One issue that is shaping up to be a major focus of the next legislative session is school choice. Texas came close to passing a bill last legislative session that would have made up to $100 million in tax credits available annually for businesses donating to scholarship funds. But while the legislation passed in the Senate last year, it failed to reach a vote in the House. For the upcoming season, Lt. Gov. Dan Patrick has vowed to pass an even better tax-credit scholarship program along with other school-choice legislation.
And if the issue of school choice needs any further impetus, President-elect Donald Trump last week named Betsy DeVos, a conservative activist and billionaire philanthropist who has pushed for private-school voucher programs nationwide, as his nominee for education secretary. The nomination highlights Trump’s vow on the campaign trail to put “school choice” — expansion of taxpayer-funded charter schools and vouchers for private and religious schools — at the center of his efforts on education.
Texas is ranked anywhere from 10th to 39th based on 2015 reading and math assessments completed by fourth and eighth graders through the National Assessment of Educational Progress performed by the National Center for Education Statistics. Other rankings place the state even lower, such as the “Quality Counts” report from Education Week which ranked Texas 43rd. The state ranks 38th in per-pupil spending, about $2,670 below the national average and far behind some of our major competitors for economic development. Moreover, Texas has fallen further behind in other areas in recent years.
In general, there are three types of school-choice legislation that are either being proposed or have been implemented around the nation. The most commonly referenced form of school-choice legislation is the use of school vouchers. Also referred to as opportunity scholarships, vouchers are state-funded scholarships for a student to attend a private school rather than a public school. The idea is to take the money that would have been allotted to a public school for a student and instead make that money available to meet the costs of private schools. There are currently 13 states plus the District of Columbia that have implemented some version of a school-voucher program.
Another approach, which appears to be the current Texas buzz word, is known as education savings accounts (ESAs). In an ESA system, restricted-use debit cards are issued to participating parents with a portion of state-funding in the form of a grant already loaded on the card. Like vouchers, this program redirects part of the per-student funding that a public school would have received for the student. However, since the money is delivered to the parents instead of to a private school, parents have even greater freedom to decide the areas in which to spend those funds, such as private-school tuition, home-schooling materials, online courses or transportation to school. There are five states that have adopted ESA programs.
The last major type of school-choice legislation — the type which the Texas Senate passed in the previous session — employs use of scholarship tax credits. These programs allow individuals and/or corporations to receive a tax credit for money donated to a nonprofit organization that grants scholarships to primary and secondary students, effectively allowing them to apportion part of what they owe in state taxes to scholarship organizations instead. Currently 16 states have a scholarship tax-credit program of some form.
School-choice legislation is highly controversial. Proponents point out that parents are in the best position to decide which type of schooling is best for their child and that school-choice programs provide students who are located within failing school districts a chance at a better education. In addition to the difficulty of holding private schools accountable and issues that diverting public funds to religious schools cause with separation of church and state, opponents point to the fact that a school voucher or ESA takes away valuable resources from struggling public schools.
Like any controversial issue, school-choice legislation is not as simple as it seems on the surface, particularly the potential funding for these programs. The state only contributes 41percent of the revenue for school districts on average, while 45 percent comes from local taxes and the rest comes from federal funding and other local and intermediate sources. At the same time the choice debate is raging, there is also discussion of efforts to reduce local property tax burdens, which could further strain the system.
Many of the operating expenditures are either fixed costs (since the school district has to maintain facilities regardless of the number of students) or effectively fixed costs, since small changes in the number of students will not change the need for teachers, guidance counselors or bus drivers, for example. Thus, the operating expenses of a school (estimated at about $9,000 per student) will not suddenly drop by $9,000 if it has one less student attending. Thus, the funding that follows a student can have a proportionally larger impact on the public school left behind, depending on the amount of that funding.
The bottom line is that competition could introduce incentives to improve school performance, which is positive. But that would only be a viable approach if the underlying system were adequately funded to meet the educational needs of all students and meet the needs for a well-educated workforce. As presently structured, the school voucher and ESA proposals in Texas appear to be nothing more than an attempt to save tax dollars (by providing less than the cost of education while removing a student from the public system) and to further drain the public schools of resources. Depending on the size of the subsidies, it could well be that those who benefit would primarily not be the students with the greatest needs (as their families could not afford amounts above the subsidies). In essence, the plans would likely have the effect of reducing educational funding and quality in the public school system, which must provide opportunities for the vast majority of Texas children. Competition to improve an excellent system is laudatory; competition as a code word to further deteriorate a chronically underfunded system that is leaving our future workforce behind is not.
Nationally known economist Ray Perryman is president and chief executive officer of the Waco-based Perryman Group. He was selected as the 2012 Texan of the Year by the Texas Legislative Conference and received the 2013 Baylor University Distinguished Service Medal. He holds a Bachelor of Science degree in mathematics from Baylor and a Ph.D. in economics from Rice University.