Arizona Legislature adopts sweeping education reforms
by Matthew Ladner, Ph.D.

This session Arizona lawmakers enacted some of the most far-reaching K-12 education reforms in state history. The changes have received little attention from any Arizona media so far. But you can bet you’ll hear much more as the state implements the new laws.

Ten years ago Florida implemented a set of education reforms that transformed their schools from among the worst performers on national tests to among the best. Several of the bills that Governor Brewer has signed into law are modeled on Florida’s success.

1. Arizona now will annually issue schools a letter grade of A, B, C, D, or F.
2. The state now will have a robust program for experts in math, science and other areas to teach their subjects without first getting a teaching certificate from a college of education.
3. Lawmakers have curtailed social promotion by holding back some third graders who have yet to learn the basics of reading.
4. Legislators expanded the sources available to launch new charter schools.
5. Lawmakers increased the size and transparency of the state scholarship tax credit program and changed to the date for claiming the tax credits from December 31 to April 15.
6. The Legislature also specified school districts cannot use “years on the job” as the only criteria when deciding which teachers to keep. The Arizona Department of Education will be required to develop teacher and principal evaluations that include how well students score on specific tests.

Each bill contains important policy changes that will improve education by holding educators accountable to parents and taxpayers. The “A” to “F” school labels and teacher evaluation reforms could revolutionize Arizona’s public schools if properly implemented.

We have many people to thank for these remarkable changes. Former Florida Governor Jeb Bush and Patricia Levesque, the executive director for the Foundation for Excellence in Education, spent their valuable time here in Arizona. Key philanthropic and business community leaders aided with both their money and their time. Governor Jan Brewer and her staff made it a priority to win legislative approval of the Florida-based reforms. The chairmen of the Senate and House education committees, Senator John Huppenthal and Representative Rich Crandall, personally introduced several of the key bills. Most of the measures gathered strong, bipartisan support.

This year, Arizona lawmakers demonstrated with action, not just words, that they will not accept Arizona permanently sitting near the bottom of student achievement rankings. We will not see overnight improvement, and much hard work lies ahead. We have, however, taken the first vital steps to turning our school performance crisis around.

Dr. Matthew Ladner is vice president for research at the Goldwater Institute.

LEARN MORE:

Goldwater Institute: New national test scores show urgent need for education reform

Goldwater Institute: Teachers union pushes for larger class sizes taught by bad teachers

Goldwater Institute: Demography Defeated: Florida’s K-12 Reforms and Their Lessons for the Nation

MEETING NOTICE

On Wednesday, March 31, 2010 at 1:30 pm in SHR1, the Senate Committee on Education Accountability and Reform will hear two school choice bills — HB 2663 and HB 2664.

Arizona House moves to improve tuition tax credit program
by Matthew Ladner, Ph.D.

Through the magic of public access television, I recently watched debate before the state House of Representatives on bills to reform the tuition scholarship tax credit program. I’m happy to report that legislators engaged in a substantive discussion and adopted amendments from both parties.

Congratulations to Representative Rick Murphy for bringing an important and helpful bill, HB2663, to the House. His bill will strengthen oversight through several steps, including empowerment of the state Department of Revenue to revoke the designation of “Student Tuition Organization” for rogue scholarship groups.

I was also impressed with the level of debate from House Democrats. In years past, I’ve had the impression many of these elected officials were content to complain about the scholarship tax credits, but they were not serious about doing anything to address their concerns. In this debate, I saw serious proposals offered.

For instance, Representative Steve Farley offered a floor amendment to allow the Department of Revenue to collect a fee from STOs to fund better oversight. Farley made a convincing case that state government is moving towards user fees during this economic downturn, and scholarship groups ought to be included. The amendment wasn’t adopted. But a fee of less than one-half of 1 percent on the total amount each STO raises each year should provide sufficient funding and merits further consideration.

Other amendments would have required that scholarships funded by the individual tax credits go to students from low-income families, and would have forbidden STOs from considering any recommendations from donors about who should receive scholarships. Reasonable people can and have disagreed on these subjects.

Only the Internal Revenue Service can ultimately determine the legality of donor recommendations. I’ve seen legal opinions going both ways. In the meantime, HB 2663 specifies that donor recommendations cannot be the sole reason any student receives a scholarship, and scholarship groups must consider financial need as a part of their criteria.

No one is getting everything they desire from these reforms. But this bill represents a positive step towards improving transparency and accountability in the program if the Senate and the governor also approve it.

Dr. Matthew Ladner is vice president for research at the Goldwater Institute.

LEARN MORE:

Goldwater Institute: State budget cuts should include education bureaucrats

Goldwater Institute: Fortune Favors the Bold: Reforms for Results in K-12 Education

Goldwater Institute: Arizona’s education stagflation

Arizona Legislature: House Bill 2663

Join the Arizona STO Association (ASTOA) and its members and supporters on the Senate Lawn at the Arizona State Capital to celebrate and show support for Arizona’s many school choice programs.

ASTOA and its members will showcase the positive impact Arizona’s school choice programs, and in particular the tuition tax credits, are making in the lives of Arizona families. Come out leaders so that our state’s leaders will know that school choice matters and that their continued support is important for our children’s educational futures. We look forward to seeing you there!

Posted by Andrew J. Coulson

The latest fiscal impact review of Arizona’s scholarship tax credit programs estimates that they saved between $44 million and $186 million last year.  The programs offer individuals and businesses dollar-for-dollar tax credits if they make donations to non-profit K-12 scholarship-granting organizations. Those organizations, in turn, provide private school tuition assistance.

This is much higher than the savings estimate offered by the Arizona Republic last month, as the AZ Republic story linked above is quick to point out. I deal with the reasons for the discrepancy below, but first, here’s the crucial fact that the Republic has missed yet again: if the tax credit programs were significantly expanded, such as by raising the donation caps, the state would undeniably save many hundreds of millions of dollars annually. In fact, if the share of AZ schoolchildren participating in the program rose to just 40 percent, taxpayers would save billions of dollars a year – even if the size of the individual scholarships had to triple to achieve that result.

The Republic’s failure to report that inescapable and rather important fact does it no credit.

Now, on to the reason for the discrepancy in savings numbers. The body of the story hints at it: the Republic’s estimate assumed that private school enrollment would have been flat or increasing without the tax credit program, while the latest estimate does not.

As I pointed out at the time, the Republic’s assumption is demonstrably mistaken. Official AZ statistics show that enrollment in private schools peaked before the tax credit program had gotten under way, and had begun to decline as a result of rapid growth in the (tuition-free) charter school sector. So the Republic’s savings estimate was almost certainly too low.

As the author of the latest study admits, his assumptions about the true number of students who have migrated to private schools as a result of the program are speculative, but at least they are reasonable and not obviously erroneous, as the Republic’s were. In any event, the savings from a much larger migration to the private sector are not in doubt.

Tuition Tax Credit Saves At Least Twice What It Costs State
by Matthew Ladner, Ph.D.

Baylor University economist Dr. Charles North developed an estimate of the savings to state taxpayers due to the individual tax credit, and shared his findings with the Arizona Legislature last week. You can find Dr. North’s analysis here and view his testimony to the Ad Hoc Committee on Private School Tax Credit Review here.

Dr. North provides a conservative estimate that the credit saves taxpayers twice as much money as the credit costs the state treasury each year. The savings could be greater than that.

During the same hearing, committee chairman Rep. Rick Murphy revealed the result of his survey of Scholarship Tuition Organizations (STOs). The survey included responses from 51 of the 53 STOs that collectively represent 96 percent of the funds raised (the other two groups may be defunct).

Thirty-two STOs reported considering family tax returns in the awarding of scholarships. Only seven of the 50 groups reported considering donor recommendations in awarding scholarships. Dr. North pointed out in his report that some of those recommended donations aid low-income children.

The Goldwater Institute went on record supporting STO reform–including annual audits–back in 2003. Lawmakers need to create either a public or a private oversight structure to deter STO malfeasance. But, some of the criticisms have jumped the shark. For instance, the Attorney General’s Office threatening to sue STOs over tiny fund balances when school districts have carried fund balances in the hundreds of millions of dollars for years. Quelle horreur!

Let’s make the necessary reforms to the tax credit program and actually focus on the serious education problems facing the state and the vast majority of Arizona children attending public school.

Dr. Matthew Ladner is vice president for research at the Goldwater Institute.

LEARN MORE:

Goldwater Institute: The Arizona Scholarship Tax Credit: Providing Choice for Arizona Taxpayers and Students

ATRA: K-12 Cash Balances Could Help Close FY 2010 Deficit

Center for Arizona Policy: State Saving Millions Because of Scholarship Tax Credits!

School Choice Working Group Plans Improvements to the Individual Scholarship Tax Credit Program

September 21, 2009
Contact: Sydney Hay 928-310-4343

School choice proponents today announced their intention to work with the newly- announced Arizona House of Representatives Private School Tuition Tax Credit Review Committee in the formulation of a bold and ambitious policy proposal that will improve and enhance the state’s Individual Scholarship Tax Credit program which already provides tremendous educational opportunity to Arizona children while saving the State of Arizona significant money.

“Each year, through the Individual Scholarship Tax Credit program, 28,000 children are able to attend the schools that best meet their educational needs,” said Sydney Hay of the School Choice Working Group. “We are proud of that record and are looking forward to working with the legislature to increase public awareness of and confidence in the program through greater transparency and additional accountability.“

Ideas currently being discussed that will be vetted through the new House Committee include making sure that all School Tuition Organizations consider financial need when awarding scholarships, a practice that most STOs already engage in; publicly reporting on the numbers of children in financial need who are helped annually; and adding financial accountability measures.

“Many of the most prominent STOs, like the Arizona School Choice Trust and the Catholic Tuition Organizations, have always used financial need as their primary criterion,” Hay said, “and most of the other STOs take it into account in making their awards. But, frankly, we have not done a very good job of telling that story. That is going to change. A renewed emphasis on financial need and increased reporting will help us to demonstrate that this program is transforming thousands of children’s lives.”

Parents Confirm Program Works Wonders for Their Children

Judi Jones has a 6-year-old son attending Millennium Worldwide Academy on a tax credit scholarship. Her son is currently reading and doing math at a 3rd-grade level, and she says sending her child to the school of her choice has been a wonderful experience.

“The school is a special place, a safe environment, the students are happy. They challenge my son in a way that’s fun. I’ve seen him develop tremendously.”

Alisha Anderson, whose son is also a tax credit scholarship recipient says, “This scholarship is giving Averien an opportunity that I could not possibly give him on my own. He is going to be somebody important someday and give back to those who helped him succeed. Averien has been learning so much in this school. We need this scholarship. Some legislators pretend to help us, when they really are trying to take away my son’s chance. I trust that this new House Committee has his future at heart.”

Helen Hernandez, grandmother of second and seventh grade girls said, “The scholarship means everything to me. The school is a great help in assisting me in raising my grandchildren. It’s pure and simple, I couldn’t do it without this scholarship.”

“Arizona has consistently been a national leader in making educational opportunity available to all,” Hay said. “We in the school choice movement are dedicated to working with the legislature in continuing to make a great program better.”

The School Choice Working Group is a coalition of organizations and individuals that seek to expand educational opportunity to Arizona children through school choice. Members include Advocates for School Choice, Alliance for School Choice, Center for Arizona Policy, Arizona Catholic Conference, Institute for Justice, Arizona School Tuition Organization Association, the Arizona affiliate of Council for American Private Education and several pro-school choice legislators.