‘Scholarship’ proposal boosts the education marketplace

If we want to improve student performance and drive innovation in Texas K-12 education, we must look at parents and students as “customers” in the “education marketplace” who are free to choose the school option that best suits their respective needs.

We get to choose what kind of cellphone we have; we get to choose where we shop for groceries; and we get to choose our dry cleaner. Choosing a child’s education is even more important. To that end, the Educational Tax Credit Scholarship bill (HB 1043/SB 4) would help bring meaningful choice and increase equity in the education marketplace for working-class families.

The Educational Tax Credit Scholarship is simple: It allows Texas businesses to invest in their future workforce by receiving a tax credit from the franchise or insurance premium tax when they contribute to nonprofit organizations that award K-12 scholarships to both public school and private school students. In fact, 40,000 public school students could use this stipend for after-school tutoring or transportation costs associated with public-to-public school transfers. Because the cost of the program is capped, and the scholarship amounts limited, roughly 10,000 students would participate in the private school tax credit component. Most of the benefit would go to public school students through scholarships for educational resources.

According to Turbo Tax, a tax credit reduces the amount of income tax owed by businesses and individuals to federal and state governments. Tax credits are designed to encourage certain types of behavior that are considered beneficial. A tax credit is a dollar-for-dollar reduction of the income tax an entity owes.

On the individual side, millions of Americans take advantage of tax credits for donations to the arts, children’s college tuition, child care expenses and countless other useful programs. Businesses are incentivized as well in various areas.

In this legislative session, the House Ways & Means Committee has debated several other tax credit bills that seek to encourage positive outcomes. For example, we have had bills to provide tax credits to create quality jobs for veterans, fund college scholarships, provide community investment, subsidize high school internships, underwrite wages to college grads and enhance horse racing purses. Most of these bills have been introduced by Democrats in the House, and not once when the bills have been laid out in committee has a witness referred to the tax savings component by the “v” word — voucher.

Because unlike vouchers (which use public money), the courts have consistently ruled that tax credits are not “public money.” So if anyone calls HB 1043/SB 4 a voucher, they are either misinformed or being deceptive to scare potential supporters away from an initiative that has been successful in 14 states.

Nowhere has the tax credit scholarship been as successful as Florida, where it has had bipartisan support for more than 15 years. Florida’s scholarships benefit families with an average income of $24,138 with an average of 3.8 people in the household. Thirty percent are African-American and 38 percent are Hispanic. More than half (fifty-four percent) live in a singleparent home and students have also struggled academically.

Economic modeling for this program in Texas demonstrates a positive fiscal note of $325 million to the state within two years of the program’s inception. In other words, it “makes” more money for the state than the tax credit “costs” the state in foregone revenue. In addition to the state savings, local school districts would maintain all of their local tax base yet would have fewer children to educate, allowing greater flexibility with local spending.

School choice is the civil rights issue of our day. We are willing to consider tax credits for horse racing but not for providing a much-needed educational alternative? No family should be forced to attend a poor performing school simply because of their ZIP code. HB 1043/SB 4 are about economic justice — helping the working poor and giving educational consumers more choices.

Education is, indeed, the great equalizer. And in marketplace, the customer is always right. The education marketplace should be no different.