Author(s): Andrew D. Catt
Is regulatory creep a fate that awaits all school choice programs? With the number of those programs doubling over the past five years, the need for context and understanding is critical.
This report provides a framework for understanding the impacts of state government statutes regulating private schools, regulations distinct to a given school choice program, and any regulatory growth over a program’s lifespan. Examining school choice programs in operation for at least a few years provides important context and comparisons for policymakers considering additional regulations on current programs, as well as for school choice advocates pursuing new or expanded programs.
In recent years, several scholars have conducted research on private school regulations, in each case breaking new ground for observations. However, those researchers limited their scope to cross-sectional treatments of the regulatory environment at a single point in time—analytical snapshots—which do not show where regulations started and how those statutes got to where they are today.
This project establishes a database created specifically to track and evaluate state statutes regulating private schools before and after the enactments of 23 school choice programs in 12 states. The database contains not only the current state statutes applying to private schools in those states but also earlier versions of each state’s private school statutes as they existed before the enactment of the private school choice programs (“Pre-Choice”). The 355 Pre-Choice regulations represent nearly 62 percent of the 575 total regulations examined for this project, including 130 regulations in the first year of the programs’ implementation (“Year 1”) and 90 regulations in the following years (“Years 2+”) (see table below).
The author attempts to address several core questions:
- How do the regulatory environments before the enactment of private school choice programs compare to the regulatory environments brought about by those programs?
- To what extent do private school choice programs change the existing relationship between state governments and private schools?
- What types of regulations burden private schools the most? Has the nature of the regulatory burden changed over time?
This report proposes a new way to measure and evaluate private school regulations. As part of this project, a new rating scale was created that qualitatively assigns an “impact score” (ranging between -3 and +3) to each regulation within the relevant statute and its subparts. That symmetric scale is applied uniformly across all categories of private school regulations, with an eye toward minimizing subjectivity and arbitrary scoring as much as possible.
Because this report provides important context and comparisons for policymakers considering regulatory frameworks for new and current programs, a set of policy recommendations and considerations are provided:
- Avoid reinventing the wheel by establishing empirically-driven thresholds and see if the private school sector is already meeting those thresholds before determining if any additional regulation is necessary.
- Ensure a recommended regulation is not already in place for private schools and, if there are some already in place with similar objectives, consider any overlap.
- Take into account the oversight roles of accreditation agencies and associations to see if there is some measure of oversight and accountability already in place.
- Consider legislatively mandated costs to private schools in fiscal impact calculations.
- Ensure all schools, regardless of type or sector, can be reimbursed for substantial costs associated with regulations.
Enacted 2003 • Launched 2004
Ohio students on the autism spectrum may receive vouchers for education services from a private provider, including tuition at a private school. After participating students receive education services, they apply to the state for reimbursement of expenses.
Enacted 2005 • Launched 2005
Most Utah students who have disabilities are eligible to receive vouchers to attend private school.
However, participation is limited by the amount of money appropriated to the $3.75 million program
Enacted 2011 • Launched 2011
Indiana’s Choice Scholarship Program allows students in low- and middle-income families to receive
vouchers to attend private school.
Enacted 1995 • Launched 1996
Parents in the Cleveland Metropolitan School District can receive vouchers to send their children to
private school or public schools bordering the school district. No more than half of new recipients may
be students previously enrolled in private schools.
Enacted 2005 • Launched 2006
Ohio students attending chronically low-performing public schools are eligible for “EdChoice”
vouchers to attend private schools. The cap on available vouchers is 60,000.
Enacted 2001 • Launched 2001
Pennsylvania provides tax credits for corporate contributions to Scholarship Organizations (SOs),
nonprofits that provide private school scholarships, or Educational Improvement Organizations,
nonprofits that support innovative programs in public schools. Tax credits are worth 75 percent of the
contribution; however, a 90 percent credit can be claimed if the corporation commits to two consecutive
annual contributions. In either case, the maximum tax credit is $750,000 per company. Credits are
awarded to companies on a first-come, first-served basis until the cap is reached. The total amount of
tax credits is limited to $100 million.
Enacted 2011 • Launched 2011
Arizona’s Empowerment Scholarship Accounts (ESA) program allows parents to withdraw their
children from public, district, or charter schools and receive a portion of their public funding deposited
into an account with defined, but multiple, uses, including private school tuition, online education,
private tutoring, or future educational expenses. In the 2013-14 school year, eligibility expanded
beyond the original pool of students with special needs to students assigned to public schools or school
districts with a “D” or “F” letter grade, children of active-duty military members, and youth adopted
from the state’s foster care system.
Enacted 2001 • Launched 2001
Florida provides a tax credit on corporate income taxes and insurance premium taxes for donations
to Scholarship Funding Organizations (SFOs), nonprofits that provide scholarships for low-income
students and children in foster care and offer funds for transportation to public schools outside a
child’s district. Businesses get a dollar-for-dollar tax credit for SFO contributions, with total credits
capped at $286.25 million. Unused credits can be carried forward to the next fiscal year.
Enacted 2007 • Launched 2007
The Georgia Special Needs Scholarship Program allows any student with a disability whose parents
are unhappy with their assigned public school to receive a voucher to attend private school.
Enacted as a Pilot Program 1999 • Expanded 2000
Florida’s John M. McKay Scholarships for Students with Disabilities Program allows public school
students with disabilities or 504 plans to receive vouchers to attend private schools or other public
Enacted 2011 • Launched 2012
Ohio parents of children with special needs enrolled in public schools are able to receive vouchers to
pay for private school tuition and additional services at private therapists and other service providers.
Vouchers can be used at public providers (i.e., school districts) if the district chooses to accept voucher
students. The number of vouchers available is capped at 5 percent of the students with special needs
Enacted 2009 • Launched 2009
Arizona allows corporations to receive tax credits for donating to School Tuition Organizations (STOs),
nonprofits that provide private school scholarships to children with special needs and students who
are currently, or have been at any time, part of the Arizona foster care system. The total credits claimed
cannot exceed $5 million in a given year.
Enacted 2010 • Launched 2010
Any Oklahoma student with special needs currently in public school is eligible to receive a voucher to
attend private school.
Enacted 2008 • Launched 2008
Louisiana’s statewide voucher program is available to low-income students in low-performing public
schools. Prior to 2012, eligibility was limited to students in specific districts and parishes.
Enacted 2006 • Launched 2006
Arizona provides a credit on corporate income taxes for C-Corporations for donations to School Tuition
Organizations (STOs), nonprofits that provide private school scholarships. STOs receiving donations
for this program must award scholarships to low-income students. Corporate taxpayers contributing
to STOs may claim a tax credit equal to the full amount of their contribution. The program is limited
to a total of $35.8 million in available tax credits per year, a figure that is allowed to rise 20 percent
Enacted 1990 • Launched 1990
Milwaukee families earning up to 300 percent of the federal poverty guidelines qualify to receive vouchers.
Once a student receives a voucher, that student is able to keep it, regardless of his or her family’s future
income. Voucher students are allowed to attend any participating private school in the state.
Enacted 2011 • Launched 2013
Oklahoma provides tax credits for donations to Scholarship Granting Organizations (SGOs), nonprofits
that must spend a portion of their expenditures on private school scholarships for low-income students
in an amount equal to or greater than the percentage of low-income students in the state. The allowable
tax credit is 50 percent of the amount of contributions made during a taxable year, up to $1,000 for
single individuals, $2,000 for married couples, and $100,000 for corporations. The program is capped
at $5 million, of which $3.5 million is dedicated to private school scholarships with a separate $1.5
million in tax credits available for donations made to organizations that distribute “educational
improvement grants” to public schools. Each donor category (individual and corporate) may use up
to $1.75 million of the $3.5 million cap. If donations exceed the statewide cap in a given year, the
Oklahoma Tax Commission will allocate the tax credits to individuals (or corporations) on a pro-rata
basis. If individual donations fail to meet the $1.75 million cap while corporate donations exceed the
cap, the unused individual credits can be allocated to corporations (and to a separate tax credit for
public school improvement grants), and vice versa.
Enacted 1997 • Launched 1997
Arizona provides a credit on individual income taxes for donations to School Tuition Organizations
(STOs), nonprofits that provide private school scholarships. In the 2014 tax year, individual taxpayers
contributing to STOs may claim a dollar-for-dollar credit of up to $528, and married couples filing
jointly may claim up to $1,056. The amount an individual can claim for a credit increases each year by
the amount the Consumer Price Index changes.
Enacted 2008 • Launched 2008
Georgia provides dollar-for-dollar tax credits for donations to Student Scholarship Organizations
(SSOs), nonprofits that provide private school scholarships. Individuals may claim up to $1,000, and
married couples filing jointly may claim up to $2,500. An individual who is a member of an LLC, a
shareholder of an S-Corporation, or a partner in a partnership may claim up to $10,000 of their tax
actually paid as a member, shareholder, or partner. Corporate taxpayers may claim up to 75 percent of
their total tax liability. The program is capped at $58 million in tax credits per year.
Enacted 2010 • Launched 2011
Louisiana allows students with certain exceptionalities who live in eligible parishes to attend schools
of their parents’ choosing that provide educational services specifically addressing their needs. Eligible
students are defined generally as those with special needs who have Individualized Education Plans
but who are not in accelerated or gifted and talented programs.
Enacted 2009 • Launched 2010
Indiana’s School Scholarship Tax Credit program allows individuals and corporations to claim a 50
percent tax credit for contributions to approved Scholarship Granting Organizations (SGOs), nonprofits
that provide private school scholarships. There is no limit on the dollar amount of the tax credit that
can be claimed, although the total amount of tax credits awarded statewide is limited to $7.5 million.
Enacted 2006 • Launched 2006
Iowa provides a credit on individual income taxes for donations to School Tuition Organizations (STOs),
nonprofits that provide private school scholarships. The credit is worth 65 percent of the donation’s
value, which also is limited by a statewide cap. A maximum of $12 million in tax credits is available.
Each STO is able to grant tax credits to its donors up to its share of the statewide limit, with each STO’s
share determined by the enrollment at the schools it serves. Corporate donations are able to constitute
up to 25 percent of the $12 million cap.
Enacted 2006 • Launched 2007
Rhode Island provides a credit on corporate income taxes for donations to Scholarship Granting
Organizations (SGOs), nonprofits that provide private school scholarships. Tax credits are worth 75
percent of the contribution, or 90 percent if donated for two consecutive years and the second year’s
donation is worth at least 80 percent of the first year’s donation. The total amount of tax credits is
capped at $1.5 million. Each corporate donor can receive only $100,000 in tax credits each year, and
cannot use surplus donations in one year to generate tax credits in future years.