Policy Summary Empowering Parents: Using Ohio’s Tax Code to Promote Choice and Innovation in Ohio’s Public Schools By Joshua Hall and Tony Caporale Introduction Beginning with the publication of A Nation at Risk in 1983 many U.S. residents realized that something had gone horribly awry with its system of public education. Most states, Ohio included, enacted a variety of reform measures that tended to center around returning control over education to parents. Ohio has, in many ways, led the way in advancing education reform by returning discretion over children’s education back to their parents. Statewide standardized testing provides parents with objective information on the quality of their local public schools and those in surrounding areas. Community schools give many parents additional education options within the public school system. The Cleveland Scholarship Program provides tuition scholarships to more than 4,000 low-income students. This report presents the next phase in returning educational decision-making power back to parents education tax credits. Education tax credits or deductions currently exist in six states and at least eight states are considering some form of education tax credit. One form of education tax credits – tuition tax credits – gives parents a dollar-for-dollar reduction in income tax liability for money spent on K-12 education. Another form of education tax credits called a scholarship tax credit, gives businesses and individuals a dollar-for-dollar credit for donations made to scholar-
ship organizations. This study takes two different looks at education tax credits. First, the arguments for and against increasing education choice through the tax code are examined. Second, the Buckeye Institute Education Tax Credit (BIETC) plan is introduced to give an idea of the fiscal impact education tax credits will have on state and local government finances in Ohio. Our analysis concludes that education tax credits, by expanding parental choice, would enhance Ohio’s increasingly competitive education marketplace. Arguments for Increased Parental Choice through Tax Credits Expanding school choice through education tax credits achieves four important goals for education reform. First, parents would be able to choose from various public and private schools to find the one best suited for each of their children. In the classroom, teachers must target their teaching to the median student. Economist Gary J. Scott finds that limiting educational mobility by assigning students to schools based upon their geographic location constrains efficiency and educational opportunity. Scott also finds that choice allows parents to move children to classrooms better suited to their ability level, which results in increased learning for all concerned. From this perspective, a system of parental choice efficiently fulfills
The Buckeye Institute for Public Policy Solutions
Empowering Parents: Using Ohio’s Tax Code to Promote Choice and Innovation in Ohio’s Public Schools
the need for appropriate diversified learning environments. Second, education tax credits also move Ohio closer to acknowledging that parents, not state and local education personnel, should have final decisionmaking authority regarding their children’s education. Parents are the best arbiters of what is best for their children for two reasons: nature and a long-term custodial relationship. Parents have a strong tendency to have the best interests of their children in mind. Combined with a significant amount of tacit knowledge regarding their children’s development, consigning teachers and other state education personnel to an advisory role commensurate with their expertise is only appropriate. Third, expanding parental choice introduces competition into the academic marketplace, forcing inter-school competition for students and improving school quality. Competition in education results from any (or all of) the following: a thriving private school market, numerous independent public school districts, and the presence of charter (community) schools. Moreover, there are different ways to create and enhance competition including vouchers and tax credits. All of these education reforms share increased parental choice as common element. The very act of parents choosing between schools and school systems has the effect of improving the quality of education overall. Harvard economist Caroline Hoxby extensively studied the effects of school choice on school quality, school spending, and student performance. She found that when parents have greater choice among public school districts, school productivity (higher achievement, lower spending) is raised “significantly.” This finding has been confirmed by other research focusing on other measures of competition, including both
2
private and community schools. Education tax credits have the potential to significantly impact inner-ring suburbs and urban areas where young couples live in homes until their children reach school age, at which point they “purchase” a better education by moving to an outer-ring suburb. This migration erodes the tax base and contributes to sprawl. Education tax credits provide an incentive for parents to remain in areas they otherwise enjoy because the credits make sending children to schools outside the local public school district more affordable. Fourth, empowering parents through education tax credits will increase the quality of education in Ohio. This increased quality will generate what economists call “spillover” benefits for all Ohio residents, because better quality education produces a labor force with more skills, training, and knowledge – important factors in Ohio’s economic growth, especially as our economy becomes increasingly global. The inability of many low-income parents to exercise traditional school choice by moving or the political process has led to parental disengagement and, consequently, a lack of “bottom-up accountability” in large districts. The Columbus City School District, for example, has one school board member for every 93,421 citizens. Conversely, the more affluent Columbus suburb of Bexley has one school board member for every 2,443 citizens. Education tax credits would help to reverse these negative effects. Arguments Against Expanding Parental Choice Three main arguments against expanded parental choice through tax credits are also considered in the study. One of the most common arguments against education tax credits rests upon the notion that a
The Buckeye Institute for Public Policy Solutions
Empowering Parents: Using Ohio’s Tax Code to Promote Choice and Innovation in Ohio’s Public Schools
greater number of students attending private schools will destroy public education and the ideals upon which this country was founded. The current public school system, however, exacerbates class distinctions by excluding students whose parents are unable to afford to buy a home in the “good” public school districts. Empirical research has shown that when given the opportunity to choose private schools (through vouchers) students and families overwhelmingly chose schools more integrated than the public school they would have otherwise attended. Indeed, if one really cares about the instillation of civic values and reduction in racial and class stratification, the evidence seems to point in favor of tax credits and parental empowerment. Another objection to education tax credits is that they represent a taxpayer subsidy to those parents choosing private education. Only with the presupposition that all income belongs to the government to begin with and is only returned to the taxpayers through the tax code can reductions in tax liability be viewed as a subsidy. This view violates the deeply held principle that income, once earned, belongs to the people and is remitted to the government as a result of the democratic process. To the extent that government subsidizes public education, education tax credits merely shift the pendulum back towards the middle. Viewing education tax credits as a subsidy is problematic, especially in light of the double burden of property taxes and tuition that many parents endure in order to send their children to private school. The final objection to education tax credits is that they violate the so-called separation of church and state. The ultimate issue is whether education tax credits violate the Religion clauses of the Ohio Consti-
tution and the Establishment Clause of the First Amendment to the U.S. Constitution. Based on the reasoning of the Ohio and United States Supreme Courts when they upheld the constitutionality of the Cleveland voucher program, education tax credits similar to the BIETC plan would be entirely constitutional. The Buckeye Institute Education Tax Credit Plan The Buckeye Institute Education Tax Credit (BIETC) plan is comprised of two components: a tax credit for tuition (Buckeye Institute Tuition Credit, or BITC) and a tax credit for donations to charitable organizations that provide scholarships for children of low-income families (Buckeye Institute Scholarship Credit, or BISC). Under the tuition component of the BIETC plan any Ohio taxpayer with eligible dependents would receive a dollar-for-dollar reduction in their state income tax liability for money spent on tuition at nonpublic school of their choice, up to a maximum yearly credit of $500 per dependent child. The tuition tax credit would be non-refundable. This means that taxpayers can only claim the credit to the extent of their tax liability. Low-income Ohioans, while unlikely to have sufficient tax liability to take advantage of BITC plan, are the clear beneficiaries of the scholarship credit. The BISC plan would allow any taxpayer, individual or corporate, to receive tax credits for donations to organizations that provide educational scholarships for low-income students attending nonpublic schools. Those filing individually would receive up to a $1,000 credit against state income taxes; those filing jointly could claim up to $2,000. Corporations would be limited to 20 percent of the company’s annual state corporate income tax liability.
The Buckeye Institute for Public Policy Solutions
3
Empowering Parents: Using Ohio’s Tax Code to Promote Choice and Innovation in Ohio’s Public Schools
Fiscal Impact of the Tuition Credit (BITC) Real-world data was obtained on recent private and public school enrollments and government finances to estimate of the impact that the Buckeye Institute Tuition Credit (BITC) plan would have on student enrollment and state and local government finances in Ohio. We examine how parents respond to varying tax credit levels – the higher the credit level, the more parents will respond – and calculate the impact on state and local governments. The results, shown in Table 1, make clear that the $500 BITC credit has two purposes: tax relief and increased parental choice. Under the parameters of the BITC credit, parents will claim the credit for an estimated 114,906 students already enrolled in private school. The $500 tax credit will reduce the cost of private school enough to induce 14,031 students to switch from public to private school, thereby expanding parental choice. The total cost of the BITC plan is estimated at just over $49.9 million annually with the revenue losses split evenly between the state and local governments. This estimate is a conservative one as it assumes limited local school district savings. In the long run, the fiscal impact on state and local governments is likely to be positive. Per-pupil spending will increase in all school districts that lose students to private schools because all local taxes will remain within the local school district. So although total school district revenues will decline, there will be more dollars left to educate fewer students.
4
Fiscal Impact of the Scholarship Credit (BISC) Estimating to what extent individuals and corporations would give to scholarship-granting organizations was the first step in calculating the impact of the Buckeye Institute Scholarship Credit (BISC). Conservative assumptions were made about individual and corporate giving rates under the BISC plan. We estimate that Ohio citizens and corporations will give $87.4 million to scholarship organizations. The BISC plan requires that scholarship-granting organizations distribute no less than 80 percent of their eligible donations out in the form of scholarships. Deducting 20 percent of $87.4 million for overhead, $69.9 million is left for scholarships. The same methodology used to estimate the impact of the BITC credit was then used to obtain estimates of the impact of the BISC credit. Drawing from the recent scholarship levels of Ohio’s current scholarship-granting organizations to obtain an average scholarship value of $1,382, $69.9 million would provide about 50,590 total scholarships. Assuming that all current low-income private school students (which we estimates to be around 12,095), would receive scholarships the scholarship credit will fund scholarships for 38,495 current public schools students, as seen in Table 2. Since the school district is educating fewer students and the local property tax revenues remain the same, per-pupil education spending increases as the
The Buckeye Institute for Public Policy Solutions
Empowering Parents: Using Ohio’s Tax Code to Promote Choice and Innovation in Ohio’s Public Schools
local share of funding going to educate a student who receives a scholarship remains within the district to educate other students. The revenue loss associated with the Buckeye Institute Scholarship Credit is estimated at around $47.5 million. Ohio’s local governments would suffer revenue losses in the first year of $59.2 million while state government would have revenue savings of $11.6 million. In subsequent years, local government revenue losses would decline as they fully adjusted to the reduction in students.
Conclusion By increasing choice and competition in Ohio’s education marketplace, education tax credits represent the next phase in school choice. Education tax credits would increase educational outcomes by allowing parents to send their children to a school based not on geography, but on what the parent thought was best for the child. In addition, they have the effect of increasing per-pupil spending in local school districts since all local property taxes remain with the school district. Parents who send their children to private school thus spare the state some of the cost of educating their children and continue to provide much-needed property tax dollars to help educate the children of their friends and neighbors. Scholarship tax credits seek two purposes: to provide scholarships to poor Ohio schoolchildren so that they may enjoy the benefits of school choice, and
to revive the philanthropic spirit of Ohioans with respect to education. Subsidization of education through state and local taxation, while generating dollars, does not allow for a range of choices necessary to meet the needs of individual children. Creating scholarship opportunities for 38,495 low-income Ohio youths would do more than give these children an opportunity. It would create an environment where public schools would have to be more directly accountable to the needs of Ohio’s parents and kids. The combined impact of a plan similar to the BITC and
the BISC plan on state and local government finances is around $97 million annually, or just over what the state spends to subsidize education for out-of-state and international master’s students. Ohio children should have the same opportunity to choose a learning environment and receive state aid as out-of-state graduate students. Education tax credits are the logical next phase in Ohio’s market-based education reform.
The Buckeye Institute for Public Policy Solutions
5
The Buckeye Institute for Public Policy Solutions is a public policy research and education institute, or think tank. As an independent, nonprofit, nonpartisan organization, its purpose is to provide Ohio’s leaders and citizens with new ways of thinking about problems facing our state and local communities. By widely distributing and publicizing its ideas and research, the Institute encourages more policymakers and opinion leaders to embrace new approaches to solving problems. To maintain the highest level of integrity, the Institute accepts no requests to conduct contract research or programs for businesses. All research projects and programs are determined by the staff and Board of Research Advisors. The Institute receives no government funding for its activities. All funding comes from the generous contributions of many individuals and foundations, along with limited general support from businesses. The views expressed are those of the author(s) and do not necessarily represent the views of the Buckeye Institute, its trustees, or staff. Nothing written here should be construed as an attempt to aid or hinder the passage of any legislation.
Empowering Parents: Using Ohio’s Tax Code to Promote Choice and Innovation in Ohio’s Public Schools
By Joshua Hall and Tony Caporale Board of Research Advisors Dr. Douglas K. Adie, Ohio University Dr. Jonathan Alder, Case Western Reserve University Dr. Omar Altalib, Ashland University Dr. Mark Altieri, Kent State University Dr. Stephen Anthony Baker, Capital University Dr. William Binning, Youngstown State University Dr. Michael Bond, Cleveland State University Dr. Tony Caporale, Ohio University Dr. James Child, Bowling Green State University Mr. Jim Coons, Huntington National Bank Dr. Gregory Delemeester, Marietta College Dr. Gina Dow, Denison University Dr. Michael Ellis, Kent State University Dr. Paul Evans, The Ohio State University Dr. Roger Evans, Payne Theological Seminary Dr. Eric Fisher, The Ohio State University Dr. David Forte, Cleveland State University Dr. Ralph Frasca, University of Dayton Dr. Janice Gabbert, Wright State University Dr. Lowell Gallaway, Ohio University Dr. James Gaston, Franciscan University of Steubenville Dr. Melvin Greenball, The Ohio State University Dr. William Irvine, Wright State University Dr. John Kelley, Shawnee State University Dr. Robert A. Kohl, Defiance College Dr. Robert Lawson, Capital University Dr. Loren Lomasky, Bowling Green State University
Dr. Dennis Mangan, Youngstown State University Dr. Brad Martin, University of Findlay Mr. Joseph Martino, Sidney, Ohio Dr. David Mayer, Capital University Dr. Abraham Miller, University of Cincinnati Dr. Dennis Miller, Baldwin Wallace College Dr. Andrew Morriss, Case Western Reserve University Dr. Jonathan Moser, Ashland University Mr. Dorien Nunez, Cincinnati, Ohio Dr. Doug Oliver, University of Toledo Dr. Deborah Owens-Fink, University of Akron Dr. William Peirce, Case Western Reserve University Dr. Robert Premus, Wright State University Fr. John Putka, University of Dayton Dr. John Rapp, University of Dayton Dr. Henry Rennie, Heidelberg College Mr. Robert P. Rogers, Ashland University Dr. Anthony Sanders, The Ohio State University Dr. Larry Schweikart, University of Dayton Mr. Michael Solimine, University of Cincinnati Dr. John Soper, John Carroll University Dr. Anthony Stocks, Youngstown State University Dr. Rebecca Thacker, Ohio University Dr. Bradley Thompson, Ashland University Dr. Charles Upton, Kent State University Dr. Richard Vedder, Ohio University Dr. Joseph Zoric, Franciscan University of Steubenville
For more information on the Buckeye Institute, please contact: The Buckeye Institute for Public Policy Solutions 4100 N. High Street, Suite 200 Columbus, Ohio 43214 (614) 262-1593 • Fax: (614) 262-1927 www.buckeyeinstitute.org
Empowering Parents: Using Ohio’s Tax Code to Promote Choice and Innovation in Ohio’s Public Schools
Title
Page
I.
INTRODUCTION ....................................................................................... 8
II.
AN OVERVIEW OF THE BUCKEYE INSTITUTE EDUCATION ........................ 9 TAX CREDIT PLAN (BIETC)
III.
THE ARGUMENT
FOR INCREASED
PARENTAL CHOICE ........................... 10
Unequal Achievements Levels Among Student ..................................................................... 10 The Liberal Parentalism Argument ........................................................................................ 11 The Benefits of Competition ................................................................................................... 12 Decreased Traditional School Choice .................................................................................... 14
IV.
THE ARGUMENTS AGAINST PARENTAL CHOICE .................................... 16 Civic and Cultural Values ........................................................................................................ 16 Tax Credits as a Subsidy ......................................................................................................... 18 Establishment of Religion ....................................................................................................... 18
V.
IMPACT OF THE BUCKEYE INSTITUTE TUITION ...................................... 21 CREDIT (BITC) Effect of the BITC on the Cost of Tuition .............................................................................. 21 Effect of the BITC on Private School Enrollment ................................................................. 22 Effect of the BITC on State and Local Government Finances ............................................. 24
VI. IMPACT OF THE BUCKEYE INSTITUTE SCHOLARSHIP ............................. 26 CREDIT (BISC) Individual Donations ................................................................................................................ 28 Corporate Donations ............................................................................................................... 29 Impact on Finances of State and Local Governments .......................................................... 33
VII. CONCLUSIONS ...................................................................................... 34
The Buckeye Institute for Public Policy Solutions
Empowering Parents: Using Ohio’s Tax Code to Promote Choice and Innovation in Ohio’s Public Schools
EMPOWERING PARENTS: USING OHIO’S TAX CODE TO PROMOTE CHOICE AND INNOVATION IN OHIO’S PUBLIC SCHOOLS I.
INTRODUCTION In 1983, with the publication of A Nation at Risk, many U.S. residents realized that something
had gone horribly awry with its system of public education.1 Most states, Ohio included, enacted a variety of reform measures that tended to center around returning control over education to parents. In many ways, Ohio has led the way in advancing education reform by returning discretion over children’s education back to their parents. Statewide standardized testing provide parents with objective information on the quality of their local public schools and those in surrounding areas. Community schools give many parents additional education options within the public school system and allow educational entrepreneurs the chance to introduce innovative curricula or to reach out to children that may be overlooked, such as dropouts. The Cleveland Scholarship Program provides tuition scholarships to more than 4,000 low-income students to allow them to go to a school of their choice, public or private. Public sentiment seems to support returning control over education to parents. A recent CNN/ USA Today/Gallup poll found that 54 percent of Americans support policies that provide parents with a greater choice of schools.2 An NBC News/Wall Street Journal poll found that 69 percent of Americans want parents to have more control over their children’s education.3 Policymakers who understand and wish to satisfy the demand of parents to have greater control of where their children will attend school are increasingly turning to education tax credits. Education tax credits or deductions currently exist in six states and at least eight states are considering some form of education tax credit.4 This report presents an education tax credit plan for Ohio. The Buckeye Institute Education Tax Credit (BIETC) plan consists of two separate credits. The first is the Buckeye Institute Tuition Credit (BITC), where any Ohio taxpayer can receive a dollar-for-dollar reduction in Ohio income tax liability
8
The Buckeye Institute for Public Policy Solutions
Empowering Parents: Using Ohio’s Tax Code to Promote Choice and Innovation in Ohio’s Public Schools
(up to $500) for money spent on K-12 tuition for each dependent child. The second component of the BIETC plan is the Buckeye Institute Scholarship Credit (BISC) – a dollar-for-dollar credit for donations made by individuals and corporations to charitable organizations that provide tuition scholarships to children in low-income families. This report addresses the impact of the BIETC plan not only on the ability of parents to educate their children how they see fit, but also the effect of education tax credits on state and local finances.
I.
AN OVERVIEW OF (BIETC) PLAN
THE
BUCKEYE INSTITUTE EDUCATION TAX CREDIT
The Buckeye Institute Education Tax Credit (BIETC) plan is based on the principle that parents are best able to decide what constitutes an appropriate education for their children. The state, while working to ensure that all children have an opportunity for an adequate education, should give parents the ability to choose the school that is best for their children and not excessively discriminate in favor of one type of schooling. The current situation, where parents are forced to pay twice if they choose a nonpublic form of schooling, clearly violates this principle. The BEITC plan will expand the education options of many Ohioans by reducing this “double payment” of tuition. The BIETC plan is comprised of two components: a tax credit for tuition (Buckeye Institute Tuition Credit, or BITC) and a tax credit for donations to charitable organizations that provide scholarships for children of low-income families (Buckeye Institute Scholarship Credit, or BISC). Under the tuition component of the BIETC plan any Ohio taxpayer with eligible dependents would receive a dollarfor-dollar reduction in their state income tax liability for money spent on tuition at nonpublic school of their choice, up to a maximum yearly credit of $500 per dependent child. For example, consider hypothetical Ohio taxpayers Jason and Shelly Smith, who have one schoolage child and an Ohio income tax liability of a $650. Jason and Shelly are big supporters of the Core Knowledge curriculum and pay tuition (in excess of $500 annually) to enroll their son Logan in a local private school that employs the curriculum. Under the BIETC plan, Jason and Shelly are eligible to reduce their Ohio income tax liability by $500, to $150. The tuition tax credit would be non-refundable.5 This means that taxpayers can only claim the
The Buckeye Institute for Public Policy Solutions
9
Empowering Parents: Using Ohio’s Tax Code to Promote Choice and Innovation in Ohio’s Public Schools
credit to the extent of their tax liability. To illustrate this, consider the addition of another child to the Smith family. If Jason and Shelly had a second child and were paying tuition for her to attend school in a neighboring public school district (so that she could play a sport unavailable in their local district), they would be eligible to claim the maximum credit for both children. However, since their Ohio tax liability is only $650, the maximum credit that could be claimed for the second child would be $150. Low-income Ohioans, while unlikely to have sufficient tax liability to take advantage of the tuition portion of the BIETC plan, are the clear beneficiaries of the scholarship credit. The BISC would allow any taxpayer, individual or corporate, to receive tax credits for donations to organizations that provide educational scholarships for students attending nonpublic schools. Those filing individually would receive up to a $1,000 credit against state income taxes; those filing jointly could claim up to $2,000. Corporations would be limited to 20 percent of the company’s annual state corporate income tax liability. For the purposes of being eligible for these scholarships, low-income students are defined as those who qualify for free or reduced price meals through federal programs. According to Ohio Department of Education data, just over 28 percent of Ohio’s school children are from households approved to receive free and reduced price lunch.6 The scholarship granting organizations would be required to be non-profit and must distribute at least eighty percent of creditable donations in the form of scholarships. The scholarships, in addition to being limited to low-income children, would be restricted in amount to 90 percent of the nonpublic school’s tuition up to a maximum of $4,500.7 Additionally, students may not receive scholarships from more than one organization.
III.
THE ARGUMENT FOR INCREASED PARENTAL CHOICE There are at least four reasons for pursuing increased parental choice. Expanded school choice
through education tax credits: (1) better recognizes and addresses differences in ability between students; (2) recognizes that parents are the proper final authority for educational decisions; (3) increases competition which benefits all schools; and (4) reverses the decline in traditional school choice.
Unequal Achievement Levels Among Students One of the more compelling arguments for parental choice is put forth by economist Gary J.
10
The Buckeye Institute for Public Policy Solutions
Empowering Parents: Using Ohio’s Tax Code to Promote Choice and Innovation in Ohio’s Public Schools
Scott, a professor of economics at St. Mary’s University in San Antonio. In his article “Equal Opportunity and the Significance of Circumstantial Knowledge,” Scott attempts to deal with the fact that classrooms are comprised of students that may be similar in age, but little else.8 Recognizing that in classrooms of any significant size teachers must target their teaching to the median student, Scott finds that due to unequal achievement levels between students, limiting educational mobility by assigning students to schools based upon their geographic location constrains efficiency and educational opportunity.9 It does not matter whether the child is ahead or behind of the average student. What matters is that choice allows parents to move children to classrooms better suited to their ability level, which will result in increased learning for all concerned. In addition, Scott finds that even if public schools use ability tracking to overcome the problem of teaching students of unequal abilities, a system that allows for parental choice is superior because it would achieve the same learning result at a lower cost.10 Parents would be able to choose from various public and private schools to find the one best suited for each of their children. From this perspective, a system of parental choice efficiently fulfills the need for appropriate diversified learning environments.
The Liberal Parentalism Argument Opponents of parental choice frequently argue that parents lack sufficient information to make decisions regarding what education is best for their children. They argue that quality education, unlike bread or soda, is not easily discernible to uninformed parents and thus must be directed by education experts.11 This can best be called the liberal statism view regarding the proper relationship between government and parents. The opposite of liberal statism is liberal parentalism – the idea that the state should defer to the parental decisions unless they are plainly unreasonable.12 Legal scholar Stephen G. Gilles, a professor at the Quinnipiac College School of Law, argues that a careful analysis of the two points of view finds the liberal parentalism view superior because it rests upon several reasonable considerations. According to Gilles:
Unlike teachers, social workers and bureaucrats, who deal with large numbers of chil-
The Buckeye Institute for Public Policy Solutions
11
Empowering Parents: Using Ohio’s Tax Code to Promote Choice and Innovation in Ohio’s Public Schools
dren for relatively short times, most parents are linked to their children both by nature and by long-run custodial relationships. Consequently, as everyday experience confirms, parents normally identify strongly with the interests of their children, and that identification is reinforced by powerful social norms about good parenting. Of course the expertise of teachers and other educators is often a useful complement to the efforts of parents. But parents have superior knowledge of a different and less readily transferable kind: knowledge of their children’s character and development. Knowledge and incentives both suggest, then, that the parents’ role should be a decisionmaking one, with educators assigned to an advisory capacity.13
This view is often denounced as resting on the naive assumption that all parents do what is best for their children. Gilles rejects this criticism. “Rather,” he argues, “it is the comparative judgment that the fallible human agents through whom government must act are less likely to do what is good for other people’s children than fallible individual parents are to do what is good for their own.”14 A criticism of the liberal statism argument against parental choice is an examination of other areas where the provider of the service has more information about what he is providing than the buyer possesses. The same information problems that exist in the parent-student/school relationship exist in the doctor/patient relationship. Few individuals would argue that since the government subsidizes health care for seniors through Medicare that the government should assign individuals to local hospitals and doctors based solely on geography. This begs the question: If choice among providers is so good for seniors on Medicare that it is central to a “patient bill of rights,” why is choice among providers so bad when it comes to the education of children?
The Benefits of Competition One of the central arguments for parental choice is that it introduces competition into the academic marketplace, forcing inter-school competition for students and improving school quality. Competition in education results from any (or all of) the following: a thriving private school market, numerous independent public school districts, and the presence of charter (community) schools. Moreover, there
12
The Buckeye Institute for Public Policy Solutions
Empowering Parents: Using Ohio’s Tax Code to Promote Choice and Innovation in Ohio’s Public Schools
are different mechanisms to create and enhance competition including vouchers and tax credits. All of these education reforms share increased parental choice as common element. The very act of parents choosing between schools and school systems has the effect of improving the quality of education overall. The beneficial impact of competition in the K-12 education market is often misunderstood. Too often it is taken to mean that only those students who switch schools see improvement. This is a fundamental misunderstanding of what competition does. Competition puts pressure on competitors to continually try to maximize consumer satisfaction. In contrast, monopolists have no relevant rivals and therefore do not face the same pressure to strive for quality or efficiency. For example, if the line at the post office is moving slowly, customers cannot take their business to a rival post office. By expanding the options for consumers of educational services, parental empowerment (in general) and education tax credits (in specific) would have positive benefits for all concerned. Specifically, education tax credits will introduce competition in the education marketplace by reducing the cost of choosing a school different than the one in a student’s geographic area. Economic theory predicts that the increased competition resulting from education tax credits produces schools that are more efficient. Unfortunately, no empirical research exists regarding the impact of education tax credits on public and private school quality. Research on traditional school choice, however, can give some evidence on what outcomes can be expected from increased parental choice. Harvard economist Caroline Minter Hoxby has extensively studied the effect of traditional school choice (parents choosing among local school districts when deciding where to live) on school quality, school spending, and student performance.15 According to Hoxby, analyzing this form of “school choice” is the most preferable way of studying the effects of choice because of its long history and widespread use.16 In an article published in the American Economic Review, Hoxby analyzed data on spending, student achievement, and various other factors for 6,523 metropolitan school districts in the United States.17 She found that choice among public school districts “substantially” raises school productivity by simultaneously raising achievement and lowering spending.18 Other researchers have come to the same conclusions reached by Hoxby about the effect of
The Buckeye Institute for Public Policy Solutions
13
Empowering Parents: Using Ohio’s Tax Code to Promote Choice and Innovation in Ohio’s Public Schools
competition on school quality. Using data on Ohio schools and variations in private school enrollment between school districts, one of the present authors studied the impact of private school enrollment on public school performance. The results indicate a 20 percentage point increase in the percentage of school district students attending private school would improve the academic performance of students on the ninth grade proficiency tests by nearly five percentage points.19 In addition to the impact increased competition would have on student performance, empirical evidence suggests that competition is likely to have other positive effects as well. Research by Ohio University economist Richard Vedder and Joshua Hall find that increased private school competition has a substantial positive effect on public school teacher salaries.20 Education tax credits have the potential to significantly impact inner-ring suburbs and urban areas. In many of these areas young couples live in homes until their children reach school age at which point they “purchase” a better education by moving to an outer-ring suburb. This migration erodes the tax base and contributes to sprawl. Education tax credits provide an incentive for parents to remain in areas they otherwise enjoy because the credits make sending children to schools outside the local public school district more affordable. Research indicates that empowering parents through education tax credits will increase the quality of education in Ohio. This increased quality will generate what economists call “spillover” benefits for all Ohio residents, because better quality education produces a labor force with more skills, training, and knowledge – important factors in Ohio’s economic growth, especially as our economy becomes increasingly global. Many studies that investigate why there are large differences in incomes, living standards, and growth rates between countries find that one of the most important determinants is the difference in education levels between countries.21
Decreased Traditional School Choice To some extent, parents have always had the right to choose the school their children would attend. Traditionally, parents would move to a community that best reflected their values and the values they wanted to instill in their children. Schools were small, located in the local neighborhood, and school board members represented a handful of constituents. Population growth and school consolidation, how-
14
The Buckeye Institute for Public Policy Solutions
Empowering Parents: Using Ohio’s Tax Code to Promote Choice and Innovation in Ohio’s Public Schools
ever, have weakened the efficacy of “traditional choice,” except for the most affluent who can afford to send their children to private school or move to any school district they desire. Low-income families, however, frequently have little choice. In many metropolitan areas there is usually only one school district in which low-income families can afford to live. Not only are these parents denied the opportunity to “vote with their feet,” due to lack of competing local school districts, the districts in which they reside are usually so large that they effectively have no voice. The Columbus City School District, for example, has one school board member for every 93,421 citizens. Conversely, the more affluent Columbus suburb of Bexley has one school board member for every 2,443 citizens.22 The inability of many low-income parents to exercise traditional school choice through voting with their feet or the political process is the byproduct of population growth and a school consolidation movement that saw the number of school districts in Ohio decline from 1509 during the 1949-50 school year to its current 612.23 The prospects for reversing this trend are slim given the incentives facing local governments to retain power over as many constituents as possible. In the words of one commentator, “[t]rying to secede from a large, established urban school district has been about as successful as the Confederacy’s bid to leave the North behind.”24 An over-looked aspect of the breakdown of traditional school choice is the decline of the role of the community in strengthening schools. University of Chicago sociologist James Coleman believes that choice is necessary in order to restore the social contract between families in a community. He argues that private schools, because they represent families organized with similar attitudes and beliefs, have retained their sense of community much better than public schools. This sense of community contributes to the “social capital” and learning environment of the school, helping all students to do better. Coleman argues that the assignment of children to public schools based solely on geography is not a viable model as long as communities continue to become more heterogeneous in values. He summarizes his view as follows:
Given that school is a social institution, the school-student relations should have the form of a contract – either a contract between family or student and school, or a social
The Buckeye Institute for Public Policy Solutions
15
Empowering Parents: Using Ohio’s Tax Code to Promote Choice and Innovation in Ohio’s Public Schools
contract among families or among students. The conception of a child assigned by the state to a particular school is a conception that was viable when the school was an outgrowth of a homogenous community. It’s no longer viable for most schools – or most students. 25 (emphasis in original)
Although many areas of Ohio continue to remain true communities where citizens share similar values and consensus exists on what constitutes appropriate education, it is nevertheless clear that many areas, as determined by school district boundaries, do not fit the traditional definition of community.
IV.
THE ARGUMENTS AGAINST PARENTAL CHOICE Essentially, three main arguments against expanded parental choice through tax credits are con-
sidered here. First, opponents of education tax credits argue that by removing children from the public schools, tax credits would deprive Ohio youth of important civic and cultural values which are routinely instilled by public schools. Second, opponents often argue that the decision to send children to private school is essentially a private one that government should not subsidize. Finally, detractors argue that education tax credits violate the establishment clause of the First Amendment by subsidizing private, religious schools.
Civic and Cultural Values One of the most common arguments against education tax credits rests upon the notion that a greater number of students attending private schools will destroy public education and the ideals upon which this country was founded. This argument incorporates two interrelated assumptions: that the “neighborhood” or “spillover” effects of education justify a system dominated by publicly-run schools; and that private education is irrevocably at odds with the civil and political values of our society. Both of these assumptions are flawed. Nobel Laureate Milton Friedman, writing in his 1962 classic Capitalism and Freedom, explained the “neighborhood effects” associated with education as follows:
A stable and democratic society is impossible without a minimum degree of literacy and
16
The Buckeye Institute for Public Policy Solutions
Empowering Parents: Using Ohio’s Tax Code to Promote Choice and Innovation in Ohio’s Public Schools
knowledge on the part of most citizens and without widespread acceptance of some common set of values. Education can contribute to both. In consequence, the gain from the education of a child accrues not only to the child or to his parents but also to other members of society. The education of my child contributes to your welfare by promoting a stable and democratic society. It is not feasible to identify the particular individuals (or families) benefited and so to charge for the services rendered. There is therefore a significant “neighborhood effect.26
Friedman then asked, “What kind of governmental action is justified by this particular type of neighborhood effect?”27 According to Friedman, the most obvious was the requirement of some minimal level of education through compulsory schooling laws. Friedman then noted that compulsory schooling laws were quite different than other laws designed to improve the general welfare, such as auto inspection. If you cannot afford to own a car of sufficient quality to pass inspection you can just sell the car. Low-income parents do not have the same option with regard to the education of their children. Therein lies a justification for government provision of education funds.28 Compulsory schooling laws, and government financing of education for those unable to afford to meet the requirements of such laws, may be justified by such neighborhood effects. The provision of education only through public schools, however, does not appear to be justified. The requirements for ensuring a well-educated society could be met entirely by compulsory schooling laws and limited government financing. There seems to be little justification for a system dominated by government-run schools over a system of publicly financed private schools. A related argument often raised to justify the need for government-run schools is that a system of private schools would lead to deterioration in civic values and an exacerbation of racial and class distinctions in our society. The current public school system, however, exacerbates class distinctions by excluding students whose parents are unable to afford to buy a home in the “good” public school districts. If private education fails to instill civic and patriotic values (and these values are so important that they justify a system of public schools) why is attendance at public schools not mandated? The answer to
The Buckeye Institute for Public Policy Solutions
17
Empowering Parents: Using Ohio’s Tax Code to Promote Choice and Innovation in Ohio’s Public Schools
this question is obvious. Private schools do as good, if not better, job of instilling civil and patriotic values.29 As far as exacerbating racial stratification, empirical research shows that when given the opportunity to choose private schools (through vouchers) students and families overwhelmingly chose schools more integrated than the public school they would have otherwise attended.30 Indeed, if one really cares about the instillation of civic values and reduction in racial and class stratification, the evidence seems to point in favor of tax credits and parental empowerment.
Tax Credits as a Subsidy Another objection to education tax credits is that they represent a taxpayer subsidy to those parents choosing private education.31 According to this argument, because education tax credits allow eligible individuals to reduce or eliminate their state tax liability by sending their children to private schools, the government is subsidizing private education. Following such logic, to the extent that government wants to spend money to improve education it should only spend money on the current public system. Only with the presupposition that all income belongs to the government to begin with and is only returned to the taxpayers through the tax code can reductions in tax liability be viewed as a subsidy. This view violates the deeply held principle that income, once earned, belongs to the people and is remitted to the government as a result of the democratic process. Perhaps the untenable nature of this viewpoint is best illustrated through the following reductio ad absurdum. Imagine a situation where property taxes are raised to 100 percent but individuals are given tax credits for food purchases, rent or mortgage payments, clothes purchases, etc. Would government be subsidizing the choice to eat? Mortgage payments? Clothing purchases? To the extent that government subsidizes public education (to the detriment of private education), education tax credits merely shift the pendulum back towards the middle. From this viewpoint, viewing tax credits as a subsidy is groundless, especially in light of the double burden of property taxes and tuition that many parents endure in order to send their children to private school.
Establishment of Religion A common objection to education tax credits is that they violate the so-called separation of church and state. The ultimate issue is whether education tax credits violate the Religion clauses of the
18
The Buckeye Institute for Public Policy Solutions
Empowering Parents: Using Ohio’s Tax Code to Promote Choice and Innovation in Ohio’s Public Schools
Ohio Constitution and the Establishment Clause of the First Amendment to the U.S. Constitution. Based on the text of both the Ohio and U.S. Constitutions and the case precedents in both Ohio and federal courts, the BIETC proposal is entirely constitutional. The Ohio Constitution provides that “[n]o person shall be compelled to attend, erect, or support any place of worship, or maintain any form of worship, against his consent; and no preference shall be given, by law, to any religious society; nor shall any interference with the rights of conscience be permitted.”32 The Ohio Supreme Court has analogized this clause to the Establishment Clause of the First Amendment to the U.S. Constitution and found that it prohibits any state activity designed to benefit religious institutions or that involves an excessive entanglement of state and religion.33 The intent of the General Assembly in enacting education tax credits would be to help provide educational opportunities to all Ohioans, especially low-income parents and students. The program is not designed or intended specifically to benefit any religious institutions. Furthermore, because the tax credit and scholarships involve entirely private activities and choices, there is no excessive entanglement of state and religion. The Ohio Constitution states also that “no religious or other sect, or sects, shall ever have any exclusive right to, or control of, any part of the school funds of this state.”34 The BIETC plan does not give religious schools any right to, or control of, any state funds. The scholarship portion of the BIETC plan involves solely private money and those dollars only go to schools designated by the independent choice of the parents, not the state. Finally, the Ohio Constitution states that “[t]he general assembly shall make such provisions, by taxation, or otherwise, as, with the income arising from the school trust fund, will secure a thorough and efficient system of common schools throughout the State.”35 While the Ohio Supreme Court has used this provision to invalidate Ohio’s kindergarten through twelfth grade school funding system, the BIETC does not affect the state’s system of funding public schools. The BIETC plan is clearly consistent with the Religion clauses of the Ohio Constitution. In 1999, the Ohio Supreme Court found that the Cleveland Scholarship program did not violate the Religion clauses even though most of the voucher students attended religious schools with the state-provided
The Buckeye Institute for Public Policy Solutions
19
Empowering Parents: Using Ohio’s Tax Code to Promote Choice and Innovation in Ohio’s Public Schools
voucher aid. The Ohio Supreme Court held that the legislature’s attempt to provide additional choices for low-income students was “not an impermissible purpose” and that the voucher program did not excessively entangle the state and religion.36 The court appropriately recognized that the voucher aid is provided to the parents who independently choose which participating school their children attend. Under the voucher plan, some state dollars eventually reach certain religious schools but only as a result of the independent, private choices of parents. Since the Ohio Supreme Court concluded that the Cleveland voucher plan was consistent with the Ohio Constitution, it certainly would uphold the BIETC plan. The First Amendment to the U.S. Constitution prohibits Congress from passing laws “respecting an establishment of religion, or prohibiting the free exercise thereof.”37 The U.S. Supreme Court extended application of the First Amendment to the states through the Fourteenth Amendment. In the past, the U.S. Supreme Court has invalidated certain state programs that were set up to directly benefit religious institutions.38 The court, however, has consistently upheld education programs even if government aid ultimately reaches religious institutions if the aid (1) is disbursed according to neutral criteria without regard to religion, and (2) reaches religious institutions as a result of a genuine, independent private decision.39 The U.S. Supreme Court, in Zelman v. Harris, recently considered the question of whether or not the Cleveland voucher program violated the First Amendment to the U.S. Constitution and found that the program was constitutional. The 5-4 decision concluded that the Cleveland voucher program was constitutional for two reasons. First, the court found that vouchers were but one of many schooling options provided to Cleveland parents, some of which are secular and some of which are religious. These options include public schools, magnet schools, community schools, and the voucher program. Second, the voucher program is constitutional because the decision to participate in the voucher program and redeem the voucher at a religious school is made by parents, not the State of Ohio. Aid is distributed without regard to the parents’ religion or whether the school chosen by the parents is religious and any state aid that reaches religious schools under the voucher program is the result of the private
20
The Buckeye Institute for Public Policy Solutions
Empowering Parents: Using Ohio’s Tax Code to Promote Choice and Innovation in Ohio’s Public Schools
independent choices of parents regarding where to send their children to school.40 The Buckeye Institute plan meets both of these criteria. Under the Buckeye Institute plan, tax credits are available to any taxpayer that wishes to contribute to scholarship organizations or pays tuition. Parents who receive scholarships may send their children to a variety of schools, both public and private, religious and non-religious. Nothing in the proposed plan runs afoul of the Ohio or U.S. Constitutions.
V.
IMPACT OF THE BUCKEYE INSTITUTE TUITION CREDIT (BITC) In order to estimate the effect of the Buckeye Institute Education Tax Credit (BIETC) plan how
many households will take advantage of the credit must be determined. While the number of school age children attending private school currently is known, what needs to be known is the enrollment in private schools after implementation of the BIETC plan. Estimates of the credit’s impact on the after-tax price of private education in Ohio are needed in order to estimate attendance in private schools after implementation.
Effect of the BITC on the Cost of Tuition The Buckeye Institute Tuition Credit (BITC) gives parents and guardians of school-age children a tax credit against their state income tax liability for qualified education expenses, including public and private school tuition.41 Parents and guardians of school-age children would be eligible to receive a credit against their state income tax for qualified education expenses (e.g. tuition payments), up to a maximum of $500 per dependent child. “Qualified education expenses,” mean “non-reimbursed verifiable payments made by a taxpayer on behalf of a dependent child for tuition at the public or non-public school at which the dependent child is in attendance.”42 Schools are defined as a public or non-public institution “wherein a child may legally fulfill compulsory school attendance requirements under State law or may attend at parental discretion.” Collecting data on tuition at parochial and independent private schools in Ohio is difficult for several reasons. Many schools provide sliding tuition scales for families with more than one enrolled child. Other schools reduce tuition depending upon the child’s grade level or whether or not they belong to the school’s church parish.43 Also, estimates vary significantly depending upon whether the schools in question are parochial or independent.
The Buckeye Institute for Public Policy Solutions
21
Empowering Parents: Using Ohio’s Tax Code to Promote Choice and Innovation in Ohio’s Public Schools
For example, one researcher estimated that the average tuition nationwide in Catholic elementary schools during 1999 was $1,787.44 An estimate of the average tuition in an independent elementary school during the same school year was $5,411 – more than three times the cost of Catholic elementary school.45 Due to differences in methodology and sample, estimates of private school tuition vary widely. The National Center for Education Statistics conducted an extremely comprehensive survey of enrollments, costs, and surveys in all private schools; unfortunately, the survey was conducted during the 1993-94 school year. At that time, average per-pupil expenditure was $5,327 and the average tuition for private schools was $3,116. In order to best estimate current tuition costs, we assume that the relationship (58.5 percent) between public school expenditures and private school tuition held constant over time. During the 1999-2000 school year, the average Ohio public school district spent $7,057 dollars per student.46 This places the average private school tuition during the 1999-2000 school year at $4,128.
Table 1 shows the projected impact of the Buckeye Institute Tuition Credit (BITC) on the aftertax cost of tuition. In estimating the maximum effect of the BITC, this table assumes that the family can deduct the full $500 per dependent child. In reality, the maximum tax credit a family could receive is limited by the family’s state income tax liability. This factor places downward pressure on the likelihood of households claiming the full credit.
Effect of BITC on Private School Enrollment Parents balance many factors in choosing private education for their children – distance from home, religious preference, and the price of that education (tuition). Fundamentally, what tuition tax credits do is reduce the price of attending private school. In order to estimate a parent’s responsiveness to changes in the cost of private education, we need to have an estimate of their price elasticity of demand for private education. Price elasticity of demand is the relationship between the price of a good and the
22
The Buckeye Institute for Public Policy Solutions
Empowering Parents: Using Ohio’s Tax Code to Promote Choice and Innovation in Ohio’s Public Schools
number of units demanded by consumers. For example, if a ten-percent drop in the price of a product produces a ten percent increase in demand for the product, the price elasticity is said to be -1.0. Economists Barry R. Chiswick and Stella Koutroumanes, researchers at the University of Illinois at Chicago and University of St. Thomas, respectively, provided the most detailed and comprehensive estimate of the price elasticity of demand for private education in their 1996 article in Research in Labor Economics.47 Chiswick and Koutroumanes found the price elasticity of demand for private schooling to be -.48 in their study.48 In other words, using their estimate we could expect that a ten percent decrease in the price of private schooling to an Ohio family could be expected to increase the probability of that family sending their children to private school by 4.8 percent.
How many families would be influenced by a 12.1 percent decrease in tuition? Using the - .48 price elasticity of demand for private education, it is estimated that quantity demanded for private education could be expected to increase by 5.8 percent. In order to estimate the increase in new privateschool students it is necessary to know current private school enrollment. Data from the Ohio Department of Education places Ohio’s private school enrollment at 241,908.49 Multiplying private school enrollment by the expected increase in demand as the result of the BITC, we estimate private school enrollment to increase by 14,031 students under the BITC plan. A caveat is in order regarding the 14,031 new private school students under the BITC plan. The estimates for the BITC and the BISC plans assume that increases in the supply of education have no effect on the price of private education. In the short-run increases in demand may cause prices to rise if the supply curve is inelastic. In the long run, however, the supply curve is likely to be extremely elastic as new schools open and additional capacity is added. Estimates therefore should be considered maximums and coincide with our desire to estimate a maximum possible estimate of the effect of both plans.
The Buckeye Institute for Public Policy Solutions
23
Empowering Parents: Using Ohio’s Tax Code to Promote Choice and Innovation in Ohio’s Public Schools
Effect of the BITC on State and Local Government Finances The fiscal impact of the BITC credit on state and local budgets rests on several factors including, but not limited to, the number of current private school students whose parents are eligible for and claim the credit. Parents sending their kids to private schools implicitly face a double burden: property taxes and tuition payments. This suggests that a minimum income level is necessary for most families to afford private school and that many parent’s income levels are likely to be above the taxable income eligibility threshold. Little national data exists on the income levels of private school students and their families. The National Center for Education Statistics reports that, in 1997, roughly five percent of private school students nationwide were from homes defined by the NCES as “low-income.”50 Assuming that the private school population in Ohio is similar in makeup to the nation as a whole, there are 229,813 private school students eligible for the BITC. Not all eligible private school parent will take advantage of the maximum credit for several reasons. First, many private schools charge tuition on a sliding scale where the second and third children enrolled receive reduced price or free schooling.51 To the extent that private schools are unlikely to be able to know, a priori, whether or not parents will be able to take advantage of the tuition tax credit, schools will be unable to adjust this sliding scale. Second, some families with multiple dependents are unlikely to have sufficient taxable income to take advantage of all available credits. Third, past experience with tuition tax deductions in Minnesota show that not all eligible taxpayers take advantage of the credit.52 For these reasons, the estimates presented here assume that only half of eligible parents (114,906) would take full advantage of the credit. Once added to the calculation of new private school enrollment shown in Table 2 the total number of families using the BITC is 128,937. Table 3 shows that the total value of BITCs claimed would equal nearly $64.5 million. Ohio’s General Revenue Fund (GRF) receives 89.5 percent of state personal income tax revenue. Ohio’s direct GRF loss from the BITC would therefore equal almost $57.7 million. In addition to the direct cost of the BITC, there is also an indirect cost. The State of Ohio provides limited financial support to Ohio’s nonpublic (private) school students. The Buckeye
24
The Buckeye Institute for Public Policy Solutions
Empowering Parents: Using Ohio’s Tax Code to Promote Choice and Innovation in Ohio’s Public Schools
Institute estimates this support to equal an average of $734 per pupil.53 The new private school students resulting from the BITC would, therefore, cost the state an additional $10 million. Just as it would be incorrect to ignore the indirect costs associated with the BITC, it would also be wrong to ignore the indirect savings of the credit. The state of Ohio pays a large share of Ohio’s expenditure per public school pupil. For the 2000-2001 school year, this was estimated to average $3,069 per student.54 Multiplying by the estimated 14,031 new private school attendees, the indirect state savings from the BITC equals $43 million. When the direct and indirect costs are added up and the indirect savings are taken into account, the net fiscal impact of the BITC on state government is estimated at a loss of nearly $25 million.
The Buckeye Institute for Public Policy Solutions
25
Empowering Parents: Using Ohio’s Tax Code to Promote Choice and Innovation in Ohio’s Public Schools
The interaction between state and local governments also cannot be ignored and must be accounted for when attempting to analyze the cost and benefits of the BITC plan for all Ohioans.55 Local governments receive the remaining 10.5 percent of Ohio personal income tax revenues. The BITC will directly result in a $6.7 million revenue loss to local government funds (Table 4).56 Local school districts will lose an average of $3,069 for every student transferring to a private school for a total loss of $43 million. This loss, however, will be partially offset by the local school districts savings from not having to educate the 14,031 students estimated to switch from public to private schools under the BITC. Just how much money districts will be able to save is unclear and is likely to vary from district to district. Merely removing one child from a classroom, for instance, would do little to reduce costs. In a growing district, however, the loss of a few kids per grade level would allow districts to maintain acceptable class-size ratios without resorting to additional construction and teachers. In addition, each child that left the district would, by definition, increase school spending per pupil because the local taxes already levied would remain with the school. Assuming that 50 percent of a school district’s costs are fixed in the short run, each student leaving for another school saves the district $1770. Multiplying $1770 by the estimated number of transfers to private schools (14,031) local governments would save nearly $25 million annually under the BITC. On net the BITC is estimated to cost all local governments a total of $25 million (Table 4). When the direct and indirect costs and savings are added up, both for state government and for local governments, the net fiscal impact of the BITC is likely to be a decrease in state and local revenues of around $50 million (Table 5).
VI. IMPACT OF THE BUCKEYE INSTITUTE SCHOLARSHIP CREDIT (BISC) In order to estimate the impact of the Buckeye Institute Scholarship Credit (BISC) estimates are
26
The Buckeye Institute for Public Policy Solutions
Empowering Parents: Using Ohio’s Tax Code to Promote Choice and Innovation in Ohio’s Public Schools
needed of the amount of money that could be raised through donations to scholarship granting organizations. Several different ways exist to do this. One way is to analyze previous donations to educationrelated charities. A 1999 national survey by Independent Sector, a coalition of nonprofit organizations and foundations, found that 13.3 percent of households made charitable contributions to education.57 Another recent study estimated that approximately 17 percent of taxpayers donated to education-related organizations in 2000.58 Donation rates to a scholarship program under a proposal similar to the BISC could be higher or lower for various reasons. A very strong case can be made that participation rates could be substantially higher than the rates mentioned in the studies above. The numbers above are for charitable donations to education organizations that are tax deductible. Donations have some cost to taxpayers, depending upon their marginal tax rate. Tax credit donations to educational organizations under the BISC plan would be, however, in a sense “costless” to taxpayers. To the extent that they have state tax liability, taxpayers must pay income taxes. Under the BISC plan, taxpayers could choose to receive a dollar-for-dollar tax credit for donations to scholarship-granting organizations. Unlike traditional donations to education-related charities, such as colleges and universities, these donations impose no additional cost on the taxpayer. If taxpayers place a priority on education and would rather donate funds to provide scholarships to low-income children than to non-earmarked government spending, the scholarship credit could be quite popular. Critics of scholarship credits frequently point to the fact that only 2.2 percent of taxpayers claimed the Arizona’s scholarship credit in 1999 as proof that plans like the BISC will provide few, if any, scholarships.59 While it is theoretically possible that the BISC plan or similar plans could have donation rates as low as rates in Arizona, they are unlikely to for several reasons. Arizona’s law, for instance, does not allow corporations to contribute to scholarship-granting organizations. Why is that important? Corporations are more likely to donate money to scholarship organizations than individuals because they have an added incentive: publicity for their corporation and its products. The media coverage generated by large corporate donations should raise awareness on the individual side. The absolute level of donations is therefore likely to be higher under a program that allows
The Buckeye Institute for Public Policy Solutions
27
Empowering Parents: Using Ohio’s Tax Code to Promote Choice and Innovation in Ohio’s Public Schools
for corporate giving. Corporate giving, combined with high donation limits for individuals, is key to high participation rates because BISC use depends on program awareness. The inclusion of corporations and large individual donors has the possibility of providing significant awareness for the credit through the media.
Individual Donations The BISC plan creates a nonrefundable credit against Ohio income taxes for donations made to scholarship-granting organizations. Taxpayers whose filing status is single or married filing separately are given a credit of up to $1,000. Ohioans whose filing status is married filing jointly are allowed up to a $2,000 credit against Ohio’s personal income tax.
Tax liability by income class for joint filers in Ohio is presented in Table 6. In 1998, the most recent year for which appropriate tax data is available, 1,948,192 joint income tax returns were filed in Ohio. Assuming a participation rate of 2.2 percent and credits claimed equaling 90 percent of a filers state tax liability or $2,000, whichever is less, the BISC is estimated to raise $48.5 million annually from joint filers. Table 7 presents data from the Ohio Department of Taxation on Ohioans whose filing status is
28
The Buckeye Institute for Public Policy Solutions
Empowering Parents: Using Ohio’s Tax Code to Promote Choice and Innovation in Ohio’s Public Schools
single or married filing separately. In 1998, there were 3,401,480 Ohioans filing as single or married filing separate. Under the BISC plan, these Ohioans could receive a tax credit of up to $1,000 against their Ohio personal income tax liability for eligible donations to scholarship organizations. Assuming that 2.2 percent of filers would take advantage of 90 percent of the credit available to them, the BISC is estimated to raise $27.7 million from single filers. Combined with $48,571,658 from joint filers, the BISC is estimated to raise $76.2 million from individual Ohioans.
Corporate Donations The BISC, in addition to the individual portion analyzed above, would also seek to establish a credit against the corporate franchise tax for contributions made to scholarship-granting organizations. Credits would be limited to 20 percent of the annual tax liability of a corporation. The Ohio Department of Taxation reports that, in 1998, there were 110,279 general corporations in the state of Ohio and that they paid over $829 million in corporate franchise taxes during that year. Assuming that 6 percent of all general corporations donated 20 percent of their annual state tax liability, the total scholarship dollars raised through general corporate giving is equal to $9.9 million.
The Buckeye Institute for Public Policy Solutions
29
Empowering Parents: Using Ohio’s Tax Code to Promote Choice and Innovation in Ohio’s Public Schools
This number represents a conservative approximation of the dollars that could be raised from general corporations. Ohio’s Legislative Service Commission, for example, estimated that in 1999, corporate giving to schools in Ohio was $21 million.60 It is not clear what percentage of that amount goes to colleges and universities and what percentage goes to K-12 organizations. Assuming that the overall amount donated to schools does not increase, the question remains; how much of that giving will go to qualifying nonprofit organizations? Given the relative costs associated with donations to qualifying and non-qualifying education organizations, it is reasonable to assume that many corporations will shift their education-related donations from non-qualifying organizations (e.g. colleges & universities, for which they receive a tax deduction) to qualifying organizations (for which they receive a tax credit). This is not
30
The Buckeye Institute for Public Policy Solutions
Empowering Parents: Using Ohio’s Tax Code to Promote Choice and Innovation in Ohio’s Public Schools
to imply that the BISC will not induce new education-related donations, just that new education-related donations are not necessary to achieve the modest giving levels estimated.
Table 9 uses the same parameters to estimate giving from Ohio’s financial corporations. In 1998, Ohio had 386 financial corporations that paid over $99 million in corporate franchise taxes. If 6 percent of Ohio’s financial corporations give 20 percent of their corporate tax liability to scholarship organizations, the BISC would raise $1.18 million for scholarships for low-income children.
The Buckeye Institute for Public Policy Solutions
31
Empowering Parents: Using Ohio’s Tax Code to Promote Choice and Innovation in Ohio’s Public Schools
Table 10 summarizes possible individual and corporate giving under the BISC plan. It is estimated that the BISC would raise $87.4 million in donations to scholarship-granting organizations. How many scholarships would $87.4 million in donations fund? The BISC plan requires that scholarship-granting organizations distribute no less than 80 percent of their eligible donations out in the form of scholarships. Deducting 20 percent of $87.4 million for overhead, $69.9 million would be left for scholarships.
Scholarship-granting organizations will have two main restrictions in giving scholarships. One, they cannot be for more than 90 percent of a school’s tuition and two, the value of the scholarship is restricted to a maximum of $4,500. In all likelihood, however, scholarships given under the BISC plan would average far less based on evidence from Ohio’s current scholarship granting programs. The Dayton-based Parents Advancing Choice in Education (PACE) program is now in its fourth school year and in the last year for which data is available (1999-2000), the average value of the PACE scholarship was $1,382.61 The Children’s Scholarship Fund (CSF) of Cincinnati provided an average scholarship amount of $1,053 during the 2001-2002 school year.62 Although the CSF information is more recent, in the interest of making a conservative estimate of revenue loss, the assumption is made that the average scholarship given will parallel the average PACE scholarship.63 Assuming an average scholarship of $1,382, $69.9 million would provide 50,590 total scholarships – enough to fund a scholarship for every low-income current private school student and 38,495 current public schools students, as seen in Table 11.64
32
The Buckeye Institute for Public Policy Solutions
Empowering Parents: Using Ohio’s Tax Code to Promote Choice and Innovation in Ohio’s Public Schools
Impact on Finances of State and Local Governments General Revenue Fund losses under the BISC are limited by the amount of donations given to scholarship-granting organizations. Every dollar raised by scholarship-granting organizations would be 89½ cents lost for the state coffers. Therefore if the BISC generated donations of $87.4 million, the direct state general revenue fund loss is estimated at just over $78.2 million (Table 12).
Just like with the BITC, however, indirect costs and savings exist when students switch from public schools to private schools. The BISC is estimated to raise enough money to fund scholarships for 38,495 new private school students. The 38,495 new private school students will incur additional costs for the state as well as additional savings. Scholarship students are estimated to cost the state an additional $28.2 million for transportation, health and nutrition programs, etc.65 These same students, however, will also be saving the state around $3,069 each, or $118.1 million in total. Table 12 shows that the net fiscal impact of these various direct and indirect costs equals a $11.6 million surplus.
Local government funds receive 10.5 percent of personal income tax revenues. The $87.4 million in scholarship donations made as a result of the BISC would cost local governments $9.1 million. In addition, local school districts would see a reduction in state aid of $118 million for the
The Buckeye Institute for Public Policy Solutions
33
Empowering Parents: Using Ohio’s Tax Code to Promote Choice and Innovation in Ohio’s Public Schools
38,495 students transferring out of public schools. The local school districts, however, will save money from no longer have to educate transferring students. Assuming the savings to local governments average 50 percent of total costs, it is estimated that the 38,495 new private school students would save Ohio’s local school districts over $68 million. The net fiscal impact of the BISC on local governments presented in Table 13 is therefore estimated to be a loss of nearly $60 million.
Table 14 gives a summary of the combined impact of the BISC on state and local government finances. The BISC is estimated to save state government $11.6 million and cost local governments $60 million. They combine for a $47.5 million annual revenue loss.
VII. CONCLUSION This report introduces the concept of education tax credits for Ohio. The plans consist of two separate credits – the Buckeye Institute Tuition Credit (BITC) and the Buckeye Institute Scholarship Credit (BISC). Parents who send their children to private school not only spare the state the cost of educating their children, but also provide much-needed property tax dollars to help educate the children of their friends and neighbors. The BITC recognizes that it is only appropriate to give a modicum of tax relief to these parents. The BISC seeks two purposes: to provide scholarships to poor Ohio schoolchildren so that they may enjoy the benefits of school choice, and to revive the philanthropic spirit of Ohioans with respect to education. Subsidization of education through state and local taxation, while generating dollars, does not allow for a wider range of choices and, because of its mandatory nature, does not engender a civil society.
34
The Buckeye Institute for Public Policy Solutions
Empowering Parents: Using Ohio’s Tax Code to Promote Choice and Innovation in Ohio’s Public Schools
Table 15 gives the combined impact of the BITC and the BISC plan on state and local government finances. Combined they are estimated to cost state and local governments around $97 million annually, or just over what the state spends to subsidize graduate education for out-of-state and international students.66 Shouldn’t Ohio children have the same opportunity to choose a learning environment (and still receive state help) as out-of-state graduate students? The BITC and BISC represent the next step in Ohio’s role as a leader in market-based education reform. Creating scholarship opportunities for 38,495 low-income Ohio youths would do more than give these children an opportunity. It would create an environment where public schools would have to be more directly accountable to the needs of Ohio’s parents and kids.
The Buckeye Institute for Public Policy Solutions
35
Empowering Parents: Using Ohio’s Tax Code to Promote Choice and Innovation in Ohio’s Public Schools
Endnotes National Commission on Excellence in Education, A Nation at Risk: The Imperative for Education Reform: A Report to the Nation and the Secretary of Education (Washington, DC: Government Printing Office, 1983). 1
Keating Holland, “Poll: Americans Generally Favor School Vouchers, But Unsure of Bush Plan,” January 10, 2001. Available on-line at http://www.cnn.com/2001/ALLPOLITICS/stories/01/10/cnn.poll.index.html. 2
3
Elie Pieprz, “Arizona Leads the Way on School Reform,” Investor’s Business Daily, 13 May 1997.
4
June Kronholz, “High Court’s Decision to Fuel Fight Over School Vouchers,” Wall Street Journal, 19 February 2002. In addition, both components of the BITC and the BISC cannot be carried forward from one tax year to the next.
5
According to the 2000-2001 school year data available from the Ohio Department of Education’s website at www.ode.state.oh.us.gov/ Ohio’s local public schools had approximately 494,052 students enrolled from households approved to receive free and reduced price lunch. For the purposes of this report, we assume that the percentage of private school students eligible for free and reduced price lunches is equivalent to the percentage of public school students eligible. 6
7
The maximum scholarship amount should be annually adjusted for inflation using the Consumer Price Index.
This is a relatively recent phenomenon resulting from school consolidation. One-room schoolhouses, for example, frequently segmented students according to ability, not age. Perhaps this approach, which was derided as being simplistic and unfit for an advanced country, should be reconsidered. Consider the following passage from the 1916 novel Understood Betsy. The novel details the transition of a young girl from a life in the city to one in the country. Upon entering her new one-room schoolhouse, she is surprised to find that she is being placed into subjects based upon her ability. 8
“What’s the matter? asked the teacher, seeing her bewildered face.” “Why – why,” said Elizabeth Ann, “I don’t know what I am at all. If I’m second-grade arithmetic and seventh-grade reading and third-grade spelling, what grade am I?” The teacher laughed. “You aren’t any grade at all, no matter where you are in school. You’re just yourself, aren’t you? What difference does it make what grade you’re in? And what’s the use of your reading little baby things too easy for you just because you don’t know your multiplication table?” Dorothy Canfield, Understood Betsy (1916, 9th ed., Chicago, IL: Holt, Reinhart and Winston, 1964). Gary J. Scott, “Equal Educational Opportunity and the Significance of Circumstantial Knowledge,” Education Economics 8, no. 3 (2000): 197-208. 9
Ibid., 202. This is because schools would attempt to create an artificial competitive environment. Instead of having several schools, each appealing to a certain segment of the student population, you would need several schools with multiple classrooms in order to achieve the same goal. In fact, research has found that private schools, because they operate in a competitive environment where parents can choose from among a variety of different schools, have little incentive to track students according to ability. Dennis Epple, Richard Romano, and Elizabeth Newlon, “Ability Tracking, School Competition, and the Distribution of Educational Benefits,” National Bureau of Economic Research, Working Paper 7854 (August 2000). 10
See, for example, Robert E. Prasch and Falguni A. Sheth, “What is Wrong with Education Vouchers?” Journal of Economic Issues 35, no. 2 (June 2000): 509-515. 11
Stephen J. Gilles, “Why Parents Should Choose,” In Susan E. Mayer and Paule E. Peterson, eds., Earning and Learning: How Schools Matter (Washington, DC: Brookings Institution Press, 1999): 395. 12
36
The Buckeye Institute for Public Policy Solutions
Empowering Parents: Using Ohio’s Tax Code to Promote Choice and Innovation in Ohio’s Public Schools 13
Gilles, 397.
14
Ibid.
In economist terms, traditional school choice is called “Tiebout choice,” named after economist Charles Tiebout, whose seminal 1954 paper developed the theory that people choose among different local governments based upon the local public goods (e.g., schools, hospitals, etc.) For more see Charles Tiebout, “A Pure Theory of Local Expenditures,” Journal of Political Economy 64, no. 5 (October 1956): 416-424. 15
Caroline M. Hoxby, “Does Competition among Public Schools Benefit Students and Taxpayers?” American Economic Review 90, no. 5 (December 2000): 1209-1238. 16
17
Ibid., 1222.
18 Ibid., 1236-37. For example, a student living in Boston (70 school districts within a 30-minute drive of the city) can be expected to score one-quarter to one-half of a standard deviation better on standardized tests than a student in an area like Miami (one school district for virtually the entire city).
Joshua Hall, “Private School Enrollment and Private School Performance: Evidence from Ohio,” unpublished masters thesis, Athens, OH: 1999. 19
Richard K. Vedder and Joshua Hall “Private School Competition and Public School Teacher Salaries,” Journal of Labor Research 21, no. 1 (Winter 2000): 161-168 20
A comprehensive survey of this literature is found in Robert Barro and Xavier Sala-I-Martin, Economic Growth, New York, NY: McGraw-Hill, 1995. For a study finding no relationship, see James D. Gwartney, Robert A. Lawson and Randall G. Holcombe, “Economic Freedom and the Environment for Economic Growth,” Journal of Institutional and Theoretical Economics 155, no. 4 (December 1999): 643-663. 21
Data on number of school board members and population come from J. Kenneth Blackwell, Ohio Municipal, Township and School Board Roster 2000-2001, (Columbus, OH: Secretary of State’s Office, 2001). 22
Lawrence W. Kenny and Amy B. Schmidt, “The Decline in the Number of School Districts in the U.S.: 1950-1980,” Public Choice 79, no. 1 (1994): 1-18. 23
Michael Gougis, “L.A. Mummified! The Small Minority Community of Carson is Most Likely to be the First to Break Away from Giant L.A. United,” New Times Los Angeles, 2 August 2001. 24
Center for Educational Innovation, The Right to Choose: Public School Choice and the Future of American Education, Education Policy Paper Number 2 (New York, NY: Center for Educational Innovation, 1989), 18. 25
26
Milton Friedman, Capitalism and Freedom, (1962, 4th ed., Chicago, IL: University of Chicago Press, 1964), 86.
27
Ibid.
Although these are arguments presented by Friedman, he does not believe that the benefits of compulsory education outweigh the costs. See Milton Friedman and Rose Friedman, Free to Choose, (New York, NY: Avon Books, 1981), 152. 28
Regular visitors to any of Ohio’s urban public schools will not find this view surprising. The pledge of allegiance, for example, is often nowhere to be found in Ohio’s urban schools. For a more scholarly view, see Jay P. Greene, Joseph Giammo, and Nicole Mellow, “The Effect of Private Education on Political Participation, Social Capital, and Tolerance: An Examination of the Latino National Political Survey,” Georgetown Public Policy Review 5, no. 1 (Fall 1999): 53-71. 29
Jay P. Greene, Choice and Community: The Racial, Economic, and Religious Context of Parental Choice in Cleveland, (Columbus, OH: Buckeye Institute for Public Policy Solutions, November 1999). 30
The Buckeye Institute for Public Policy Solutions
37
Empowering Parents: Using Ohio’s Tax Code to Promote Choice and Innovation in Ohio’s Public Schools This section borrows heavily from Section IV of Joshua Hall, Tax Expenditures: A Review and Analysis, Joint Economic Committee Study, (Washington, DC: Government Printing Office, August 1999). 31
32
Ohio Constitution, Article I, Section 7.
33
Simmons-Harris v. Goff, 86 Ohio St.3d 1, 10 (1999).
34
Ohio Constitution, Article VI, Section 2.
35
Ibid.
36
Simmons-Harris v. Goff, 86 Ohio St.3d at 10.
37
U.S. Constitution, Amendment I.
38
See Committee for Public Education and Religious Liberty v. Nyquist, 413 U.S. 756 (1973).
39
See Agostini v. Felton, 521 U.S. 203, 226 (1997).
David J. Owsiany, “Cleveland, School Choice, and the Constitution,” Brief Analysis (Dallas, TX: National Center for Policy Analysis, December 18, 2001. 40
While all parents and guardians of children enrolled in elementary and secondary school are eligible for the BITC plan (to the extent they have sufficient Ohio taxable income), the numbers taking advantage of the BITC credit are likely to be small relative to the total eligible population. Policy makers, if they so wish, could make the tuition tax credit broader in order to spread the benefits to a greater constituency. For example, the credit could be expanded to include payments made to tutoring organizations such as Sylvan Learning Centers or for purchases of education-related materials such as computers and books. The expansion of the credit in this manner would probably increase the number of tax filers taking advantage of the credit. 41
Although no specific data is available, every year several Ohio families pay tuition to attend school in a public school district in which they do not reside. Families do so for many reasons, including: athletics teams unavailable in home school district; advanced placement classes unavailable in home district; the desire for a child to finish out high school with his/her friends after a recent move. The number of students taking advantage of this option, however, is likely to remain small and thus is not directly considered in the following analysis. 42
43 Dale McDonald, United States Catholic Elementary and Secondary School Statistics 1999-2000: Synopsis of the Annual Statistical Report on Schools, Enrollment and Staffing (Washington, DC: National Catholic Education Association, 2000), 7. 44
Ibid.
Department of Education, National Center for Education Statistics, Digest of Education Statistics 2000, Table 62, data for 1993-94 updated to 1999 using the Consumer Price Index. 45
46
Ohio Department of Education, “RC 2001 State Data.”
Barry R. Chiswick and Stella Koutroumanes, “An Econometric Analysis of the Demand for Private Schooling,” Research in Labor Economics 15 (1996): 209-237. 47
48 The 95 percent confidence interval for this price elasticity was {.59, .38}. In other words, there is only a 5 percent chance that the “true” elasticity is below .38 or above .59.
Legislative Budget Office “Redbook.” Available on-line at http://www.lbo.state.oh.us/124ga/budget/ education/ edu/factsfig.htm. 49
50
38
Cited in Darcy Ann Olsen, Carrie Lips, and Dan Lips, “Fiscal Analysis of a $500 Federal Education Tax Credit to
The Buckeye Institute for Public Policy Solutions
Empowering Parents: Using Ohio’s Tax Code to Promote Choice and Innovation in Ohio’s Public Schools Help Millions, Save Billions,” Cato Policy Analysis No. 398, May 1, 2001, ff. 22. Low-income was defined as those in the bottom quartile of all incomes. Joseph L. Bast, “Fiscal Impact of Proposed Tuition Tax Credits for the State of New Jersey,” Heartland Institute Policy Study No. 96 (Chicago, IL: Heartland Institute, April 2000). 51
Limited evidence on the experience with tuition tax deductions in Minnesota show that in the early years of the program participation was less than 25 percent of eligible taxpayers. Ibid., 25. 52
This number was estimated by summing total non-public subsidies proposed in the executive budget for FY 2002 ($177,645,088) and dividing by the number of private school students (241,908) in Ohio. 53
54
RC2001 District Data File, available on-line at http://www.ode.state.oh.us/
The impact of the BITC and BISC on local governments should be viewed as the impact of the BITC and BISC on taxpayers statewide, not on taxpayers in particular local governmental units or on the units themselves. This is important because the funds will be lost and gained by different governmental units that may or may not cover the same geographic area. Library budgets and school budgets, for example, are completely separate. It is difficult to know, a priori, the effect on taxpayers in a particular subdivision due to the overlap of local governments. 55
56
This study considers any reduction in state aid to be a “loss” to local governments.
Independent Sector, Giving and Volunteering in the United States: Summary of Findings from a National Survey, (Washington, DC: Independent Sector, 2000). 57
Darcy Ann Olsen, Carrie Lips, and Dan Lips, “Fiscal Analysis of a $500 Federal Education Tax Credit to Help Millions, Save Billions,” Cato Policy Analysis No. 398, May 1, 2001. 58
59
Ibid., 9.
Jean J. Botomogno, Fiscal Note and Local Impact Statement: H.B. 202 (Columbus, OH: Ohio Legislative Service Commission, 13 June 2001). 60
Martin R. West, Paul E. Peterson, and David E. Campbell, “School Choice in Dayton, Ohio After Two Years: An Evaluation of the Parents Advancing Choice in Education Scholarship Program,” (Cambridge, MA: Program on Education Policy and Governance, August 2001), Table 1. 61
62
Lisa Claytor, program director of CSF, electronic mail transmission, 1 October 2001.
The average scholarship amount in Arizona during the 2000-01 school year was for $856. The Arizona program, however, was not strictly limited to low-income children as we propose here. 63
It is unclear if nearly 38,000 open spaces currently exist for scholarship students in Ohio’s private schools. Concerned policymakers might want to consider a phase-in of the scholarship credit in a manner similar to that employed in Pennsylvania, where donations were limited to a set level. This limited the state’s direct revenue loss and gave the private school marketplace sufficient time to adjust. 64
65
As earlier, this assumes that costs for the average new private school students is equal to $734.
Memo from Richard J. Petrick, Vice Chancellor for Finance, Ohio Board of Regents, to Representative Lynn E. Olman, January 3, 2002. 66
The Buckeye Institute for Public Policy Solutions
39
Empowering Parents: Using Ohio’s Tax Code to Promote Choice and Innovation in Ohio’s Public Schools
About the Authors Joshua Hall is the Director of the Center for Education Excellence at the Buckeye Institute. From January 1999 until October 2000, Mr. Hall was a staff economist for the Joint Economic Committee of the U.S. Congress. A native of Cleveland Heights, Josh matriculated at Ohio University where he earned his B.B.A. in business economics in 1997 and his M.A. in economics in 1999. His master’s thesis considered the effect of private school attendance on public school student performance. Mr. Hall’s areas of expertise include the economics of education, labor economics, and tax policy. During his time on the Joint Economic Committee, he authored several studies including Tax Expenditures: A Review and Analysis, The Roots of Broadened Stock Ownership, and Investment in Education: Private and Public Returns. His article (co-authored with Richard Vedder) “Private School Competition and Public School Teacher Salaries” appeared in the winter 2000 issue of the Journal of Labor Research. In addition, his opinion pieces have run in newspapers throughout Ohio.
Tony Caporale is an associate professor in the department of economics at Ohio University. He earned his Ph.D. in economics from George Mason University in 1992. He has published in numerous academic journals, including The Journal of Economic History, Public Choice, Journal of Money, Credit and Banking, and The Journal of Law and Economics. He lives in Athens Ohio.
40
The Buckeye Institute for Public Policy Solutions
Empowering Parents: Using Ohio’s Tax Code to Promote Choice and Innovation in Ohio’s Public Schools
Other Education Research from the Buckeye Institute Studies Choice and Community: The Racial, Economic, and Religious Context of Parental Choice in Cleveland, November 1999. Children First: A Discussion Paper on School Finance and Education Reform in Ohio. November 1997 Giving Choice A Chance: Cleveland and the Future of School Reform, September 1998. Policy Briefs Fiscal Impact of Proposed Tax Credits for Contributions to Qualifying Nonprofit Scholarship Organizations under H.B. 202, October 2001. Perspectives & Op-Eds Real Education Reform Needed – July 2001. If You Can’t Beat Them, Join Them – February 2001. Research, Not Politics, Should Drive School Funding Reform – January 2001. Community Schools Offer Vital Alternative to Traditional Public Education – March 2000. Tax Relief and School Choice: a Win-Win Proposition – January 1998. Policy Notes Taxing Ohio’s Farmland, Taxing Ohio’s Schools? – March 2002. Private Vouchers Improve Parental Satisfaction – October 2001. Education in Ohio is Top Heavy with Administration – June 2001. Are Some Ohio School Districts Too Large? – January 2001. Private Education Vouchers Show Academic Improvement for African-Americans – October 2000. Private School Competition Raises Salaries of Public School Teachers – March 1999. Private School Competition Improves Public School Performance – December 1998.
The Buckeye Institute for Public Policy Solutions
41
Empowering Parents: Using Ohio’s Tax Code to Promote Choice and Innovation in Ohio’s Public Schools
42
The Buckeye Institute for Public Policy Solutions
Empowering Parents: Using Ohio’s Tax Code to Promote Choice and Innovation in Ohio’s Public Schools
The Buckeye Institute for Public Policy Solutions
43
Empowering Parents: Using Ohio’s Tax Code to Promote Choice and Innovation in Ohio’s Public Schools
44
The Buckeye Institute for Public Policy Solutions
