choice history

The rise of tax credits: How Arizona created an alternative to school vouchers — and why they’re spreading

PHOTO: U.S. Department of Education

With its recent adoption of a tax credit scholarship program, Illinois became the 18th state to adopt an innocuously named — but highly controversial — policy that critics have described as a “backdoor voucher.”

In some sense, the description is apt. But by injecting a middle layer into the government’s support of private school tuition, tax credits help avoid some of the legal and political obstacles that have dogged efforts by advocates, like Education Secretary Betsy DeVos, to promote school choice through vouchers.

Perhaps as a result, more students now use tax incentive programs than vouchers to attend private schools in the U.S. A federal tax credit is also seen as the Trump administration’s favored approach for promoting school choice at the federal level, though its immediate progress looks increasingly unlikely.

The 20-year history of this approach offers insights into why it has taken hold: resistance to legal challenge; limited government oversight, appealing to among free-market advocates of school choice; and a more politically palatable branding than vouchers.

This is far better than vouchers — it is easier to pass and easier to uphold,” Trent Franks, a conservative activist and now a U.S. congressman, said in 1999 after Arizona’s state supreme court upheld its tuition tax credit program. “I think this is the direction the country will go in.”

He proved largely right.

The number of students participating in private school choice programs over time, including tax credits (green) and vouchers (orange). (EdChoice)

Arizona’s pioneering approach

The first tax credit program was passed in Arizona in 1997. Arizona’s constitution, like most other states’, bars public dollars from going to religiously affiliated schools. Proponents knew any plan to promote private school choice would likely end up in court.

So they landed upon an ingenious approach that would make the initiative more likely to survive legal challenge. Instead of issuing vouchers for private school tuition — like Milwaukee had done since 1990 — the state would outsource that role to nonprofits. Those groups would get their money from donations, encouraged by generous tax credits.

It worked like this: An individual could donate up to $500 to a nonprofit, then get a tax cut for the exact amount they donated. The nonprofit would take the donated money and use it to offer tuition stipends — essentially vouchers — to families who met certain conditions. That system allows the state to promote the tuition subsidy, losing $500 in revenue for each maxed out donation, without paying for it directly.

Arizona’s program has since grown, and the state has created a number of other tax credit programs. (This approach is distinct from programs that give individual families tax breaks for educational spending on their own children; Illinois has had such an initiative since 2000, while Minnesota has had one since 1955.)

Arizona’s and of Milwaukee’s policies look similar. In both places, students can receive a subsidy to attend a private school, and it comes at the expense of state revenue. But crucially, in Arizona, the government never had the money to begin with.

“The point was in part to ensure that these were not government-run programs,” Lisa Graham Keegan, who was Arizona’s school superintendent when the tax credit program passed, told Chalkbeat. “Those scholarships are completely separate, both for legal reasons and for philosophical reasons.”

Tax credits: the legal survivors

Private school choice across the country have been inundated with legal challenges, but tax credits have proven remarkably resilient.

Although voucher programs have continued to grow and were upheld by the U.S. Supreme Court in 2002, they have also faced legal challenges in state courts. Colorado’s top court, for example, struck down a voucher program in 2015. (The case is currently being reconsidered in light of a recent Supreme Court decision.)

But tax credits have never ultimately lost in state or federal court, prevailing in Arizona, Alabama, Florida, Georgia, New Hampshire, and the U.S. Supreme Court.

Tax credits “grew up as a result of saying we need a different vehicle than vouchers in states that have legal issues,” said Robert Enlow, the president of EdChoice, an Indianapolis-based group that backs both vouchers and tax credits. (EdChoice is a funder of Chalkbeat.)

Often, cases have been thrown out before substantive arguments can be made, amounting to a win for the programs: Some courts have ruled that private organizations or individuals do not have legal standing to challenge tax credits, since they aren’t government expenditures.

That was the decision in the 2010 Supreme Court case Arizona Christian School Tuition Organization v. Winn, in which the majority said equating government spending and tax credits was “incorrect.”

“When Arizona taxpayers choose to contribute to [scholarship organizations], they spend their own money, not money the State has collected,” Justice Anthony Kennedy wrote.

Light regulatory touch proves a blessing and a downside

To Arizona conservatives skeptical of both regulation and the education establishment, the system had an additional benefit.

“The point was in part to ensure that these were not government-run programs,” said Graham Keegan, and additionally that “these don’t become government dollars.”

Nationwide, tax credit scholarship programs appear less regulated than voucher programs, some of which require private school students to take state tests or for schools to undergo financial audits.

Free-market oriented supporters “see ‘neovouchers’ as much less likely to be regulated and have restrictions — the government strings attached — than a traditional voucher law,” said Kevin Welner, a University of Colorado professor who wrote a book on the rise of tax credit programs and is generally critical of them.

A 1998 essay published by the Mackinac Center, a conservative Michigan think tank, made this case explicitly: “Tuition tax credits also create very different effects than vouchers. … Vouchers are more likely to be viewed as a rationale for regulating the entity that receives the subsidy.”

This has played out in practice. One analysis compared several voucher programs to a number of tax credit programs and found that, in almost all cases, vouchers were more regulated. Most tax credit systems had few, if any, financial reporting or disclosure requirements. (Notably, Florida’s program, the largest in the country, was the most regulated tax credit initiative.)

Many tax credit programs do not require participating students to take state exams, and if they do, the tests are rarely comparable to the assessments taken in public school. This means that while voucher programs have been widely studied, there is little research on the effect of receiving a tax credit scholarship.

Supporters of this approach argue that such requirements discourage private schools from participating.

Limited oversight, however, has proven something of a political liability, insofar as it has allowed for financial malfeasance. National media have drawn attention to how one prominent politician and advocate for Arizona’s program was also able to profit personally from it, for example.

“I think [limited regulation] is a feature that has some bugs,” said Enlow of EdChoice. “We need to have transparency. The programs, like Florida, which are very transparent and very open to data collection, I think are very important.” He declined to name any tax credit programs that, in his view, lacked sufficient transparency.

The use of the tax code has also raised another concern: Under some tax credit systems, “donors” can actually earn a profit by taking advantage of both state and federal tax breaks.

Selling tax credits

How exactly to brand tax credit programs has been the subject of fierce debates. Opponents have called them “neovouchers” and “voucher schemes,” while supporters sometimes portray them as entirely distinct from vouchers.

Tax credits tend to poll better than vouchers, and Welner thinks that may be because it’s less clear to most people what they are.

“People’s eyes get bleary and they tune out when people start talking about tax credits,” he said. “That helps to avoid a situation where they respond to it the same way they respond to a voucher proposal.”

Tax credits are essentially a tax cut, which can be a selling point for some, especially conservatives. Advocates sometimes also downplay the costs of tax credits to the government.

“Is it foregone revenue? Sure, but it doesn’t mean it’s the state’s revenue,” said Enlow.

The distinctions between vouchers and tax credits, though, may ultimately matter less to lawmakers in states where they are being debated. In Illinois, critics connected tax credits to vouchers, and Democrats were largely opposed to the tax credit initiative that ultimately passed.

“In my experience the arguments have been the same whether it’s a tax credit bill or a voucher bill when you’re talking with legislators,” Enlow said. “There’s some nuances, but it’s still the same.”

Correction: An earlier version of this piece misstated the name of a free-market Michigan think tank, which is the Mackinac Center.

student teaching

Building a teacher pipeline: How one Aurora school has become a training ground for aspiring teachers

Paraprofessional Sonia Guzman, a student of a teaching program, works with students at Elkhart Elementary School in Aurora. (Photo by Yesenia Robles, Chalkbeat)

Students at Aurora’s Elkhart Elementary School are getting assistance from three aspiring teachers helping out in classrooms this year, part of a new partnership aimed at building a bigger and more diverse teacher pipeline.

The teachers-to-be, students at the University of Northern Colorado’s Center for Urban Education, get training and a paid job while they’re in college. Elkhart principal Ron Schumacher gets paraprofessionals with long-term goals and a possibility that they’ll be better prepared to be Aurora teachers.

For Schumacher, it’s part of a plan to not only help his school, but also others in Aurora Public Schools increase teacher retention.

“Because of the nature of our school demographics, it’s a coin flip with a new teacher,” Schumacher said. “If I lose 50 percent of my teachers over time, I’m being highly inefficient. If these ladies know what they’re getting into and I can have them prepared to be a more effective first-year teacher, there’s more likelihood that I’ll keep them in my school in the long term.”

Elkhart has about 590 students enrolled this year. According to state data from last year, more than 95 percent of the students who attend the school qualify for subsidized lunches, a measure of poverty. The school, which operates with an International Baccalaureate program, has outperformed the district average on some state tests.

The three paraprofessionals hired by the school this year are part of the teaching program at UNC’s Lowry campus, which has long required students to work in a school for the four years they work on their degree.

Students get paid for their work in schools, allowing them to earn some money while going to college. Students from the program had worked in Aurora schools in the past, but not usually three students at once at the same school, and not as part of a formal partnership.

The teaching program has a high number of students of color and first-generation college students, which Rosanne Fulton, the program director, said is another draw for partnering with schools in the metro area.

Schumacher said every principal and education leader has the responsibility to help expose students to more teachers who can relate to them.

One of this year’s paraprofessionals is Andy Washington, an 18-year-old who attended Elkhart for a few years when she was a child.

“Getting to know the kids on a personal level, I thought I was going to be scared, but they’re cool,” Washington said.

Another paraprofessional, 20-year-old Sonia Guzman, said kids are opening up to them.

“They ask you what college is like,” Guzman said.

Schumacher said there are challenges to hiring the students, including figuring out how to make use of the students during the morning or early afternoon while being able to release them before school is done for the day so they can make it to their college classes.

Schumacher said he and his district director are working to figure out the best ways to work around those problems so they can share lessons learned with other Aurora principals.

“We’re using some people differently and tapping into volunteers a little differently, but if it’s a priority for you, there are ways of accommodating their schedules,” he said.

At Elkhart, full-time interventionists work with students in kindergarten through third grade who need extra help learning to read.

But the school doesn’t have the budget to hire the same professionals to work with older students. The three student paraprofessionals are helping bridge that gap, learning from the interventionists so they can work with fourth and fifth grade students.

Recently, the three started getting groups of students that they pull out during class to give them extra work on reading skills.

One exercise they worked on with fourth grade students recently was helping them identify if words had an “oi” or “oy” spelling based on their sounds. Students sounded out their syllables and used flashcards to group similar words.

Districts across the country have looked at similar approaches to help attract and prepare teachers for their own schools. In Denver, bond money voters approved last year is helping pay to expand a program this year where paraprofessionals can apply for a one-year program to become teachers while they continue working.

In the partnership at Elkhart, students paraprofessionals take longer than that, but in their first and second year are already learning how to write lessons during their afternoon classes and then working with teachers at the school to deliver the lessons and then reflect on how well they worked. Students say the model helps them feel supported.

“It’s really helping me to become more confident,” said Stephanie Richards, 26, the third paraprofessional. “I know I’m a lot more prepared.”

Schumacher said the model could also work in the future with students from other teaching schools or programs. It’s a small but important part, he said, toward helping larger efforts to attract and retain teachers, and also diversify the ranks.

“You’re doing something for the next generation of folks coming in,” he said.

testing testing

McQueen to convene third task force as Tennessee seeks to get testing right

PHOTO: Creative Commons/timlewisnm

For a third straight year, Education Commissioner Candice McQueen will convene a task force to examine Tennessee’s testing program in the wake of persistent hiccups with its TNReady assessment and perennial concerns about over-testing.

McQueen announced Monday the members of her newest task force, which will assemble on Dec. 11 in Nashville and complete its work next July. The group includes educators, lawmakers, and parents.

At the top of the agenda: evaluating the first full year of TNReady testing for grades 3-8 and the second year for high schoolers, the latter of which was marred by scoring problems for a small percentage of students.


Five things to know about the latest brouhaha over TNReady


The group also will look at district-level “formative tests” that measure student progress to help teachers adjust their instruction throughout the school year. The goal is to support districts so those tests align with TNReady and the state’s newest academic standards.

The transition to online testing and concerns about over-testing will be on the minds of task force members.

This marks the first school year that all high schoolers will take TNReady online since 2016, when a new platform buckled on its first day. State officials are more confident this time around under a phased-in approach that began last school year with 25 districts. (Middle and elementary schools will make the switch in 2019.)

PHOTO: Laura Faith Kebede
Candice McQueen

On over-testing, McQueen has highlighted 11th-grade as a concern. The junior year of high school is intense as students explore their post-graduation options while taking the ACT college entrance exam, the state’s end-of-course exams, and for some, Advanced Placement tests. All are high-stakes.

McQueen told Gov. Bill Haslam earlier this month that the upcoming task force will seek to strip away tests that don’t align with Tennessee’s priorities.

“We’re looking for testing reductions … but also setting a path toward (our) goals, which is a new test that’s aligned to new standards that really matter,” she told Haslam during budget hearings.

During its first two years, task force work has led to a number of changes.

Recommendations in the first year resulted in the elimination of a test for eighth- and tenth-graders, as well as the shortening of TNReady tests for math and reading.

In the second year, the task force contributed to Tennessee’s education plan under a new federal law and slimmed down science and social studies assessments for third- and fourth-graders.

Members of the third task force are:

  • Candice McQueen, Tennessee commissioner of education
  • Sara Morrison, executive director, State Board of Education
  • Sen. Dolores Gresham, chairwoman, Senate Education Committee
  • Rep. John Forgety, chairman, House Education Instruction and Programs Committee
  • Rep. Harry Brooks, chairman, House Education Administration and Planning Committee
  • Rep. Mark White, chairman, House Education Administration and Planning Subcommittee*
  • Wayne Blair, president, Tennessee School Board Association*
  • Barbara Gray, president, Tennessee Education Association
  • Dale Lynch, executive director, Tennessee Organization of School Superintendents*
  • Sharon Roberts, chief strategy officer, State Collaborative on Reforming Education*
  • Audrey Shores, chief operating officer, Professional Educators of Tennessee
  • Gini Pupo-Walker, Tennessee Educational Equity Coalition and senior director of education policy & programs, Conexión Américas*
  • Lisa Wiltshire, policy director, Tennesseans for Quality Early Education*
  • Shawn Kimble, director, Lauderdale County School System*
  • Mike Winstead, director, Maryville City Schools
  • Jennifer Cothron, assessment supervisor, Wilson County Schools*
  • Trey Duke, coordinator for Federal Programs and RTI2, Rutherford County Schools*
  • Michael Hubbard, director of performance excellence, Kingsport City Schools*
  • LaToya Pugh, iZone science instructional support manager, Shelby County Schools*
  • Bill Harlin, principal, Nolensville High School, Williamson County Schools
  • Laura Charbonnet, assistant principal, Collierville High School, Collierville Schools*
  • Tim Childers, assistant principal, L&N STEM Academy, Knox County Schools*
  • Kevin Cline, assistant principal, Jefferson County High School, Jefferson County Schools*
  • Kim Herring, teacher, Cumberland County High School, Cumberland County School District*
  • Jolinea Pegues, special education teacher, Southwind High School, Shelby County Schools*
  • Stacey Travis, teacher, Maryville High School, Maryville City Schools*
  • Josh Rutherford, teacher, Houston County High School, Houston County School District*
  • Cicely Woodard, 2017-18 Tennessee Teacher of the Year, West End Middle Prep, Metro Nashville Public Schools*
  • Virginia Babb, parent, Knox County Parent-Teacher Association
  • Jennifer Frazier, parent, Hamblen County Department of Education*
  • Student members will be invited*

*new members