have broadened the common conception of public education. The following movements expand that conception further.

The Public Voucher Movement

The public voucher movement is a landmark educational reform. It may mean not only the end of the entrenched paradigm of public education but also, if its proponents are to be believed, provide a vital step towards racial equality, social integration, and urban economic renewal. The first two programs, Milwaukee and in Cleveland, demonstrate that, in practice, inner-city, public voucher programs live up to these expectations.

Milwaukee

Milwaukee Parental Choice Program (MPCP) is the oldest and longest-studied public voucher program in the United States. It was sponsored, in 1990, by African-American State Representative Polly Williams in response to high drop-out rates, disgraceful test scores and an unacceptable disparity in educational opportunity between Milwaukee's low-income and middle-income families.5 The program initially allowed one percent of Milwaukee Public School (MPS) students from low-income families to attend independent, non-sectarian schools. Students applied to the participating independent schools and, once their family incomes were verified, were selected randomly by the schools for the places available. This voucher education cost the public less than half the cost of sending the students to a Milwaukee government school: US$2,729 per pupil for independent schooling rather than US$6,656 per pupil at MPS (Greene, Peterson and Du 1997: 13).6

The constitutionality of MPCP was challenged with a union-backed lawsuit, but the state's Supreme Court declared the voucher program constitutional in 1991. Milwaukee's legislation establishing the public voucher program prohibits independent schools from enrolling more than half of their students with vouchers. This regulation, and the ongoing lawsuits imperiling the program's survival, discouraged the establishment of any new elementary schools. Choice was, therefore, at this time still limited to the few existing secular schools with capacity to meet the voucher demand.

In 1995, the Wisconsin legislature expanded Milwaukee Parental Choice Program from 1 percent to 15 percent of MPS students and, for the first time, allowed participants full choice of religious schools. Expansion was important because religious schools accounted for 90 percent of Milwaukee's established independent school capacity (Greene, Peterson and Du 1997: 9). Only days before the start of the new school year, a court injunction halted the program in response to an objection raised by the Milwaukee Teachers Education Association and the American Civil Liberties Union that government funding of religious schools was unconstitutional. Thousands of children would have lost their place at school had not a local private voucher program raised $1.6 million from private Milwaukee citizens and businesses in only a week. Thus the community enabled 4,650 children to start the new school year in their parents' choice of school without government assistance.

In August 1996 and August 1997, the Wisconsin Supreme Court twice upheld the injunction to prevent public vouchers being used at religious schools but, in early 1998, the Wisconsin Supreme Court voted to uphold the expanded Milwaukee Parental Choice Program, after giving careful consideration to its constitutionality.7

Research teams at the University of Wisconsin and Princeton University have closely studied MPCP. The team from the University of Wisconsin found that "[i]n all five years, parental satisfaction with choice schools increased significantly over satisfaction with prior public schools" (Witte, Sterr and Thorn 1995). Education reporter David Ruenzel noted five years into the program:

the Milwaukee choice plan has . . . deeply involved long-alienated parents in their children's schooling. This is of crucial importance, standing as a powerful retort to educators who have long suggested that parents burdened by social and economic problems could devote but minimal attention to educational issues. (Ruenzel 1995)

Findings based on a randomized experiment by researchers at Harvard and Princeton showed "statistically significant" efficiency gains (Greene, Peterson and Du 1997: 2). The evaluation by the team from Harvard found that academic improvement by students on the voucher program began in the first year of attending a choice school and increased the longer they were enrolled. Gains in mathematics scores were small in the first two years but greater in the third and fourth year at independent schools, while improvement in reading scores was significant at first and increased slowly but steadily in the following years (Greene, Peterson, and Du 1997: 17). The team from Princeton did not have access to reading-score data but found "the causal effect of private schools on yearly increases in math scores . . . is about 2 percentage points a year" (Rouse 1996). Both studies recommended that more, and larger, choice programs be implemented and studied to confirm these results. The Cleveland public voucher program does just that.

Cleveland

The Cleveland Scholarship program, currently in its third year of operation, was the first publicly funded American voucher program to include both parochial and secular schools. The scholarship covers up to 90 percent of a student's tuition to a maximum of US$2,250, the equivalent of just over a third of the cost of sending a child to a Cleveland government school.8 In its first year, the program provided educational vouchers for 1,996 low-income students,9 chosen by means of a lottery. The planning and administration of the lottery was impeded by a lawsuit launched by the American Federation of Teachers and others, which was only resolved in favour of the voucher program two weeks before the school year commenced.

The study of the Cleveland program by Greene, Howell, and Peterson (1997a), like the research on Milwaukee's voucher program, is based on academic testing of students and interviews with parents. It shows two "very important" reasons parents applied for a voucher: first, parents sought "improved academic quality" in their children's education (85 percent); second, they looked for "greater safety" in their school environment (79 percent). Contrary to the prediction of the American Federation of Teachers, "religion" and "friends" were "very important" reasons to leave the government school for only a minority (Greene, Howell, and Peterson 1997a: 27, 53).

The report found that virtually all scholarship recipients were "far more satisfied" with independent schools than the families attending government schools, and more satisfied than those who were offered and declined a voucher.

It is interesting to note that this study also found that wealthier families were more likely to be satisfied with government schools than were impoverished families.10 No such difference was found among voucher recipients attending independent schools. Voucher programs, therefore, appear not only to increase parental satisfaction with schools but also to give children from different social and economic backgrounds better educational opportunities than does the present system of "public" schooling (Greene, Howell, and Peterson 1997b: 17).

Other Developments

These findings have contributed to a growing political interest in publicly funded vouchers across the United States. In June 1998, Puerto Rico approved the creation of a US$72.3 million public scholarship fund to enable students from preschool to university to attend the school of their choice (The blum Center for Parental Freedom in Education 1998). In April 1999, Florida passed a bill to provide US$4,000 vouchers to as many as 170,000 students in the state's worst municipal schools (Investor's Business Daily 1999b). Six other states and New York City are also currently considering the establishment of public voucher programs.

The Private Voucher Movement

Private voucher programs are being established across the United States to provide a small but growing percentage of impoverished families with a means to exit failing government schools. They advance a formula of "public education" that is financially and philosophically independent of the government sector. Privately funded vouchers are important to American education both because they are helping individual students and because they are focusing public attention on the need to improve the educational choices available to low-income families.

The History and Growth of Private Vouchers

Since 1991, when businessman J. Patrick Rooney launched the first program in Indianapolis, private vouchers have spread in size and significance to 41 cities across the country, with at least 15 new programs scheduled to begin in 1999 (National Scholarship Center 1998: 4). Participants are low-income families, almost always inner-city residents and predominantly minorities (National Scholarship Center 1998: 1; Dewey 1998).

A few voucher programs are funded by one major sponsor but the majority are supported by individuals, foundations, and corporations from the community. Private spending on vouchers is growing exponentially: in 1997/1998, it totaled US$11.6 million, and the cumulative private, spending on vouchers from 1991 to 1998 totaled US$45 million. In the last year, a great wave of private investment has swept the movement, bringing total commitments to $250 million by the end of 1998. In 1997/1998, 64,000 children applied for voucher places and there were enough places to serve 12,684 of them. The 1999/2000 school year will see the number of voucher places leap to over 50,000.

Participating independent schools charge tuition ranging from US$800 to US$6,000 and scholarship awards range from US$150 to US$4,000. Nearly all the programs require parents to contribute some portion of the tuition (National Scholarship Center 1998: 1).

As long as inner-city government schools continue to fail the majority of students, voucher programs are unlikely to raise enough funding to satisfy the demand among parents for independent schooling. As private voucher programs--and their waiting-lists, their funding, and the public's awareness of them--have grown, the education monopoly has begun to respond to the competition. When voucher programs allowed only one or two students in any government school to leave, the school boards ignored them. More recently, programs have found that by offering vouchers to every student in a small, specific group of under-achieving, low-income students, they can spur improvement by threatening the municipal school board with a significant loss of students. In this way, they may help not only the students who accept the voucher, but also those who remain in the municipal school.

Three landmark voucher initiatives show the growth in scope and potency of the private voucher movement over the past two years. In 1997, a woman donated US$1 million to establish the first school-wide voucher program for every student at one failing government school in Albany, New York. In 1998, a charitable organization committed US$50 million to establish the first district-wide private voucher program in the Edgewood district of San Antonio, Texas. The same year, two men pledged US$100 million to establish the national Children's Scholarship Fund to cover tuition for low-income children in more than 40 cities and three whole states across the United States.

Giffen Memorial Elementary School

The first case is that of Virginia Gilder and the Giffen School in Albany, NY. In the early 1990s, Gilder sponsored a voucher program for students at several poorly performing municipal schools in upper New York State. Each summer, a few students at each of the schools won a voucher and transferred to an independent school. Meanwhile, the government schools' dropout rates remained unacceptably high, their literacy and numeracy scores remained unacceptably low, and the school board made no apparent attempt to improve them. Gilder decided to focus her efforts on the worst school, Giffen Memorial Elementary.

At Giffen, only half of the grade-three students could read at the minimum state standard and their results deteriorated the longer they attended. Gilder offered every child at Giffen a scholarship of up to US$2,000 per year, or 90 percent of the cost of an independent school, for three to six years. Thirty-four percent of the low-income parents accepted her offer, even when asked to pay a share of the tuition. For the first time the school board was forced to account for and defend its use of public funds.

The story made national news (Lee and Foster 1997, among others) and roused the municipal school board to make some changes. The principal and 12 teachers were immediately replaced and the board invested US$125,000 in the school (Carroll 1997, Gilder 1998). The result was a better education both for the students who accepted a voucher and for those who remained at Giffen.

Gilder's donation inspired an explosion of interest and investment in private vouchers. Last year, The Children's Educational Opportunity Foundation of America (CEO America) and physician James Leininger pledged to raise at least US$50 million over the next ten years for the United State's first district-wide private voucher program, in the Edgewood school district of San Antonio, Texas. The same year, entrepreneurs John Walton and Ted Forstmann pledged a US$100 million challenge grant to establish the Children's Scholarship Fund (CSF) for students in 40 cities across the country.

The Edgewood-Horizon Project

In the first year of the Edgewood-Horizon Project (1998/1999), 837 of the district's 14,000 students took advantage of the voucher offer.11 District officials predicted that the vouchers would skim off the cream of the students in government schools or prompt a mass exodus from government schools. They have been proven wrong. Test results show that the students taking up the voucher are neither the district's high academic achievers nor children of its social and economic elite. On average, voucher students leaving the government school district scored 4.8 in reading and 4.9 in mathematics on a nationally normed 10 point scale where 5 is considered average. The ethnic makeup of voucher students was 92 percent Hispanic, close to that of the district as a whole, and their average family income was US$13,492 (CEO America 1999).

The Edgewood school district has responded by trying harder to attract and keep students. The President of the school board, Manuel Garza said, "its not that we weren't aware that we needed to make changes, but [the program] does put added pressure on us . . . We need to make sure residents choose Edgewood schools first" (Investors Business Daily 1999). The Superintendent of Edgewood schools commented on the voucher program by saying, "this is the time not to stop improvement but to accelerate improvement" (Waco Tribune-Herald 1998). For the first time, Edgewood opened school doors to students from other districts, and 200 students transferred into the district. The district also hired a consultant to develop a constructive response to the challenge of competition but declined the offer from a private foundation to cover the expenses. Unfortunately, the school board voted not to cooperate with an independent evaluation of the Horizon program, undertaken and financed by Mathematica Policy Research of New Jersey. The superintendent of schools explained this decision by saying that she was "concerned that we can't control the conclusions drawn by outside organizations" (CEO America 1999).

Children's Scholarship Fund

The Children's Scholarship Fund (CSF) has taken the private voucher movement to a new level of size and significance. Less than nine months after its establishment, the US$100 million fund had raised an additional US$100 million in matching grants and US$55 million in additional donations. CSF plans to distribute 40,000 vouchers having a total value of US$170 million for the 1999/2000 school year: 35,000 of these vouchers will be distributed through local organizations established in 43 cities and three states while another 5,000 will be available to low-income children who apply from any other part of the country. CSF has made private vouchers a movement of national significance.

Assessment of Private Vouchers

The exponential growth of the private voucher movement reflects common recognition that independent schools often succeed in the same communities and with the same students failed by the government schools. It also suggests that there is a wide base of support for educational choices that are neither restricted by public approval nor regulated by government administration. The question that must then be answered is, do vouchers really improve the academic performance of students?

Long-standing research comparing government schools and independent schools indicates that the educational value added by independent schools is greater than that added by government schools (see Coleman, Hoffer, and Kilgore 1982; Powell, Farrar, and Cohen 1985; Chubb and Moe 1990). New research on the academic achievements of voucher recipients in Milwaukee, Cleveland, and New York confirms this (Greene, Howell, and Peterson 1997a, 1997b; Greene, Peterson, and Du 1997; Peterson, Myers, Haimson, and Howell 1997; Peterson, Myers, and Howell 1998). The most convincing example comes from Harvard's study of the New York's School Choice Scholarship Program.

Evaluators from Harvard and Mathematica Policy Research used the private New York School Choice Scholarship Program to conduct the first "natural randomized experiment" on the effects of winning a voucher on students and their families. Data on the family background and academic ability of applicants were collected before a lottery allocated the applicants randomly to a voucher-winning group and a control group.

After only one year, voucher winners out-performed the control group by 2 to 6 percentile points. Parents of voucher students reported that they were much more satisfied with their children's education, and that students' safety, tardiness, vandalism, absenteeism, fighting, cheating and racial conflict were not such problems in their new schools as they were in the control group's schools. Voucher parents were nearly four times more likely to give their chosen school an "A" than were parents in the control group were (Peterson, Myers, and Howell 1998).

This research suggests that academic failure of low-income students is by no means inevitable. Independent schools succeed with students better than government schools do because they have "clear school goals, rigorous academic standards, strong leadership by the principal, teacher participation in decision-making, parental support and co-operation, and high expectations for student performance" (Chubb and Moe 1990: 16). These things are impossible to legislate and can only be cultivated when schools are allowed to be autonomous and accountable to the families they serve.

Privately funded vouchers give low-income parents the power to seek the education they want for their children. They encourage grass-roots action to promote public vouchers and prompt municipal schools to respond to community demands for better teaching, better learning environments and better academic results.

Education Tax Incentives

The American public has clearly become less satisfied with the government's management of education and is devising ways to regain control of schooling. Charter schools and voucher programs reflect this inclination, and so does the development of the United States' newest education policy instrument: tax credits. Tax credits for educational spending developed from the premise that taxpayers and parents should have some power to direct their school taxes to their preferred system of education. Tax incentives can be designed either to reduce the barrier to independent schooling for middle-income and lower-income students or to provide the families at the very bottom of the socio-economic ladder with the option of independent schooling for their children.

Growing numbers of politicians and groups supporting citizens' rights are advocating tax credits as an alternative to public vouchers. In Minnesota, Iowa, and Louisiana, tax incentives have been enacted to reduce the financial barrier to independent school enrolment, making it possible for a greater proportion of the population to afford independent schooling for their children. In Arizona, the tax-credit program encourages taxpayers to help low-income families afford the education of their choice. Other tax-credit proposals are currently being fought for in Colorado, Idaho, Virginia, Georgia, New York, Michigan, and Idaho. (For further information about these proposals, see the Blum Center for Parental Freedom in Education 1998.)

Arne Carlson, the Governor of Minnesota, was the first state governor to promote educational choice through tax incentives. His scheme has increased independent school enrolment in Minnesota by 20 percent over the past decade (Teasley 1997). Families with lower incomes (below US$33,500) can earn tax credits for educational expenses while families with higher incomes receive tax deductions for their children's learning expenses. School tuition, however, can only be deducted from income (Center for Education Reform 1997: 29). Small tax credits are available for tuition expenses for Louisiana and Iowa residents with dependent children.

Arizona's Tax Credit

Arizona takes the idea of claiming the educational expenses of one's own children a step further. Arizona families now get a tax credit for helping to expand the educational options of others' children. Since January 1999,12 the state's residents have been able to claim an income-tax credit worth up to US$500 for donations to private voucher programs based in Arizona. If an Arizona taxpayer donates up to US$500 to a private voucher program, the full amount may be subtracted from the donor's state income-tax bill. Parents may not claim the credit for tuition paid for their own dependents.

For a donation to qualify, it must be given to a charity that can prove it administers vouchers efficiently and offers them for use at more than one school. The tax incentive is estimated to result in donations to these charities of US$50 million each year and is likely to provide vouchers to 200,000 children per year (Hoff-Hay 1997). This will be a tremendous boost to the private voucher movement in Arizona, which had only raised funds for 140 vouchers before the tax credit was passed.

The Arizona tax credit ensures that each time a student transfers out of the government-school system with a tuition voucher, the children who are left behind also benefit. When a student leaves a government school, all but US$500 of the US$4,500 that Arizona spends per pupil stays in the government system. The resources available for the remaining students will therefore grow by US$4,000 for every voucher used. The tax credit gives independent and government-run schools a new incentive to develop programs that cater for students served poorly by their local government school.

Other Tax Credit Proposals

Several other compelling versions of the educational tax credit have been proposed and are under consideration in other states. The National Center for Policy Analysis and CEO America have published their own proposal, The Tax Credits Program for School Choice (Morrison 1998). It recommends taxpaying individuals and businesses receive a dollar-for-dollar tax credit up to US$1,000 for tuition paid to non-government schools, for donations to private voucher programs or for home-schooling expenses. Every dollar credited to taxpayers for these expenses would be taken from the budget of the school district in which the student beneficiaries lived. Anyone, including a parent, who pays the tuition of a child attending an independent school, could claim US$1,000. For instance, an individual or business could pay US$1,000 per child for each of ten children and claim US$10,000 in tax credits. However, the credit could only be claimed once per child, so where independent-school tuition exceeds US$1,000, only the first US$1,000 could be claimed. If, for example, three taxpayers contributed US$1,000 each to pay one child's US$3,000 tuition, only one of them could claim the US$1,000 credit.

A tax-credit program would highlight differences in cost and value between educating a child at a municipal school versus an independent institution. Few people realize that the majority of independent schools cost much less per student than existing government schools. In 1993/1994, according to the National Center for Education Statistics, the average cost per pupil at American independent schools was US$3,116 compared to US$6,857 at government schools--less than half. By increasing the funding available per student in the government school system, tax credits would increase this difference in cost between government and independent schools and eventually impel a reduction in school taxes.

Tax credits for education encourage both school efficiency and civic responsibility. Where government schools are good, few people will redirect their taxes to independent schools; but where government schools are failing, parents may send their children and taxpayers may direct their money to independent alternatives. This policy instrument reduces government coercion and facilitates access for all families to the education of their choice. Diverse, innovative, and accountable schools are likely to flourish a result of this inexpensive government instrument.

Tax credits are potentially superior, in the long run, to either charter schools or public voucher programs because they keep educational funding and decisions in private hands. The government is less likely to interfere with the educational autonomy of an independent school if the two remain at arm's length from one another. A government introducing public vouchers may not perceive them as the means to expand its fiefdom but its successors may. The Swedish model of school choice has proven this danger. Only a few years into the voucher experiment, the government decided that no school should be allowed to charge tuition or select its students. Public funding has led to a loss of independence for all Swedish independent schools. Elected officials, if given the power, can seldom resist the temptation to make decisions that are better made by those primarily affected by them, parents and educators.

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