This piece of legislation establishes a tax credit for corporations who donate to non-profit organizations that provide education improvement scholarships to low-income, academically at-risk children. On top of that, it would improve public schools and save the taxpayers of the Commonwealth tens of millions of dollars.
This is what the Patron had to say about his bill:
Imagine a law that would: 1. enable low-income academically at-risk children to receive new and improved educational opportunities, 2. save state and local taxpayers tens of millions of dollars per year, and 3. improve local public schools.
Sounds like a great opportunity for “bi-partisanship,” doesn’t it?
That’s why Delegates Algie Howell (D-Norfolk), Tag Greason (R-Loudoun) and I introduced HB 321, our “Educational Improvement Scholarships” bill. Our bill allows corporations to receive tax credits for contributing to foundations that provide K-12 educational scholarships to low-income students. Recipients’ parents could then use those scholarships to choose the nonpublic schools best suited to their child’s needs.
Our bill is modeled after Florida’s incredibly successful tax-credit scholarship program which now has almost 40,000 children attending a school of their parent’s choice. In Florida 75% of these children come from minority families with an average income of $26,000 per year. In the past 10 years, Florida’s legislature has voted four times to expand this program; because they now know it works! Its last 2010 expansion enjoyed majority support from the Florida Legislative Black Caucus and all but two Hispanic legislators.
The students benefiting from these scholarships are among the lowest performing students, and among the poorest. The scholarships can be used only by students eligible for free or reduced-price meals, and on average the recipients are only 17 percent above the poverty line. A recent Florida Department of Education report noted, “Scholarship participants have significantly poorer test performance in the year prior to starting the scholarship program than do non-participants. … These differences are large in magnitude and are statistically significant, and indicate that scholarship participants tend to be considerably more disadvantaged and lower-performing upon entering the program than their non-participating counterparts.”
These are the children that have had the most challenges in life and need the most help. Their parents have tried everything and now feel boxed in. Their children often need a different educational setting than a one-size-fits-all public school system can offer, and while our program is not a silver bullet, it clearly would provide new opportunities and new options for these students.
But how does a “tax credit” save taxpayers tens of millions of dollars per year?
Under our bill, corporations would receive a 70 percent state tax credit for contributions to K-12 scholarship foundations. In turn, those scholarship organizations must spend 90 percent or more of the contributions on scholarships for low-income students. Each time a student uses a scholarship, the state will save the full amount it spends on that child.
In other words, a $100,000 donation will “cost” the state $70,000 in tax credits. But it will “save” the state $90,000 in state education expenses. Additionally, local governments may save $6,000 per year, on average, per child that moves to a non-public school.
This math works in Florida, and multiple studies demonstrate savings of more than $30 million a year. In 2009, Florida’s Office of Program Policy Analysis and Government Accountability (OPPAGA) estimated that the scholarship program saved the state $36.2 million. In 2008, OPPAGA estimated a net savings of $38.9 million. And the respected Collins Center for Public Policy concluded in 2007 that Florida had accrued nearly $140 million in public school revenues since 2002 as a result of the savings generated.
Virginia’s State Department of Taxation agrees that “there would be some state General Fund cost reduction resulting from students moving from public to private schools.” The only question they raise is whether there would be sufficient utilization. Florida answers that question, too: In that state, almost 40,000 students use a scholarship – with a waiting list of almost 10,000 children. Since the inception of the Florida program there has always been more children applying for, wanting scholarships than there has been money raised to fund those scholarships. Utilization will not be a problem.
And our bill goes Florida one step better. In Florida, local property tax revenues are combined with state revenue, and localities lose control of their own funds. In our bill, local school systems will continue to receive their state sales tax revenue and, if they so choose, be able to retain what they raise and spend locally – even though they will no longer have to educate a child that left their system.
Perhaps most importantly, the Florida program has had a positive academic impact on local public school systems. The December 7, 2010 issue of Education Week reported on a study of the Florida program for the National Bureau of Economic Research, noting that the “results show modest, but clear gains in reading and math test scores for students in public schools that faced private school competition through the Florida program. The closer to the nearest private school, the greater the public school gains. And for public schools having a larger number of private schools nearby, the effect was even greater, the study showed.”
In short, numerous independent studies have proven that Educational Improvement Scholarships have given new and improved education opportunities to low-income, at-risk students, saved the taxpayers tens of millions of dollars per year and also had a positive academic impact on students remaining in nearby public schools. What’s not to like?
Which is exactly the point! The primary purpose of any K-12 education bill must be to help Virginia students become better prepared for the demands of the 21st century, especially during these difficult economic times.