Getting Some Schooling: Feds Can Learn from Arizona's Education Tax Credit

Posted on August 04, 2002 | Type: Op-Ed
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It's August now and that means the Back-to-School season is just around the corner. Soon, area merchants will hit the airwaves offering deals on everything from lunchboxes to Levi's to laptops, explaining why their products and prices beat the competition.

With all this advertising for the little things, wouldn't you expect some commercial attention focused on the most important factor in a child's back-to-school success: the schools themselves? Unfortunately, few schools have reason to advertise. Children are assigned to their school by zip code. And parents often can't afford private school tuition, even if they're dissatisfied with their local public schools.

Many Arizona families face this situation. U.S. Secretary of Education Rod Paige recently announced that 8,600 public schools nationwide were in danger of failing, and 334 of those schools are right here in Arizona. Not surprisingly, these schools are populated primarily with students from low-income families.

Fortunately, Arizona has a program to help those children, and it's drawing the attention of members of Congress. Since 1997, Arizona has allowed state taxpayers to take a dollar-for-dollar tax credit for charitable donations made to nonprofit groups that help students afford private school tuition. Last year, the scholarship program funded nearly 17,000 scholarships. According to Cato Institute researchers, around 80 percent of those scholarships are awarded to children on the basis of financial need.

Numerous lawmakers in Congress, including Arizona Senator Jon Kyl, have proposed federal legislation based on this promising program. According to projections released August 1 by the Goldwater Institute, a $500 federal scholarship tax credit could help more than 1.5 million low-income students transfer into new schools. Across the nation, state and local governments could save upwards of $11 billion as those students transfer out of the traditional public schools and off of school budget ledgers.

If those savings were reinvested in public education, the size of public school classrooms would decrease by 3.5 percent nationwide. Regardless of how the savings are spent, the scholarship program would wrest billions of federal dollars from Beltway bureaucrats and win a watershed victory for local control of education. The beneficiaries would be parents, students, taxpayers and local governments.

For Arizona, a $500 federal scholarship tax credit would result in 14,000 scholarship transfers, saving the state more than $66 million in public school costs per year.

Research shows that private scholarship programs deliver results. For instance, a recent Harvard University study found that African-Americans receiving private scholarships in New York scored significantly higher than their peers on standardized tests. Overall, more than a dozen independent studies have found that scholarship programs benefit children who participate.

School choice also spurs public schools to improve. Harvard University economist Caroline Hoxby found that even in metropolitan areas with limited competition from private schools, public schools provide significantly better outcomes at a lower cost. And in a recent analysis of 35 empirical studies of school choice programs, Columbia University researchers found that a "sizeable majority report beneficial effects of competition across all outcomes."

Imagine how different the American education system would be if parents and local officials--not federal bureaucrats--controlled our education dollars. Families would shop for elementary schools, just as they do for colleges.

Market competition is what gives Americans our amazingly abundant supermarkets; the lack of competition gave the old Soviet Union its bread lines. Allowing parents to pick their children's schools would attract a diverse spectrum of entrepreneurs and innovators seeking to cater to their needs by providing superior services. For millions of American children, these improvements could mean the difference between a lifetime of hope and learning and a lifetime of illiteracy and despair.

Who knows, letting parents choose schools may mean more Back-to-School advertising next year. Some schools might boast of their test scores, or the variety of electives they offer. Others might boast of their success in helping children with learning disabilities.

That's an advertising blitz we all can look forward to.

--Dan Lips is an associate scholar with the Goldwater Institute and author of a study, "The Arizona Scholarship Tax Credit: A Model for Federal Reform," available at the Web site.

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