Ep. 122: The Monthly Debrief – June Looking to July 2019

July 11, 2019

In this Monthly Debrief podcast, EdChoice’s Senior Director of State Relations Michael Chartier, Director of Policy Jason Bedrick and Director of State Relations Lauren Hodge discuss the latest school choice happenings in the states. They talk about everything from the repeal of  the Nevada Education Savings Account program to program expansions in Ohio.

Michael Chartier: Hello everybody, and welcome to another EdChoice Chats. Here in studio it’s myself, Michael Chartier, your senior director of state relations, and Lauren Hodge.

Lauren Hodge: Hi there, so glad to be joining you today.

Michael Chartier: And on the phone from usually what would be the cactus patch, but has literally transported himself somehow across the country up to much cooler, but still beautiful—I would say arguably even more beautiful—New Hampshire, Jason Bedrick.

Jason Bedrick: Great to be here.

Michael Chartier: So, thank you everybody, for taking the time to listen to this podcast. I think we’re going to start out with Lauren giving us a quick update on what’s going on in the Tarheel State. I know they’re still in session. And I should probably go back a little bit, this is the podcast that’s covering what happened in June and what we think will happen in July. So, for some context for what we’re talking about, it’s things that happened in June and what we think will happen in July. I think Lauren’s going to give us an overview of what’s going on in the Tarheel State.

Lauren Hodge: Thanks so much, Michael. As we wind down legislative sessions, there’s still a couple that are on the slow burn and finishing up that ever-important budget process that truly does consume so very much, not only of the session, but of oxygen in the room, really. One of those states is going to be North Carolina. What’s interesting, if you’ve listened to the podcast or you’ve followed the state updates, you do know North Carolina had a really interesting year. They were all over the place in terms of school choice legislation, programs, bills that would expand the eligibility and the income limits, to bills that would, in essence, take out or diminish some of those programs. There’s been a really robust debate that’s happening in that state, and as we look at part of North Carolina’s potential success, it’s that so many people are already engaged in choice. For those that remember, they have three programs. They’ve got two that are based for special needs or children with disabilities, and one that is called the Opportunity Scholarship Program, and that Opportunity Scholarship Program is based on your income level and targeted towards low-income families.

The big change that we see—a proposed change, mind you, it hasn’t passed yet—would be a structural change actually to the program. What that would do is combine the two programs that are focused and targeted towards the disability grants. For those that remember, know North Carolina, what that looks like is, one is an Education Savings Account with high flexibility as to how the funds are spent. The other is much more of a voucher-style program where it’s going just towards tuition.

This is in the Appropriations Act, and what they’re talking about is combining the two programs into a single Education Savings Account. We’ve talked about Education Savings Account, we’ve got Jason Bedrick on this call, who I’m sure can course correct me if I say anything wrong. But what the key difference is going to be is really how parents can spend that money and how children can access those services. And especially in the disability sphere, that flexibility has been something we’ve heard from parents time and time again, is highly coveted and very, very useful, to be able to specialize therapies and to be able to find not only the right therapies, but the right therapists. They’re talking about changing both programs into one Education Savings Account. The maximum value that that would be is $17,000, and that would be, much like the disabilities grant program currently, based off of children that have what are considered the most severe disabilities.

They have a listing of what those disabilities might be. If you are not one of those disabilities, the value of the Education Savings Account, the ESA, does go down, but we’re looking at roughly potentially $9,000, similar to what it was prior to this, for a full-time student, $4,500 for a part-time student. That’s kind of where we’re at for the program structure. It hasn’t passed yet, we don’t know what that will, if it does pass, what it’ll look like. So, we’re going to be paying attention to it, seeing how this blocks out.

The interesting feature, too, to this possible change is that North Carolina has always had stackable programs, meaning that you could combine the choice programs one on top of the other. What they are talking about with this change is allowing the Opportunity Scholarship Program for low income to be stackable for the disabilities grant. That would be an opportunity, so if you are a child who not only has a disability, but is also from a low-income household, you could have additional funding revenues brought in to try and help further that educational freedom and to put you at a different playing field.

So, that’s kind of what’s going on in North Carolina. Well, stay tuned, it is always, always an interesting state to watch.

Michael Chartier: Oh, absolutely. And as you pointed out, one of the best states when it comes to school choice and the number of programs that they have passed there. I think I’ll take us a little bit further north, and then a little bit … Well, actually, let me start a little bit further west. Let’s keep this in chronological order. We’ll start a little bit further west, so the great state of Nevada.

Nevada ended their legislative session very early in the beginning of June. I should start with the bad news, and we’ll move on to the good news. As some listeners may know, the legislature repealed the Nevada Education Savings Account program in its entirety. Governor Sisolak signed that bill into law. So basically, it was SB 551, it was a bill to do a whole bunch of stuff. Their modified business tax, or MBT, was currently set for sunset. The governor had proposed extending that sunset [inaudible 00:05:52] to raise additional revenue to bring into the state and use, I think all of it, or at least most of it, for education and to spend money on education.

That vote … Well, there’s an argument on both sides. The Republicans in the legislature are arguing that vote requires two thirds of the members of both chambers to vote in the affirmative for a tax increase, and they would argue that a tax extension is a tax increase. The Democrats in the chamber argued that because it’s not a tax increase, that it’s just an extension, that that does not require a two thirds vote. The leadership in the House and the Senate went to their Legislative Counsel Bureau and asked for their opinion about what they think is required. The LCB came back and said that they did not believe that a two thirds vote was required to extend that modified business tax. That incensed the Republicans. They thought that this was an end run around the Constitution, so they decided that because of that opinion, they would not be supporting the legislation.

So ultimately, as sort of a … There’s carrots and sticks in life, and as sort of a stick for the Republicans, the Democrats threw in, on the last day, a total repeal of the ESA program. That bill ended up passing. So, that is somewhat sad, and I believe … Jason may correct me if I’m wrong, but this is really the first legislatively repealed program in the country. Other programs have somewhat been shifted around and moved and whatnot, but I think this is the first total repeal of a program with no sort of alternate that’s taken place. That’s sort of a sad prospect, and I was not happy to see that removed.

Jason Bedrick: It is sad, though I should point out perhaps the silver lining here, as we mentioned in the podcast last month, is that even in states where there was a very hostile legislature and a hostile governor, but the program was actually operating, they did not repeal it. So, looking at New Hampshire, New Hampshire has a favorable governor, but an unfavorable legislature, and the repeal effort failed in the legislature. Didn’t even have to be vetoed, they couldn’t get it passed. And in Illinois, the governor had been talking about phasing out the program, the legislature had seemed willing to do this, and yet, they did not. So, it just goes to show that when these programs are actually running, the legislature and the governor are not willing to take scholarships away from families that are actually using them.

In Nevada, it’s the exception that proves the rule, because here you have a situation where nobody was actually receiving an ESA, so it’s a lot easier to take something away from nobody than it is to take something away from somebody.

Michael Chartier: That is absolutely correct, Jason, absolutely correct. I think one of the things that was positive about the bill was that their tax-credit scholarship, which they locally call the Opportunity Scholarship Program, that was set to, basically I think be, not repealed, but rolled back by almost half. The total donation cap was to be rolled back by around half, and what ended up happening at the last minute negotiations, the current levels of funding that the tax credit cap was actually kept at its current levels, so no students in the program would be kicked out of the program. That’s a big thing to say, is that thankfully no one in that program would be removed. However, there is, as in all things, there is currently a discussion about whether that program allows for new entrants into the program, not just fiscally, but whether the language in the bill allows just for new children to come into the program.

There are those, including Nicole Cannizzaro, who is the Senate majority leader, who say that it does not allow for new students to come into the program. She said that multiple times on the floor. But then there are others in the state, including Valeria Gurr, who say that, actually that the plain language of the bill does allow for the program to receive new entrants. So, I’m not sure what’s going to happen with that. Potentially there could be litigation or a deal, or a clarification could be worked out behind the scenes. I know that the Nevada Department of Education has released guidance to say that there are no new entrants to the program, but we will continue to monitor that situation see what happens out there. That is another interesting wrinkle in the Silver State. That’s a quick update about what has happened there.

Moving on to the state of West Virginia. Most of you know, the Senate went into special session early in June and passed a nearly universal Education Savings Account as part of an omnibus bill and sent that over to the House of Delegates. That bill included the teacher raises that were a big sticking point in the last election. Both the House of Delegates and the governor have come out strong to say that they were going to give raises to the teachers. The question is, how were they going to do that and what sort of reforms would be included in that. The Senate came out, made a very strong statement by passing a very strong bill with Education Savings Accounts, a broad charter school program, as well as mandatory public school open enrollment. They sent a strong message over to the House of Delegates that they believed that more educational options were good for the Mountaineer State.

The West Virginia House of Delegates came back in a special session last week in June, and they basically put forth their own bill, didn’t really even take up the Senate’s Student Success Act, and they removed the Education Savings Accounts provision. They didn’t even take that up, I guess actually technically that was passed with a separate bill. They didn’t even take that up outside of their subcommittees. They created four subcommittees. They didn’t even take that up and that had no opportunity to pass. They basically removed all of the charter provisions that were in the Senate’s bill, and they introduced a bill that had ten charter schools and capped forever, but they did keep the mandatory open enrollment for public school districts, so that was a spot of bright light.

What ended up happening, that they did pass their version of the Student Success Act, and that did include the mandatory public school open enrollment. It did not include Education Savings Accounts, but it did include a somewhat different charter proposal. So, basically what happened was, they capped charter schools at three charter schools every three years. So, if this program will start, there could be up to three charter schools in existence, and those would be approved by the county boards of education, of which there are 55 county boards of education in West Virginia. Then after three years, the Department of Education will basically look at those charter schools and determine how they’ve done and make a recommendation to the legislature, basically to allow three more charter schools to come into existence. In four years, we could have six charter schools, and then after six years, they’ll have nine schools. So, they’re going to continue to ratchet up the program. There is no overall cap for those charter schools, but they can only grow by three schools every three years.

So, that’s what happened out there. Teachers got their raise, and that will take into effect, so we’re glad to see that the House and the Senate and the governor followed through on that and they made that all a very big deal. We’re glad to see that those things happened and that the state of West Virginia is happy with the work of the legislature out there. So, those are sort of my updates on my states, perhaps long-winded, but kind of give you guys an update on the last two remaining states in my portfolio. I think all of my states, at this point, are out of session.

With that, I think we’ll move over to Jason Bedrick. Jason will sort of round out our podcast here.

Jason Bedrick: All right. So, moving up the East coast to Pennsylvania, we’ve been following HB 800, as regular listeners will recall, passed the Pennsylvania House last month with unanimous Republican support, and also a number of Democrats supporting it as well. It did have some bipartisan support. This is a bill that would expand the state’s tax-credit scholarship programs. They have two programs, the EITC, that’s the Education Improvement Tax Credit, and the OSTC, the Opportunity Scholarship Tax Credit. These are both programs for low-income students. They would increase the amount of tax credits available by about $100 million, so that would provide thousands of students with additional scholarships.

Also, it would add what’s called an escalator or an inflator, which is to say that if the amount of tax credits claimed in any given year is equal to or greater than, I think it was 90 percent of the available tax credits, then the tax credit cap would increase by 10 percent in the following year. This is similar to provisions in Florida and Arizona. This would allow the program to continue to grow to meet demand. The fortunate thing, we’ve got some good news, bad news here. Good news is that it passed Pennsylvania Senate. It was unfortunately on party lines, but still, it passed. It was sent to the governor’s desk, at which point the governor vetoed the legislation. There is still an opportunity that they may get some of these provisions, maybe a smaller increase in the amount of tax credits available in the state budget. We will be keeping an eye on that. As a matter of fact, we’re recording this podcast with a few days left in the month, so if there is an update … Well, stay tuned at the end of the podcast, there may actually be an update on this. But we will certainly keep our viewers informed about what happens there.

In Ohio, the Senate’s version of the state budget includes an expansion to the state’s income-based voucher program. There are actually five different school choice programs in the state of Ohio. One of the main ones is, it was known as the EdChoice voucher program, or EdChoice scholarships. These were available to students who were assigned to very low performing district schools. That program was expanded somewhat. We categorize it as a separate program for low income students, so students who are not eligible for the other program, but are from families that earn up to 200 percent of the federal poverty line, which is to say, that’s about $50,000 a year for a family of four, are eligible if those students are entering grades K-5. What they were doing is, they were expanding, each year they were adding on another grade. So next year, it would be grade 6, 7, 8, and so on.

What the Ohio Senate did is, they decided instead of phasing it in one grade a year, we’re just going to increase it all the way in K-12. So, any of those students that are switching out of a public school, or entering school in the state for the first time, would be eligible for a voucher. They would be a line item adding $50 million to the program to provide for thousands of new students that are newly eligible for the program. That’s in the Senate version of the budget, it’s not currently in the House version of the budget. The House and Senate leadership are currently in the midst of budget negotiations. We’re hearing that the governor is supportive of this proposal, so we are hopeful that the final version of the budget will contain some sort of increase for the program and be able to help lots of new students. We will keep you posted with regard to that.

Michael Chartier: Well, perfect. Thank you very much for that update, Jason. Do you want to give a quick update, maybe a minute or two about some of the court cases that I know Leslie is going to be talking about, maybe as just a little teaser for folks, and then we can send everybody on their merry way.

Jason Bedrick: There are a number of lawsuits going on right now, again, stay tuned for the podcast that Leslie Hiner will be releasing soon. Leslie is our VP of legal affairs, and very well-known legal eagle in the school choice community, probably known to our listeners as well. She’ll have a much more thorough update than I’ll give, but I’ll point out that there are currently three lawsuits that we are tracking. One, in Florida, is a lawsuit against the new voucher program that they just passed. Earlier this year, they passed the voucher program, and essentially, for about 18,000 students and it grows every single year. It was to address the wait list for the tax-credit scholarship program. There were 14,000 students on the wait list and legislators there said, “We want to make sure that every child whose family wants a scholarship has access to one.”

Well, the opponents of school choice have filed a lawsuit saying that this violates the Constitution. There was a lawsuit many years ago, Bush v. Holmes, in which the state Supreme Court actually struck down a voucher program very narrowly and on very confusing and not very constitutionally sound grounds. This was not a Blaine Amendment case, this did not implicate separation of church and state or anything like that. This was an odd understanding of the uniformity clause, which says that the state government has to provide a uniform system of free public schools. But, A, what uniform actually means, no one can really say. Does it mean uniformity in the content that’s taught? Does it mean uniformity in the number of hours? What about special education students? How do they fit into this idea of uniformity?

So, even that is a real open question, but certainly, no one, until that court, thought that uniformity meant exclusivity, meaning they said, “Well, we have to provide a uniform system of free public schools, and therefore we may not do anything more than that,” when really all it is, it’s providing a floor, not a ceiling. They interpreted it as a ceiling. There, right now, is a very new Supreme Court, and court watchers in Florida expect that the new Supreme Court is not going to uphold this precedent. It is very likely going to be overturned. So, stay tuned for that.

We also have two cases making their way, hopefully, up to the U.S. Supreme Court, one out of Montana. This is an interesting situation, because it was … Usually, somebody passes a school choice program, and then the opponents of school choice sue. This is kind of, in some ways, the opposite. What happened, this is the Espinoza case. What happened there is that the state of Montana, the legislature passed a tax credit scholarship program, which was open to students going to any type of private school, religious or secular. The Department of Revenue, on its own initiative, said, “Well, we don’t think that this comports with the state constitution’s Blaine Amendment, so we’re only going to allow scholarship organizations to grant scholarships to students going to secular schools, not to religious schools.”

The Institute for Justice sued on behalf of a single mother who wanted to provide her child access to a religious school using one of the scholarships. It went up to the state Supreme Court, and in a first, the state Supreme Court actually struck down the tax-credit scholarship program. No other state Supreme Court has done so, and these are in 18 different states, many of which … Most of which, I would say, actually, have very similar Blaine Amendment language. So this is being appealed up to the U.S. Supreme Court based on the US Supreme Court’s decision, I believe it was last year, but it may be the year before, in Trinity Lutheran, in which they said that if the government is providing a general benefit and you have an individual or an organization that qualifies, but they are denied solely because of their religious affiliation, that is an unconstitutional denial of their First Amendment right to free exercise of religion.

So, that looks very like what’s going on here. This is a woman who is eligible to receive a scholarship for her child, the school meets all of the conditions that a school would need to meet in order to receive scholarship students, except for the fact that it has a religious affiliation. The Supreme Court, within the next week or two, is supposed to announce whether or not it is granting cert in this case, meaning that they would actually hear the case in the coming Supreme Court session, so we are very hopeful.

And there’s a somewhat similar case that the Institute for Justice is also pursuing in Maine, also based on the U.S. Supreme Court’s recent jurisprudence with the Trinity Lutheran decision. In that case, they’ve had a town tuitioning program, which is very similar to a voucher program, since the mid-1800s. It was only in about the 1960s or 70s that they modified the program to exclude religious schools. Before then, anybody using the town tuitioning program was allowed to use the funds at a religious school. That changed recently, and I mean recently in the grand scheme of things, which, you know, four or five decades ago. But in light of Trinity Lutheran, it appears that that added regulation may very well be unconstitutional. We will be tracking these as these cases have major implications for school choice. I don’t like to make predictions, but I will say that I feel very confident in all three of these cases, and I think that in the next year, we will see some major wins for school choice.

As promised, we have a brief update for you from the state of Pennsylvania, where the governor has actually signed legislation that, in addition to having a number of technical changes to the two tax credit programs in Pennsylvania, increased funding by a total of $30 million, in a boost of $25 million to the cap for the education improvement tax credits and a boost of $5 million to the Opportunity Scholarship tax credit program.

All in all, not everything that school choice advocates in Pennsylvania were hoping for, but certainly a step in the right direction for low income students in the Keystone State.

Michael Chartier: Thank you for that update, Jason. And everyone, look forward to Leslie’s podcast coming out here soon. I think with that, we’ll let you guys get back to your normal lives. Please, if you guys have anything you want us to talk about, anything of interest, email us at media@edchoice.org. Sign up to receive these podcasts at SoundCloud, Stitcher or iTunes. Follow us on social media, @edchoice. And I think that’s pretty much about it. Everyone have a great July, and you’ll hear from us again in about a month. So, thank you very much, everybody.