The basics of school choice

Geoffrey Lawrence

The need for school choice in Nevada is clear.  Empirical research into existing programs of school choice in other states has consistently found that choice leads to improved outcomes for both students who participate in those programs and for students who elect to remain in district-run schools. 

As detailed in NPRI’s recent report, “33 Ways to Improve Nevada Education Without Spending More,” there have been 12 random-assignment empirical studies examining the impact of school choice and six of these determined that all student groups benefit, five found that some groups benefit and one found no visible impact.  No random-assignment study has ever found a negative impact of school-choice programs on educational outcomes for any group of students.

That’s why school choice should be a centerpiece of any successful program of education reform and why Nevada’s new Republican majorities should make school choice their highest priority.

School choice, however, can be implemented through a range of different policy structures. All are similar in substance; the main difference is how they are structured financially and how the funds flow. The three major options for school choice are outlined briefly below:

  1. Vouchers. The original idea for school choice was for the state to pay tuition costs directly to any private school chosen by parents, up to a maximum value.

                             Flow of funds: From state directly to private schools

                             First Program: Milwaukee Parental Choice Program (1990)

Obstacles: Vouchers have been successfully challenged by teacher unions in some states that have “Blaine Amendments” — a constitutional prohibition on state funding for religious institutions. At least a share of parents who enroll in a choice program are likely to choose religious schools, and since vouchers are direct payments from the state to these entities, teacher unions and other opponents of education reform have used Blaine Amendments as a basis for legal challenges. The Institute for Justice has found that a voucher program would not violate Nevada’s Blaine Amendment, but a court challenge would certainly loom. To securely institute a voucher program would likely require a constitutional amendment, which is at least a five-year process.

  1. Tuition Tax Credit & Scholarship. This is the most common form of school choice — 18 such programs exist across the country. They allow either businesses or individuals to claim a dollar-for-dollar credit against tax liabilities by donating money into a non-profit corporation designated by the state education department. This entity, in turn, is a scholarship-granting entity for which administrative expenses are usually capped at around 4 percent. It automatically awards grants to all eligible applicants until the funds are exhausted. Eligibility is sometimes restricted by income, English-language-learner status, special-needs status, or other designation.

Flow of funds: From businesses or individuals to scholarship account and then to schools chosen by parents

First Program: Florida (1997)

Strengths: Tax-credit scholarships get around the constitutional obstacles confronting vouchers because the money never passes through a state account — it remains entirely private. These programs have withstood all legal challenges. A further strength is that states cannot impose special conditions on fund recipients in an effort to control the curriculum and independence of private schools, because it is technically not state-controlled money.

  1. Education Savings Accounts (ESAs). ESAs are the newest form of school choice. They are individualized accounts established by the state in the name of any child who elects to participate. A base per-pupil spending amount is deposited into the account annually and parents can use that money to purchase any approved educational expenses, including: private-school tuition, private tutoring, transportation, or schoolbooks and study materials. In addition, any unused money in the account at the end of the school year remains in that student’s private account and can later be used to pay for college tuition expenses.

Flow of funds: From state to individuals; individuals then purchase educational services directly

Existing Programs: Arizona (2011) and Florida (2014)

Strengths: To date, ESAs have survived legal challenges in Arizona. This structure enjoys the same advantages of tax-credit scholarships, but also grants parents additional flexibility to purchase tutoring services and defray future college costs.

NPRI believes that Education Savings Accounts are the best method currently in existence of structuring a program of school choice.  Further, this option can be accomplished in a single legislative session and remain secure from any prospective future legal challenges.

Geoffrey Lawrence is the director of research and legislative affairs at the Nevada Policy Research Institute, a non-partisan, free-market think tank. For more, visit npri.org.