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The Federal Government and School Choice

• McKenzie Snow

During National School Choice Week, ExcelinEd’s team is highlighting unique aspects of educational choice policy. Today, McKenzie Snow explores ways the federal government can support school choice in the states.

Check out related posts on education savings accounts, tax-credit scholarshipscharter schools and opportunities for states to advance school choice through ESSA.

As you may have noticed, school choice is growing—fast. Today, 25 states plus Washington, D.C. host 50 private education choice programs. Nearly 7,000 charter schools serve students in 43 states and Washington, D.C. As state legislative activity burgeons, Washington is becoming increasingly interested in how the federal government can support the immense success of school choice in the states.

The recent inauguration of President Donald Trump and nomination of Secretary-designate Betsy DeVos has made the growing interest in federal support for school choice even more warranted. The centerpiece of the president’s education platform was an additional federal investment of $20 billion towards school choice, intended to expand access to high-quality education options, in particular, to children living in poverty.

Many have speculated how a federal initiative supporting school choice could be structured in a way that respects federalism and makes federal dollars more impactful for students, especially for those who are disadvantaged. To prudently pursue the $20 billion campaign promise, possible avenues include:

  • Using the federal tax code to support school choice;
  • Allowing existing federal dollars to follow the child to the schools and educational services of their choice; and
  • Increasing support for existing federal competitive grant programs or creating a new program.

Perhaps the most popular and clear road forward is to use the federal tax code to support school choice, as proposals could be passed during the budget reconciliation process with 51 votes in the Senate, rather than 60 votes. A federal tax-credit scholarship program, for example, could provide federal tax credits to individuals and corporations who contributed to Scholarship Granting Organizations (SGOs), which in turn grant scholarships to low-income children. (See Senator Marco Rubio’s bill from last Congress.) Scholarships could help eligible children pay for the schools and educational services of their choice, with possible allowable expenses ranging from private school tuition to transportation to a non-residential public school. A federal tax-credit scholarship program could expand the reach of existing state tax-credit scholarship programs, and, depending on how it’s structured, could also provide students scholarships in the 33 states without programs.

Likewise, the tax code could be used to encourage private savings for a designated beneficiary’s K-12 expenses by expanding the allowable uses of 529 college savings accounts. (See Representative Luke Messer’s bill from last Congress.) But, why is this needed since we already have Coverdell Education Savings Accounts (ESAs), in which savings for a designated beneficiary’s higher education and K-12 expenses can grow tax-free until distributed? Unfortunately, Coverdell ESAs are only available to families below a specified income level and total contributions for a beneficiary are capped at $2,000 per year. (For context, the National Center for Education Statistics reports that the average tuition for Catholic elementary schools, the lowest average for private school tuition, was $5,330.) These ill-advised limitations have resulted in an underutilization of Coverdell ESAs. An expansion of 529 accounts to K-12 expenses coupled with sunsetting Coverdell ESAs is an attractive option that fits Congress’s overarching goal of tax code simplification.

In addition to opportunities to support school choice with the federal tax code, Washington could allow existing federal dollars to follow eligible children to the schools and educational services of their choice. Specifically, giving states the flexibility to make their Title I funds “portable has long been advocated. (See Chair Lamar Alexander’s bill from the 113th Congress and Representative Luke Messer’s bill from the last Congress.) Under Title I portability, the federal government would continue to allocate funds to states the same way, except that a state could take their total Title I allocation and instead opt-in to design and implement a portable Title I program. This would allow states to disburse their Title I funds in a more transparent, student-centered and targeted way so that existing dollars can make a meaningful impact on the disadvantaged students served.

Besides incentivizing private contributions or making existing federal spending more productive, federal competitive grant programs are another way to support school choice in the states. For example, the Charter School Program (CSP)—which provides federal grants to start new charter schools and to replicate and expand high-performing existing charter schools nationwide—merits increased funding. With more than one million student names on waiting lists, the unmet parent demand for new charter seats is evident. A greater appropriation to the CSP would empower the charter community to expand its reach to more students in more geographic locations in more innovative ways. Likewise, a federal competitive grant program to provided start-up funding to private schools has also been considered.

Beyond these different ways to support school choice in the states, multiple legislative options have been proposed to expand high-quality options available to students whose education is directly within the purview of the federal government. These include:

  • Reauthorizing and expanding the DC Opportunity Scholarship Program (OSP);
  • Providing Education Savings Accounts (ESAs) to students in Bureau of Indian Education (BIE) schools or living on Native American reservations; and
  • Providing scholarships to military dependents living on bases.

New ideas are exciting, but Uncle Sam must also remember to support the success of existing federal school choice programs. It’s past time to reauthorize and expand the DC Opportunity Scholarship Program (OSP). (See Representative Chaffetz’s bill from last session.) The OSP provides scholarships to low-income students to attend a private school of their choice. Yet, there are well over four times as many student names on the wait list as the number of scholarships available. Despite habitual political opposition in Washington, D.C., the OSP stands on its own, firmly rooted in results. Nearly 90 percent of participating students graduate high school (30 percentage points higher than Washington, D.C. traditional public schools) and 90 percent go on to college. The DC Opportunity Scholarship Program embodies its namesake, providing low-income children a vital educational lifeline.

Senator John McCain is working to provide better educational options to another group of students whose education is the federal government’s responsibility—Native American children. Senator McCain proposed that students who live on federal Native American reservations or who are eligible to attend BIE schools have access to ESAs. BIE schools, which are run by the Interior Department’s Bureau of Indian Affairs, are notoriously, abhorrently underperforming. McCain’s proposal would allow part of the $15,000 paid per pupil to instead provide an eligible child with an ESA—a flexible, multiple-use education account that allows parents to customize their child’s education—in the states with programs. (Arizona, Florida, Mississippi and Nevada have enacted ESA programs and would have eligible students.)

Likewise, Senator Tim Scott aims to provide better educational options to children in military families, whose parents’ sacrifice for our country brings about unique education challenges for dependents, including transience. Senator Scott proposed a five-year pilot program to provide scholarships to military dependents living on bases that would be administered chiefly by the Department of Defense.

As you’ve read, Washington is rich with admirable, unique ideas to seize this unprecedented opportunity for the federal government to support school choice. We’ve identified three meaningful reforms to expand high-quality options available to students whose education is directly within the purview of the federal government, as well as several judicious, constructive ways the federal government can support the immense success of school choice in the states. When navigating these new waters, we hope you will assess such proposals by their respect for federalism, student-centeredness and ability to have a meaningful impact on children’s lives. We spot some gems above.

About the author

McKenzie Snow @mcksnow

McKenzie Snow is a Policy Analyst in Educational Choice for the Foundation for Excellence in Education. Previously, McKenzie worked at the Charles Koch Foundation where she helped guide investments in university research centers. She was a lecturer at the University of the Free State in Bloemfontein, South Africa, where she was the recipient of a Fulbright grant. As a Rotary Ambassadorial Scholar, she pursued a master’s degree in International Development at Lund University in Sweden. McKenzie earned a bachelor’s degree in Political Science from Kansas State University.