In this episode, we speak with Terry Stoops, the vice president of research and director of education studies at the John Locke Foundation in North Carolina. He discusses the state’s Opportunity Scholarship Program and most recent school choice program.
Jason Bedrick: Hello, and welcome back to another edition of EdChoice Chats. This is Jason Bedrick, the director of policy, and you’re listening to our state policy series. I am joined today by Dr. Terry Stoops, the vice president of research and director of education studies at the John Locke Foundation in North Carolina. Terry, welcome to the program.
Terry Stoops: Thank you. It’s a pleasure to be here.
Jason Bedrick: So, today we’re going to be talking about school choice in the Tarheel state, and let’s start with your voucher program. The Opportunity Scholarship Program was enacted in 2013 and launched in 2014. Terry, can you tell us a little bit about how it works and who’s participating?
Terry Stoops: Sure. The Opportunity Scholarship Program is for low-income children. It is the largest voucher program in North Carolina with, at this point, over 9,000 participants, over 9,500 participants. And we see the most demand for this program, and the amount of scholarship money set aside for it being over $31 million. It’s a statewide program that has income eligibility. Certainly the one drawback to the Opportunity Scholarship Program is that the maximum scholarship amount is around $4,200 a year. Now, this program has been the one that’s probably been the most scrutinized of our programs here in North Carolina, and certainly we can get into that, but this is certainly the most popular voucher program that we have here in North Carolina.
Jason Bedrick: So, in order to be eligible, students can’t be more… They can’t come from a household that has an income of greater than 133% of the federal poverty guidelines, so that’s about $62,000 for a family of four. Now, you mentioned that the scholarships are for up to $4,200. I see that private school tuition, at least for elementary schools, the average is about $7,800, for high schools about $9,800. So, you’re getting, depending on high school or elementary, a little less than half. How much is the public school spending per pupil, do you know?
Terry Stoops: Well, the public schools are spending around $9,300 per student, so this is certainly significantly less. And really hats off to the private schools in North Carolina, because parents that come with the Opportunity Scholarship are able to meet some of the costs. The private schools are able to make up some of the difference. So, they have done a really good job of ensuring that no parent that has an Opportunity Scholarship will be turned away. Now, that’s certainly not the case universally. Of course, like every state, we have some very expensive private schools that wouldn’t even entertain the idea of having a voucher student with a scholarship this low, but the vast majority of private schools ensure that no student will be turned away with an Opportunity Scholarship. And so although it meets such a small amount… And it’s an amount that hasn’t changed for several years. We anticipate that there will be legislation in the upcoming session that will increase the amount by a small bit to try to bridge the gap between what the private schools are charging and what the Opportunity Scholarship provides.
Jason Bedrick: And it seems to be quite a popular program. So, in 2015 you had about 1,200 students participating and you’ve had very steady growth since then. And like you said, now more than 9,000 students participating. So, that’s tremendous growth in just four years, so hats off to those who are running the program. One thing that makes the voucher program in North Carolina different than in other states is that you can use it for more than just tuition. Can you explain? What can you use the voucher for?
Terry Stoops: That’s right. The scholarship can be used for other expenses in addition to tuition, and this includes the expenses that are needed to transport the student, provide additional educational services for them. So, yes, while the scholarship can be used for other matters, given how small the amount is, its main focus is to address the cost of tuition and I think that’s what most schools are using it for.
Jason Bedrick: Now there was another program that was enacted in the same year, 2013, and launched in 2014, and that’s the North Carolina Special Education Scholarship Grants for Children with Disabilities. Can you explain how that one works?
Terry Stoops: Sure. The Disability Grant actually started out as a tax rebate to parents that would pay the amount and then get the amount back on their taxes. And we found that didn’t really work well, especially for families that couldn’t afford to pay the amount of tuition at the beginning of the school year and then get refunded at the end of the school year, essentially. So, the idea was to switch it to make it a voucher program. And in 2017, we saw it become a voucher program with around 1,100 students.
It’s grown slower. We only have around 1,500 students that take the disability grants, but most of that is due to the fact that it is only open to students with a documented disability. These are students that have an individualized education plan that is binding with a school district and so they take it… their eligibility is based on having an IEP and they’re able to access up to $8,000 a year for the Disability Grant. Again, it’s growing much slower, but that’s mainly because it’s a very targeted population, much smaller population than the Opportunity Scholarship for sure.
Jason Bedrick: Right, so only 11% of students are eligible statewide for that, whereas with the low income scholarships, you’ve got about 44% of students who are eligible statewide. There’s a difference in the funding, right? The students participating in the special needs program gets significantly more money, correct?
Terry Stoops: That’s right, up to $8,000 a year. And certainly the nature of some of the disabilities that these students have necessitate a much larger amount. Now, of course we would like to see the Opportunity Scholarship get to that amount as well given the expense for tuition at many private schools, but the disability grant with $8,000 a year, has seen an increase. Used to be $6,000 a year. And that was a decision made by legislators after input from parents who found that the tuition amount that they were receiving was not commensurate with some of the services that these private schools needed to provide. So they made the decision to increase the amount from $6,000 to $8,000 a year. Probably still not enough, but certainly much to the pleasure of the parents and the schools that provide these services for these children, that amount was increased.
Jason Bedrick: Now, before we get to the most recent educational choice program in North Carolina, perhaps you can tell us a little bit about the history of these programs. Who is behind them? Who is pushing them? Was your organization involved? I’m sure our listeners would be interested to know.
Terry Stoops: Sure. In 2010, the North Carolina General Assembly gained the Republican majority for the first time in a century. And when the Republicans came into office, they did so with the promise of providing expanded school choice options in North Carolina. We’ve had home schools since around 1985. We’ve certainly had private schools. We’ve had charter schools since 1996. But we didn’t have any private school voucher programs. And so once this new leadership came into office, it was one of the first things that they promised.
Now, once we got through that period where the recession was taking a hit on state finances, they began setting the groundwork for these programs. And by they, I’m referring to Phil Berger, who’s the president pro tem of the North Carolina Senate. He was then and still is. House Speaker, Thom Tillis, who is now a U.S. Senator, and Paul “Skip” Stam, who was a house leader. And these really are the three legislators that carried the weight in the legislature to make sure that we got the first of our voucher programs, the Opportunity Scholarship and the Disability Grant.
And they really relied on organizations like the John Locke Foundation, the Civitas Institute, membership organizations such as the Private Schools Association, the Catholic Diocese, advocacy organizations all came together. We had planning meetings in a small office at the legislative office building. And this really was a group effort because it was one thing to get the legislation passed, but it’s a whole other to not only get the public aware of these programs, but to get them to support these programs.
And so it was an effort that was started soon after they took office in 2011. We were able to get the programs enacted in 2013, and launched in 2014. And it’s really this coalition that also laid the groundwork for the Education Savings Accounts that we had enacted in 2017. So, really it’s a group effort, but we’ve had some fantastic leadership in the General Assembly that has really been laser focused on expanding school choice options in North Carolina. And that applies not just for our private school options, but for our home and charter school options as well. A real focus on expanding school choice.
Jason Bedrick: And so that’s a good segue as you mentioned the education savings account program. North Carolina was the sixth and most recent state to adopt an ESA. How does your ESA work? What makes it different from the other two voucher programs?
Terry Stoops: Well, the ESA provides up to $9,000 a year for parents to use for qualified education expenses, and that may include tuition, therapy, or any other item that will enhance the services provided to these students, which are students with disabilities. It’s focused just on students with disabilities, and that’s one of the reasons why our current program, which just launched, only has 277 students participating. And many of these students are taking advantage of both the Disability Grant and the Education Savings Account so they can combine the two, use part of the money for tuition, and then the other money for the other needs that some of these students have. We hear from parents with students with severe disabilities that require any number of physical therapies, speech therapies that use the education savings account to pay for those expenses. They’re able to leverage both programs.
The amazing thing about the education savings account is sometimes you have those implementation challenges when you’re trying to explain to people what an ESA is and how it works. But even so, in the first year we had over 1,400 applications for only around 300 ESAs. So I think that the Disability Grant population really had a desire for an ESA and they really came out in trying to get an ESA. Most of them did. Unfortunately, the amount of money was limited for the ESA, and at $9,000 a year, 277 lucky parents were able to get an ESA this year for their children.
Jason Bedrick: Now, when they get the ESA, how does it work? It’s set up differently in different states. Are they paying out of pocket and then submitting their expenses and receipts to be reimbursed? Are they using debit cards?
Terry Stoops: They are using an online marketplace mostly for some of these expenses. There are reimbursements involved and, of course, there’s strong oversight of the program. One of the worries that folks had was that there would be the opportunities for fraud, but it is a program that’s overseen by our State Education Assistance Authority that works closely with a vendor that provides an online marketplace for parents to be able to find the various things that they need for their child, the qualified education expenses that they can take advantage of. So, parents are able to use an education marketplace and also have preloaded debit cards that they could use to pay for those expenses. So, there’s strong oversight of the program to ensure that there are no fraudulent activities for the 277 participants.
Jason Bedrick: And the other two programs have much higher levels of funding. So the other disability program had about more than $13 million in funding. There’s about $55 million set aside for the low-income scholarships. But there’s only about $3 million that was allocated to the ESA. Is there a reason for that? Did legislators see this sort of as a pilot program that they are hoping to expand later?
Terry Stoops: Yeah, I believe that there were legislators that had some reservations about the program because of the isolated incidents of fraud that they heard from other states. There were some legislators that really just didn’t understand how it worked, and although they had support for private school choice, they were hesitant to enact a program of this type. So, they decided to create a lower amount for the ESA as a starting point, see how it works, ensure that all the oversight that was necessary was in place, and then expand it from there.
And I think there’s an appetite among the Republicans in our General Assembly who have the majority to expand the Education Savings Account and perhaps merge it with the Disability Grant. I think the flexibility that an ESA provides is something that a lot of Disability Grant parents would really like to have. So I could see that in the future, perhaps, that our ESA really envelops the Disability Grant and there’s a much larger program with a larger pool of money that would allow those parents to use that money in the way that they believe is best for their child.
Jason Bedrick: So, beyond expanding the programs, what sort of fixes or changes would you propose and where do you think that these programs are going to go in the future?
Terry Stoops: Well, there was a lot of controversy recently in North Carolina about a study that showed that the Opportunity Scholarship was not spending its entire allocation. Members of the General Assembly years ago chose to provide an automatic funding increase to the Opportunity Scholarship Program of $10 million a year. Unfortunately, the regulatory constraints on participants of the Opportunity Scholarship Program make it difficult for parents who want to have an Opportunity Scholarship to be able to access that money. It’s not just the financial constraints, it’s the fact that most students who participate have to have spent the previous year in a public school.
That was a way to sell the idea of cost savings when it was originally passed as legislation. But we don’t believe that that’s really necessary given that we’re already seeing the cost savings and given the demand that we’ve seen for the Opportunity Scholarship. So I think we’re going to see an effort to try to allow more students to participate in the program and access the money that legislators have wisely set aside in the form of automatic $10 million increases every year, because we’re seeing the number of applicants far exceeds the number of recipients, and many of these applicants are not eligible for the scholarship because of the regulatory constraints put on them.
There’s also been a problem with the administration of the Opportunity Scholarship itself, is that some eligible parents were told that there wasn’t money available only to find, months later, that there was plenty of money available. So, there were some administrative and bureaucratic issues that need to be addressed in the administration of the program and the timing of the grants. I think these are issues that will be worked out given the amount of really negative press that the Opportunity Scholarships have received from this study that shows there’s this quote unquote “leftover money.” And so we just want to make sure as an organization, and I think legislators want to make sure, as many parents as possible have access to those funds.
Jason Bedrick: Now, going forward, these programs may also be under legal threat, I understand. Let’s talk a little bit about the legal history of the programs and then what you think might happen going forward in the courts.
Terry Stoops: Well, the Opportunity Scholarship was taken to court by individuals that claim that it violated the North Carolina Constitution to provide these types of scholarships to families. And so the idea that there was a constitutional prohibition really wasn’t based on one of these Blaine Amendments. North Carolina doesn’t have a Blaine Amendment that explicitly says that public funds can’t be used for private purposes. In 2015, the North Carolina Supreme Court ruled that the program was constitutional. After some initial hiccups in the lower courts, the Supreme Court determined that there was nothing in the North Carolina constitution that was violated by the Opportunity Scholarship Program. And it was just the Opportunity Scholarship Program that was taken to court. The Disability Grant, at the time, was not subject of the litigation, and so in 2015, we got that decision.
But that doesn’t mean necessarily that these programs are not going to see another legal challenge. Given the popularity and growth of these programs, we are hearing reports that those individuals that are opposed to these private school choice programs are looking to find the way to send it back to North Carolina court now that the courts, especially the North Carolina Supreme Court, has a Democratic majority. And with a Democratic majority, there’s a belief that if the private school scholarship programs were subject to another legal challenge, that the Supreme Court might rule, in some other way, these programs to be unconstitutional. Now we have some federal precedent, obviously, that tells us that these are consistent with the federal constitution. We have a 2015 ruling that just can’t be ignored.
So, we might see some creative legal maneuvers to try to get the courts to rule these programs unconstitutional.
And it should be pointed out that these programs… Many of those that are challenging them are making the claim that these programs are not only hurting public schools but are hurting low income and minority students who are increasingly seeking out these programs. One of the things about the Opportunity Scholarship, it’s predominantly… It’s about 50% minority students, 50% white students that take advantage of the Opportunity Scholarship. So, the claim that somehow these populations are being harmed, a claim that’s being made by those who want to see these programs back in court or subject to some sort of litigation, are the ones that are really benefiting from it. So, we are certainly on guard as an organization working with our state and national partners to ensure that if it is the subject of litigation, then we will be ready.
There’s another wrinkle to this is that North Carolina has a long standing adequacy lawsuit, called the Leandro lawsuit, and it’s possible that once that case continues to get discussed in court, because it was a case that was remanded to a lower court, that somehow they would use our adequacy case as a way to invalidate our Opportunity Scholarship, disability grants, or ESA. So really the biggest threat that we have right now as a state in North Carolina really isn’t a legislative issue, even though we have a Democratic governor, a Republican majority in our General Assembly, it’s the fact that the courts are always looking to intervene in ways that are challenging the laws and regulations enacted by the Republican General Assembly. And given the growth in these programs, the popularity in these programs, it would not surprise me or the allies that I work with on behalf of these programs, to see a lawsuit filed as early as this year and perhaps one filed next year in anticipation of the 2020 elections.
Jason Bedrick: Well, I hope the concerns do not come to bear as… There actually have been other states, most notably, I think, Georgia recently, had a unanimous opinion upholding the state’s program that was written by a Democratic appointee, and justices that were appointed by members of both parties ruled in favor of the program. So, I’m hoping that that will also be the case in North Carolina, especially as we see that the program is benefiting so many low income and students with special needs that really are getting access to educational opportunities that they otherwise wouldn’t have without the programs.
Terry Stoops: That’s our hope too. And as a state that I believe has become a leader in school choice in both private school choice, charter schools, and home schools, that has seen a market share for school choice at around 20%, it’s our hope that we can provide these programs indefinitely, make them stronger, expand them so that all parents who want them can access them, and reap the educational benefits that we believe that these programs will provide.
Initial studies by North Carolina State University have indicated these programs are not only signs of academic improvement amongst students who are taking advantage of these programs, but they’re incredibly popular with the parents that are involved in them, choosing these programs not just for the academic advantages, but for safety concerns and various other concerns that parents have with the traditional public school systems. So, we believe that this is a tremendous success in North Carolina and we believe that those who are taking advantage of our private school choice programs would agree that all parents, as many parents who want access to these programs, should have that access.
Jason Bedrick: My guest today has been Dr. Terry Stoops, vice president of research and director of education studies at the John Locke Foundation. Terry, thank you for joining us.
Terry Stoops: Thank you for having me.
Jason Bedrick: You’ve been listening to EdChoice Chats. This is the state policy series. Don’t forget to subscribe to the EdChoice podcast on SoundCloud, iTunes and Stitcher. Follow us on social media @edchoice and sign up for our emails on our website edchoice.org. Thank you for listening.