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Analysis of Tax Credit Scholarship Academic Outcomes and State Income Participation Requirements PUBLIC FUNDING Across the Unitedpublic States FUNDING

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Analysis of Tax Credit Scholarship Academic Outcomes and State Income Participation Requirements PUBLIC FUNDING Across the Unitedpublic States FUNDING February 9, 2021 Analysis of Tax Credit Scholarship Academic Outcomes and State Income Participation Requirements PUBLIC FUNDING across the UnitedPUBLIC States FUNDING RI PRIVATE PUBLIC PRIVATE PUBLIC BACKGROUND: Members of the Georgia House of Representatives introduced HB142, a bill that would expand the state’s existing tax credit scholarship program, the Qualified Education Expense Tax Credit (QEETC) program. HB142 would increase the state’s cap on tax credits issued for donations to scholarship-granting organizations from $100 million to $150 million annually, despite no evidence or publicly-available information showing improved academic outcomes among students receiving scholarships. The proposed expansion of the QEETC program would also raise the maximum tax credit doled out to donors to $25,000—a 250 percent increase from the original $10,000 limit. 04.523.00014 • [email protected] • SouthernEducation.org • Follow us on social media 1 Tax Credit Scholarship Programs in the U.S. STATES WITH ONE TAX CREDIT SCHOLARSHIP PROGRAM Alabama Nevada Georgia New Hampshire RI Illinois Oklahoma Indiana Rhode Island Iowa South Carolina Kansas South Dakota Louisiana Utah Montana Virginia STATES WITH TWO TAX CREDIT SCHOLARSHIP PROGRAMS Florida Pennsylvania STATES WITH THREE OR MORE TAX CREDIT SCHOLARSHIP PROGRAMS Arizona STATES WITH PUBLICLY-AVAILABLE REPORT(S) FOR THEIR TAX CREDIT SCHOLARSHIP PROGRAM(S) Alabama Kansas South Carolina Arizona Nevada South Dakota Florida New Hampshire Virginia Indiana Oklahoma Iowa Rhode Island 04.523.00014 • [email protected] • SouthernEducation.org • Follow us on social media 2 TAX CREDIT SCHOLARSHIPS DO NOT a norm-referenced assessment, 74 percent (110 IMPROVE ACADEMIC ACHIEVEMENT students) either decreased or maintained the same score after participating in the Nevada Opportunity Scholarship Program.3 • In the 23 years tax credit scholarship (TCS) programs have existed, very little scientific research has • Because many tax credit scholarships lack surfaced showing TCS recipients experiencing evaluation and comprehensive reporting significant academic improvements by enrolling in requirements, there is a dearth of research in this a private school instead of their local neighborhood area. Research on school vouchers, however, is the public school. Out of the 24 TCS programs closest comparison that exists due to the nature nationwide, only three programs—the Exceptional of public funds (or benefits in this instance) being Needs Scholarship in South Carolina, the Florida similarly used to pay for private school tuition. Tax Credit Scholarship program, and the Nevada Comprehensive studies have shown that no clear Opportunity Scholarship Program—produced academic advantage exists for students attending state reports with public academic assessment private schools with vouchers compared to similarly results. Both in the 2016-2017 and 2017-2018 situated students attending public schools. In fact, years, students participating in South Carolina’s tax in some states such as Louisiana4 and Indiana5, credit scholarship program experienced a decline participation in voucher programs had negative in reading results and made no gains in math.1 In effects on student achievement. Florida, the 2019 report issued by the state revealed that students who did not participate in the Florida INCONSISTENT TCS INCOME ELIGIBILITY Tax Credit Scholarship program are better off STANDARDS AND OTHER ISSUES academically than students who participated, and scholarship recipients did not experience any gains • Eight of the 24 tax credit scholarships currently 2 in math or reading. A 2018 report on the Nevada operating in 19 states, including in Georgia, have Opportunity Scholarship Program shows that out no family income threshold to determine student of a group of 149 scholarship recipients who took eligibility, while four more programs have a threshold 04.523.00014 • [email protected] • SouthernEducation.org • Follow us on social media 3 above a six-figure annual income for students living improve transparency and accountability for the in family households of four. For example, a student QEETC program.8 living in a family of four earning up to $142,913 in Oklahoma is eligible to receive a TCS to attend a PROGRAM REPORTING INCONSISTENCIES private school.6 • The majority of states report neither academic • It is inequitable to provide tax breaks to individuals achievement nor the racial or ethnic makeup of who donate money so that students from affluent student participants. Reporting requirements are families can attend private schools. It effectively inconsistent, leading to widely-varying availability reduces the government’s annual tax revenue and of data regarding student performance, student siphons funding away from research-based school eligibility, family satisfaction, discrimination, and improvement efforts for students from low-income other critical information to help assess the impact families who remain in the public school system. of TCS programs. For example: • In New Hampshire, participating families are paying • Only three of the 24 TCS programs publish an average of $3,249 each in out-of-pocket tuition any academic achievement data associated expenses annually to be able to pay for their private with student participants; and school tuition.7 This amount does not include fees related to transportation, extracurricular activities, • Of the 17 total TCS programs with state etcetera—which will create an additional burden for reports, five do not disaggregate program low-income families. data by race or ethnicity. • In Georgia, a January 2021 report from the State Auditor’s office found that the state’s oversight mechanism for the QEETC program was insufficient, and that the state needed additional measures to 04.523.00014 • [email protected] • SouthernEducation.org • Follow us on social media 4 • Some federal and state lawmakers hope to advance TCS programs despite their inconsistent and unclear effects on student achievement and global understanding of student participants. THE TROUBLING RACIAL HISTORY OF PRIVATE SCHOOL CHOICE • The origins of school privatization programs are rooted in efforts to avoid desegregation. Southern state legislatures passed more than 450 bills from 1954 to 1964 to avoid desegregation and fund a system to fund private schools with public dollars.9 From the mid-1960s to 1980, in the peak of the era of court-ordered school desegregation, private school enrollment in the South grew by more than 200,000 students.10 • As a region, the South’s public schools are 23 percent Black,11 but its private schools are only 12 percent Black.12 Sixty-six percent of private schools in the South are white, while 43 percent of students in the South’s public schools are white. EXISTING TAX CREDIT SCHOLARSHIP PROGRAMS State Program Funding Eligibility Requirements Assessments and academic outcomes Alabama Education Scholarship A student whose family qualifies for the None of the publicly available reports Program federal free and reduced-price lunch are disaggregated by race/ethnicity. (FRPL) program ($47,638 for a family They are forms displaying amounts of four in 2019–20) is eligible to receive paid and compliance with eligibility a scholarship. Once a student receives requirements. a scholarship, the family’s income may not exceed 275 percent of the federal poverty level ($70,813 for a family of four in 2019–20). 404.523.0001 • [email protected] • SouthernEducation.org • Follow us on social media 5 State Program Funding Eligibility Requirements Assessments and academic outcomes Arizona Original Individual None On page 14, the report shows that a Income Tax Credit plurality (39 percent) of scholarships Scholarship went to families with an income greater than 342.25 percent of the federal poverty level. The report does not disaggregate by race or show any academic information. Low-Income A student living in a family of four with a The publicly available report shows the Corporate Income Tax total household income $88,129 or less growth of the program, participating Credit Scholarship is eligible to receive this scholarship. for schools, and amounts disbursed. The this scholarship. report does not disaggregate by race or show any academic information. Switcher Individual None On page 23, the report shows that Income Tax Credit nearly 60 percent of scholarships went Scholarship to families with an income greater than 185 percent of the federal poverty level. The report does not disaggregate by race or show any academic information. Lexie’s Law for None On page 41, the report shows that Disabled and nearly 60 percent of scholarships went Displaced Students to families with an income greater than 185 percent of the federal poverty level. The report does not disaggregate by race or show any academic information. 404.523.0001 • [email protected] • SouthernEducation.org • Follow us on social media 6 State Program Funding Eligibility Requirements Assessments and academic outcomes Florida Florida Tax Credit A student living in a family of four with The 2019 report for the program Scholarship Program a total household income of $66,950 finds that students who did not or less is eligible to receive this participate in the program are better scholarship. off academically; former Florida Tax Credit (FTC) students who returned to public schools performed at the 37th Florida percentile in ELA and the 36.6th Florida percentile in math, while other subsidized
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