Across the country, tax credit legislation is fast emerging as a popular, politically viable path to educational choice. Democrats and Republicans alike have embraced tax credits as a way to widen the aperture of educational freedom for low- and middle-income families. Seven states have already passed laws permitting tax credits or deductions for education expenses, empowering parents and saving millions of dollars.
Currently, North Carolina law does not permit education tax credits. But a new policy report from the North Carolina Education Alliance, Education Tax Credits in North Carolina: Innovation in Education, to be released April 8th, argues conditions are ripe for change. Indeed, North Carolinians now support education tax credits/deductions by wide margins: 77 percent say they “somewhat support” or “strongly support” a state tax deduction for education expenses, according to a January 2008 Civitas Institute poll.
To date, state legislatures have allowed two kinds of education tax credits. Family education tax credits/deductions permit parents to recover some of the money they spend on children’s educational expenses like tuition, tutoring, textbooks, educational software, and music lessons. Private, public, and home school parents can all benefit. States with family education tax credits include Minnesota, Iowa, and Illinois.
Philanthropy education tax credits, on the other hand, are available to individuals or businesses making contributions to scholarship organizations. Scholarship organizations then use the money to offer tuition assistance to poor children. States with philanthropy education tax credits include Arizona, Florida, Iowa, Pennsylvania, and Rhode Island.
Why does North Carolina need the choice provided by tax credits? A spate of recent data indicates our state’s public education system is failing scores of students. In 2007, only 45 percent of North Carolina schools met federal Adequate Yearly Progress standards in reading and math. Almost one-third of our state’s high school students do not graduate within four years. The situation is particularly dire for poor children, notes the NCEA report: in North Carolina, just 16 percent of low-income fourth-graders read proficiently.
Unfortunately, these students are often without recourse. Within the public system, North Carolina’s menu of choice options is decidedly lean. The 100-school cap on charter schools has remained intact, leaving thousands of students to spill over onto wait lists. Public school choice programs operate in only a limited number of school districts. Tax credits would level the playing field, enabling less affluent parents to do “what the wealthy have always done – choose a school that best meets their children’s needs,” according to the NCEA report.
In addition to aiding families, education tax credits save states millions of dollars. This is because the cost of a tax credit is lower than the cost to educate a student in public school. Based on NCEA estimates, a $3,000 scholarship from a philanthropy tax credit in North Carolina would result in $1,450 in state savings and $2,385 in school district savings – for each student who leaves the public system. According to analysis by the Friedman Foundation’s Susan Aud, cited in the NCEA publication, programs in Arizona, Florida, and Pennsylvania have saved a combined $204 million.
Recent rulings by the U.S. Supreme Court and state supreme courts indicate tax credits are also constitutional. Challenges to these programs have failed since tax credits are not public funds and reflect the private choices of parents. In North Carolina, our state constitution is particularly favorable to choice: according to the Institute for Justice’s Dave Roland, “A well-crafted school choice program is extremely likely to survive judicial scrutiny.”
That’s good news for many North Carolina parents. In the end, they – and not education bureaucrats – know what school is best for their kids. But all too often, our current public education system sidelines and marginalizes parents. Instead, we need a system that acknowledges and values the inimitable influence parents have on a child’s educational success. It’s time to give credit where credit is due.