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School Choice

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Our system of tax-supported education has for 150 years provided many of the primary embarrassments to America’s image as a just society. America, for example, is still resolutely unfair to the children attending government schools in those districts that are disfavored by the poverty of their tax bases.

…[W]e still arrange education so that children of the wealthy can cluster in chosen government enclaves or in private schools; the rest get whatever school goes with the residence the family can afford.

…Choice is the obvious remedy for such maldistribution and discrimination. A system of universal state scholarships, properly designed, would remove the anomaly of the impoverished district and the imposition of state ideology upon dissenters. This is the primary hope for ending the balkanization of children by race and family wealth. Choice, indeed, is the specific therapy for every historic pathology of the schools.

Although written over two decades ago, these words of Professor James Koons of the University of California – Berkeley law school still ring true today. They summarize the major issues that propel the school choice debate and articulate the hope that school choice offers parents and students alike.

Parents in North Carolina—like parents everywhere— cherish the freedom to raise and educate their children consistent with their own values and beliefs. It is a freedom that has been supported by tradition and nearly a century of Supreme Court law. In Pierce v. Society of Sisters (1925), two private schools sued the State of Oregon over a statute requiring parents to send their children to a public school. The Supreme Court ruled the Oregon statute unconstitutional. The court held, “the liberty of parents and guardians” includes the right “to direct the upbringing and the education of children under their control.” Moreover in Prince v. Massachusetts (1944), the Supreme Court again confirmed the existence of parents’ rights when it ruled, “it is cardinal with us that the custody, care and nurture of the child resides first in the parents, whose primary function and freedom include preparation for obligations the state can neither supply nor hinder.”4 This freedom is something that has seldom been questioned. For 100 plus years, parents and the local community have been partners in a social compact that educates young people in the public schools and teaches students the rights and responsibilities of living in a democratic society.

Today, however, that freedom is imperiled in North Carolina and elsewhere. A public school system that assigns students to schools based on nothing more than zip codes traps thousands of lowincome students in failing schools. Such policies condemn students to a life that lacks opportunity. In reality, such policies take away a parent’s right to educate their children at a school whose values and beliefs mirror their own. It is a tragedy that parents who once freely trusted the public schools to teach their children the three Rs now find themselves challenged by a system that is increasingly hostile to the nation’s Judeo-Christian heritage, and the moral norms and values of the surrounding community.

Expanded school choice is the best instrument for restoring parents’ rights, increasing access to quality schools, and infusing meaningful, real reform into the public schools. Thriving educational alternatives like charter schools, home schools, private schools, and online learning show that quality education comes in a variety of shapes and sizes.

Strong Support for Choice

Recent North Carolina poll data confirm that support for school choice is strong and crosses racial, economic and political divisions. In September 2012, the Civitas Institute and the Friedman Foundation released a joint poll. The findings are both concerning and promising.

Dissatisfaction. The poll found widespread dissatisfaction with the public schools. Fifty-five percent of North Carolina voters believe the education system is on the wrong track. Fifty-two percent of respondents rated the public schools as “fair” or “poor.” How widespread is the discontent? When broken down into sub groups, at least 50 percent of respondents in every category and region believe North Carolina is on the wrong track.

Preferences. Equally surprising were results to the question: If cost was not a factor and you could send your child to any school, where would you send them? Only 34 percent of North Carolina voters said they would send their children to traditional public schools. Almost two-thirds of respondents (65 percent) said they would choose to educate their children elsewhere. The breakdown includes private school (39 percent), charter school (15 percent) or home school (11 percent).

And how do North Carolinians feel about school choices options? Respondents voiced strong support for school choice alternatives. High percentages of voters supported charter schools (65 percent); tax credit scholarships (63 to 65 percent depending on how the question was asked); Education Savings Accounts (56 percent); and school vouchers (56 percent).

The poll results are more than merely informative. With 87 percent of students enrolled in the public schools, the responses reveal a disconnect between the school choices parents would like and the school choices currently available. This gap can be bridged through expanded school choice options, which would work to improve educational opportunities for all children. However, before pursuing those options, one must examine the current school choice landscape in North Carolina.

North Carolina School Choice

The best way to describe the school choice landscape in North Carolina is promising but unfinished. The current system of public education offers parents and students some choice, albeit at opposite ends of the educational spectrum. Over $1 billion has been invested by state and federal authorities to provide parents and students choices when selecting preschools, childcare facilities, and colleges and universities in North Carolina. Young families can use vouchers to choose from among prekindergarten and childcare programs. Approximately one-third of the 24,000 students in the State Pre-K program (formerly known as More at Four) attend private prekindergarten programs. In addition, North Carolina’s $400 million subsidized childcare program, SmartStart, provides care for 85,000 children across the state, including more than 8,000 children in private facilities.

Students pursuing postsecondary education in North Carolina also enjoy considerable choice. State or federal financial assistance allows students to enroll in private or public colleges or universities. This past year, the legislature approved more than $86 million in grants to students from low and middle-income families who enroll in one of North Carolina’s 50 private colleges and universities. Approximately $159 million in federal Pell grant money was awarded to 38,000 students attending private colleges and universities in the State. Moreover, over $832 million in direct loans were distributed to 124,000 students attending private colleges and universities in North Carolina.

In addition to state and federal financial assistance, the State tax code also works to expand education options for postsecondary students in North Carolina. In 2011, the General Assembly approved a tax credit of up to $6,000 on educational expenses for parents of special-needs students enrolled in private schools. North Carolina also provides a deduction for parents who contribute to qualified college tuition savings plans and a tax credit for child-care expenses.

Despite the federal and state financial assistance available to some parents, North Carolina’s current policies do not treat people equally or provide equal access to educational opportunity. Here is the dirty little secret: kindergartners and college students enjoy school choice. However, the 1.4 million K-12 students attending the 2,500 public schools in North Carolina have little choice as to where they will attend school.

Limited Options

Truth be told, school choice in North Carolina is similar to a sandwich with two pieces of bread and nothing in between. K-12 students are told to enroll at their district public school, and that’s that. The lucky few may enroll in one of the 100 plus charter schools that serve approximately 45,000 students in North Carolina. Before the charter school cap was lifted in 2011, charter schools had a waiting list of 20,000 students. The 25 new charter schools opening in the next two years will likely alleviate some of the crowding. Still, about half of North Carolina counties do not have a charter school. If parents can afford the tuition, their children may enroll in one of North Carolina’s close to 700 private schools, which educate 96,000 students. As another option, some families may wish to add their child to the list of 80,000 students who home school in North Carolina.

North Carolina parents want to be able to choose where their children attend school. And there is good reason. School choice enhances lives and improves educational quality in both public and private schools. The research supports these findings. Why not allow North Carolina’s 1.4 million K-12 students to enjoy the same access to quality educational opportunities as preschoolers and college students? More alternative educational options like charter schools, private schools, home schools and online learning will help. Vouchers, scholarships, tax credits and education savings accounts are some of the instruments North Carolina could use to help finance expanded school choice.

Thankfully, North Carolina is not alone on the path. Three states—Indiana, Florida and Arizona— have pioneered a variety of programs to expand school choice. The choice programs in these states offer lawmakers a way to not only restore parental freedom, but also to meet the needs of students, educators and parents. Consider the programs in three of those states.

Indiana: Charters & Vouchers

In 2011, Gov. Mitch Daniels and State Superintendent Tony Bennett spearheaded the State’s signature piece of school choice legislation, “Putting Students First.” The legislation came on the heels of comprehensive K-12 reforms and was fueled in part by billions in federal aid targeted at fixing chronically failing schools. It allows local leaders to make quick and potentially radical changes to district and school operations in failing schools. It addresses a wide range of provisions to improve schools including: recognizing and rewarding the best teachers and principals; empowering school leaders to bring success to failing schools and providing families with high quality educational opportunities.

Two of the legislation’s major provisions include strengthening charter schools and providing vouchers for students attending failing schools.

Charter Schools – The Indiana legislation strengthens charter schools and increases student access to high quality charters. The legislation strengthens charter schools in three main ways. First, the legislation grants schools and communities more authority to convert failing schools to charters. Second, it develops a mechanism to provide loans and grants to charters for startup costs. Finally, the legislation expands virtual charter schools to reach underserved populations.

Vouchers – In 2011, Indiana approved the most comprehensive voucher law in the country. The law states that any child entering grades one through 12 who attended a public school for the preceding two semesters and whose household income does not exceed 150 percent of federal free and reduced lunch program (about $61,000 for a family of four) is eligible for a Choice Scholarship.

In 2011-12, participation in the Choice Scholarship program was limited to 7,500 students. In 2012-13, the program expands to 15,000. Thereafter, there is no limit on how many students can participate. In three years, 60 percent of middle and lowincome students (approximately 500,000 students) in Indiana will be eligible for a Choice Scholarship to attend a private school of their choice.

The amount of the Choice Scholarship is based on a sliding income-based scale. The maximum value for a child enrolled in grades 1-8 is $4,500. Families are allowed to supplement vouchers.

Florida’s A+ Education Plan

Florida Governor Jeb Bush began implementation of the A+ Education Plan in the 1990s. The program hinges on expanding school choice in the following ways.

Public School Choice

Florida offers families the ability to choose from educational options within public and private schools. Students assigned to failing public schools can transfer to a higher-performing public school.

Private School Choice

Under Florida law, parents of special-needs and low-income students have the opportunity to attend private schools. Options include: McKay Scholarships. The John McKay Scholarship for Students with Disabilities Program offers vouchers to special-needs students so students can attend the public or private school of their choice. In 2011-12, $151.3 million was paid out in scholarships to 24,191 special-needs students. The average scholarship amount was $6,849. The amount of the scholarship/voucher is approximately equal to what public schools would have spent had the child remained in the public schools.

Any parent of a special-needs child unhappy with their child’s assigned school is eligible to apply for the McKay Scholarship. Recipients can attend either a private school or another public school. In recent years, the definition of disability has been broadened to include “mental or physical impairment.”

Florida Tax Credit Scholarship. In 2001, the Florida Tax Credit Scholarship Program was created to encourage private, voluntary contributions from corporate donors to nonprofit scholarship funding organizations that award scholarships to children from low-income families. Florida provides a dollar-for-dollar credit on corporate income taxes and insurance premiums for donations to scholarship funding organizations (SFOs) that distribute private school scholarships. The credit has been expanded in recent years. In 2011-12, the maximum amount the state was able to award in credits was $229 million. When 90 percent of the credits are claimed in the previous year, the total number of credits is automatically increased by 25 percent.

In 2011-12, $147.4 million in Tax Credit Scholarships was awarded to 40,248 students in 1,216 Florida private schools.

Florida: Trailblazer

In five short years, Florida’s ranking among the states in educational achievement has gone from 31st to 11th. The man behind efforts to transform the public schools in Florida was former Gov. Jeb Bush. Bush’s reforms were built around the goals of accountability, effective teachers, school choice and high expectations. Gov. Bush developed an array of policy alternatives to further these goals, including providing families the power to choose schools, granting access to effective teachers, offering scholarships to students with disabilities and increasing the number of opportunities to expand charter school enrollments.

These goals were articulated in Jeb Bush’s A+ Education Plan. It was a plan that thrust Florida into the spotlight as a national leader in providing parents and students with school choice options to meet individual learning needs and styles. For more details on the specifics of the A+ Education plan, including expanded public and private school choice, especially through scholarship and tax credit programs, see the sidebar on page 25.

Fueled by a comprehensive strategy that deployed school choice to improve student achievement and school performance, Gov. Jeb Bush’s school reforms produced surprising and sustained results for students and schools. Bush’s reforms revolutionized Florida public education. They also showed how providing every child access to a quality education is not only a desirable option for parents and students, but also the best policy for Florida.

Arizona: Tax Credits & Savings

In recent years, Arizona has won acclaim for providing an array of provisions to expand school choice. While Arizona has a program that allows personal and corporate tax credits for donations to scholarship organizations, the Grand Canyon state was also the first state to develop Education Savings Accounts or ESAs, a concept that allows parents to create high-quality highly customized educational options for children. It is an idea with the potential to revolutionize K-12 education.

Personal Tax Credits – Arizona allows individuals to claim a dollar-for-dollar credit of up to $500 (for an individual or $1,000 jointly) for donations to school tuition organizations that distribute private scholarships. The Arizona Private Education Scholarship Fund (APESF) is a School Tuition Organization (STO) developed under the guidelines provided in the Arizona Private School Tuition Tax Credit Law of 1997. Founded in 1998, the organization’s mission is to provide educational scholarships to qualified students attending private K-12 schools in the state of Arizona. APESF is funded by re-directed state tax dollars available through the Arizona Private School Tuition Tax Credit Law and general donations. Financial support is directed to the student—not the school.

Corporate Tax Credits – In addition to tax credits for individuals, Arizona corporations can also claim dollar-for-dollar credit for contributions to privately run nonprofit organizations that distribute private school scholarships. There is no maximum contribution for corporations. However the amount to be claimed is limited by tax liability and the total credits claimed. For the year 2012-13, credits are capped at $29.8 million. The cap will increase to $35.8 million in 2013-14. The Corporate Tax Credit Scholarships are targeted for low-income families who switch from public to private schools. Recipients must come from families whose income does not exceed 185 percent of the federal reduced-priced lunch index.

Scholarship Accounts – In 2011, Arizona enacted a system of education savings accounts for students with special needs, called Empowerment Savings Accounts (ESAs). An ESA is an account established to provide an education for qualified special-needs students. ESAs allow parents to remove their child from an Arizona public school and use the funds to enroll their child in a private, online or home school.

Eligible ESA students receive approximately 90 percent of the state per pupil funding, minus three percent for administrative costs. ESAs range in amount from $1,500 to $27,500, depending on the severity of the disability. Parents can use the account to pay for tuition, books, tutoring, online courses or other curricular expenses, or even save for college expenses. It is important to note that no new money is generated by the state to fund ESA students. ESA monies are diverted from a portion of funds that a school would normally receive for a child’s education. ESA funds do not include money for transportation, capital or other funding sources.

ESAs were created to redress an Arizona Supreme Court decision (Cain v. Horne) that found the state’s voucher program for special-needs and foster students unconstitutional. The court ruled that the voucher program violated the state’s prohibition on directed public funding for religious or public purposes because parents could spend state funds on a variety of educational options. ESAs are currently being challenged in the Arizona courts. Arizona’s efforts to encourage scholarship funds via tax credits and donations for worthy students to attend private schools is a win-win proposition for students, taxpayers, businesses and schools. The scholarship funds encourage educational opportunity and help preserve true educational choice for parents. The state’s innovative ESA program is an effective way for parents to regain control over their child’s education and offers meaningful incentives for schools to reform.

North Carolina’s K-12 Facts

Average State rank of National Assessment of Educational Progress 22nd

High School Graduation Rate …80.2%

  • # Public School Students… 1,436,162
  • # Charter School Students… 44,829
  • # Private School Students… 96,096


  • # Home School Students… 79,693
  • % Students in Public Schools… 86.6%
  • % Students in Charter Schools… 2.7%
  • % Students in Private Schools… 5.8%
  • % Students in Home Schools… 4.8%


  • # Public Schools… 2,512
  • # Charter Schools… 107
  • # Private Schools… 695

Current Annual Spending Per Public School Student… $8,518

Total Annual Spending Per Public School Student…  $9,729

Average Annual Private School Tuition in NC… $8,549

The Road Ahead

One of the most important gifts parents can give to their children is an education. While most parents realize they are the first and primary teachers of their children, they also know that a child’s education will also likely involve formal schooling. Since parents are responsible for the care and upbringing of their offspring, it follows that they should also enjoy the right and freedom to determine how their children are to be educated.

Growing dissatisfaction with the costs and outcomes of public education, and the rejection of religious and traditional values by progressives in the public school systems have fueled a decadeslong fight to restore parental authority in education.

School choice is the remedy to correct these wrongs. Only pre-K and college students in North Carolina have school choice across the board. For those students whose parents cannot afford a private school, cannot homeschool, or who are not lucky enough to win a coveted spot enrolling in a charter school, they join the 1.4 million K-12 students in North Carolina public schools without school choice. While the removal of the charter school cap and the creation of educational tax credits for parents of special-needs students have improved school choice for some, such options are limited and for the most part do not apply to the majority of students in North Carolina.

Options for North Carolina

School choice programs in Indiana, Florida and Arizona demonstrate that charter schools, vouchers, tax credit scholarships and Education Savings Accounts can be effective tools in restoring parental authority, ensuring educational opportunity and improving the public schools.

Of course, passing school choice legislation will not be easy. Every legislative proposal has different constituencies, different impacts, and its own set of advantages and disadvantages. Take tax credit scholarships for example. The legislation (H1104) introduced last session by Rep. Paul “Skip” Stam (R–Wake) offered scholarships to students whose families met a certain income threshold. The income threshold allows the legislation to target those most in need. For many, the means testing provision also increases the chance that the legislation is likely to be approved. On the down side, such provisions significantly narrow the program’s impacts on recipients, as well as the schools. Even though H1104 enjoyed strong support from conservatives and the school choice community, the bill never advanced out of committee. With the prospect of major tax reform looming in 2013, some speculated that House and Senate leaders were unwilling to pass a tax credit scholarship bill. Still, the legislation or some variation is likely to be reintroduced in the upcoming legislative session.

North Carolinians want school choice. Conservative majorities in the House and the Senate, along with a new governor supportive of school choice, boost the prospects for that to happen. For North Carolina to pass significant school choice legislation, parents and other school choice supporters must be engaged, informed, enthusiastic and patient. The battle over who controls how a child is to be educated is never-ending. School choice efforts are punctuated with triumphs and failures. However, victory must not be equated with passing legislation. The goal is to give parents control over their child’s education. That is accomplished by parents exercising freedom, providing children access to the best education possible, and by infusing competition and incentives for reform into North Carolina’s public and private schools.

The battle over school choice is a battle to restore the freedom of parents to control the education of their children. It is a battle that must not be lost. School choice programs in Indiana, Florida and Arizona show how to win the fight, and how those programs benefit students, children, educators and schools. It is time for legislators


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Bob Luebke, Ph.D., is senior policy analyst for the John W. Pope Civitas Institute.


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