Educating Arizona: Credit Where Credit’s Due

Arizona’s public education establishment has gone on red alert, talking about a possible lawsuit or ballot referendum as a strategy to derail a $500 income-tax credit for private-school scholarships. Governor J. Fife Symington III (R) signed the measure into law on April 7. For many parents now worried about low test scores, high drop-out rates and classroom violence, the prospect of additional school options is a ray of hope.

The plan – House Bill 2074 – will not divert money directly from public to private institutions, as choice foes have long claimed would be the case under a voucher plan. (For the benefit of Maryland decision makers, the relevant portions of HB 2074 are reproduced on the facing page.) Tax credits or deductions simply allow taxpayers to contribute to worthy causes without being penalized by the tax code.

In this case, donations would be to foundations created to fund scholarships to private or parochial schools. The credit would no more divert money from the government schools than charitable deductions for, say, the Red Cross or the local symphony. Of course, this is precisely the cession of power from the bureaucracy to the citizenry that most concerns the officials who currently wield such power. Their monopoly would be jeopardized.

The new law does not appear to conflict with Arizona’s strict constitutional ban on “appropriations of any public money [to]…private or sectarian schools,” because the credit would be given for donations to independent foundations that spent at least 90 percent of revenues on tuition grants for children to attend non-public schools.

Responding to another common criticism of past proposals, the law would disallow the credit if the donation was designated for the benefit of the donor’s dependents. In other words, it would not simply substitute public for private funding for kids already in private school.

In any event, the argument against “diverting public money for private purposes” has always been bogus. Officials have always been quite content for the state to provide private school tuition costs for the education of, in Arizona, the 2,000 children with emotional or physical handicaps whom they would rather not deal with. Besides, there is an extra $200 tax credit for any fees paid by the taxpayer to a public school to support extra-curricular activities.

Cost estimates ranging from $6 million to $50 million miss the point because, as the program grows, the state will actually save money. For every student who attends a private school at a cost to the state of a $500 credit, the state will save some $2,500 in direct public school aid. That’s not hard math.

But it is the potential that is truly exciting. With only about 5,000 empty slots in existing non-government schools, the $50 million figure is now a huge exaggeration. But if, in time, that many tax credits are claimed, it will mean a huge growth in alternatives to public schools – and more choices to parents eager to maximize their children’s opportunities.

It is this that terrifies the monopoly-schools community. For it is not the diversion of funds, nor the church/state issue, that truly troubles them. It is the threat of being held accountable for students who cannot read or write. Competition is the ultimate in accountability.

Mr. Flake is the executive director of the Goldwater Institute for Public Policy Research. The institute advocates market-based education reform.

Posted in: Education, News Series