No. 2597August 17, 2011School Choice in America 2011:Educational Opportunity Reaches New HeightsLindsey M. Burke and Rachel SheffieldAbstract: 2011 has been a milestone year for school choice,setting the bar high for state legislatures across the countryto increase families’ educational options. What began witha crucial re-authorization of the D.C. Opportunity Scholarship Program continued with 12 states creating or expanding school choice options. The movement toward educationalfreedom in 2011 was unprecedented; state after state movedaway from the government’s public education monopoly andtoward policies that put power in the hands of parents, andeducational opportunity in the grasp of children.Today, families in 18 states and the District ofColumbia benefit from private school choice options.More than 200,000 children are benefiting fromvouchers, tuition tax credit programs, and educationsavings accounts to pay for tuition at a private schoolof their parents’ choice. Millions more benefit from virtual education options, charter schools, public schoolchoice, and homeschooling. But, although theseoptions are proliferating, millions of children acrossthe country are still trapped in government schoolsthat fail to meet their needs, fail to provide them witha quality education, and in some cases, even fail toprovide for their safety.Congress and state and local leaders must continuethe work of ensuring that every child has access to asafe and effective school.School Choice in AmericaAs of August 2011, 18 states and Washington, D.C.,have policies that support private school choice:Talking Points In 2011, 200,000 children in 18 states andthe District of Columbia are benefiting fromprivate-school-choice options. (Nine statesoffer education tax credits to encouragebusinesses and individuals to make donations to organizations that provide tuitionscholarships to students to attend privateschool; nine states and Washington, D.C.,have voucher programs.) Forty-six states have policies that permit public-school choice; 40 states and Washington,D.C., allow the creation of charter schools. Homeschooling is legal in every state, andmore than 1.5 million students participate inonline classes. School choice evaluations have shownincreases in academic achievement, graduation rates, parental satisfaction, and studentsafety. School choice also places competitivepressure on public schools to improve. Although more than 200,000 children arebenefiting from vouchers, tuition tax creditprograms, and education savings accounts,Congress and state and local leaders mustensure that every child has access to a safeand effective school.This paper, in its entirety, can be found at: by the Domestic Policy Studies DepartmentPublished by The Heritage Foundation214 Massachusetts Avenue, NEWashington, DC 20002–4999(202) 546-4400 heritage.orgNothing written here is to be construed as necessarily reflectingthe views of The Heritage Foundation or as an attempt toaid or hinder the passage of any bill before Congress.

No. 2597 Nine states—Arizona, Florida, Georgia, Indiana,Iowa, North Carolina, Oklahoma, Pennsylvania,and Rhode Island—offer education tax creditsto encourage businesses and individuals to makedonations to organizations that provide tuitionscholarships to students to attend private school. Nine states and the District of Columbia havevoucher programs: Colorado (Douglas County),Florida (special needs), Georgia (special needs),Indiana, Louisiana (New Orleans and specialneeds), Ohio (Cleveland, Ed Choice, specialneeds, and Autism scholarships), Oklahoma(special needs), Utah (special needs), Wisconsin(Milwaukee and Racine County), and Washington, D.C. Five states—Illinois, Indiana, Iowa, Louisiana,and Minnesota—offer tax deductions to reducetheir state income-tax liabilities by taking deductions on education-related expenses, includingprivate-school tuition.A majority of states offer some form of publicschool choice: Forty-six states have policies that permit publicschool choice.1 Forty states and the District of Columbia havecharter school laws that allow the creation ofcharter schools—public schools that are freefrom many of the regulations imposed on traditional public schools, but are held accountableto the same achievement measures as their traditional counterparts. This allows charter schoolsto be more flexible and innovative than traditional public schools.2August 17, 2011Many more families pursue options outside thetraditional school public model: Homeschooling is legal in every state.3 More than 1.5 million students participate inonline classes.4School Choice: 2011 VictoriesSo far this year—“The Year of School Choice”—more states have enacted school choice legislationthan in any previous year.5 In 2011, 12 states andthe District of Columbia implemented reforms toexpand or create school choice programs.1. Arizona. Governor Jan Brewer signed legislation to implement an Education Savings Account(ESA) program for special needs students. Underthis policy, Arizona deposits 90 percent of the stateper-pupil education funding into a savings accountcontrolled by parents, which can be used for private-school tuition, online education, homeschooling, or saving for college. Unused funds can berolled over from year to year.6 The flexibility provided by ESAs makes this school choice programone of the most innovative to date. Up to 17,000special needs students are expected to be eligiblefor the program in 2011.72. Colorado. The Douglas County School District implemented the Choice Scholarship Pilot Program, the first private-school program in Colorado.The program will provide scholarships for up to500 students to attend private schools of their parents’ choice.83. Florida. Governor Rick Scott signed legislation to expand a variety of the state’s school choice1. “Open Enrollment: 50 State Report,” Education Commission of the States, 2011, at 268 (July 26, 2011). Alabama, the District of Columbia, Maryland, North Carolina, and Virginia have not enacted openenrollment policies.2. “Charter School Laws Across the States: 2011 Rankings and Scorecards,” The Center for Education Reform, 2011,at (July 26, 2011).3. Home School Legal Defense Association, “State Laws,” at (August 9, 2011).4. Keeping Pace with K–12 Online Learning, “Data and Information,” 2011, at (July 26, 2011).5. “The Year of School Choice,” The Wall Street Journal, July 5, 2011, at 50604576420330972531442.html (August 9, 2011).6. The Friedman Foundation for Educational Choice, “School Choice Programs: Arizona–Empowerment ScholarshipAccounts,” at owerment-Scholarship-Accounts.aspx (July 22, 2011).7. Press release, “Arizona Adopts Education Savings Accounts to Aid Special Needs Students,” Goldwater Institute,April 12, 2011, at (August 9, 2011).page 2

No. 2597August 17, 20112011—The Year of School ChoiceThis year 41 states and the District of Columbia have introduced or passed legislation supporting school choice.WAMTVT slationGAPassedLegislationLAAKFLHISource: Heritage Foundation research.options, including private, public, charter, and virtual school choice. The laws expanded the eligibility for special needs scholarships through the state’sMcKay Scholarship program. The laws also expanded the Tuition Tax Credit Program, which providestax credits to corporations that donate to scholarship-granting organizations by increasing the taxcredit amount corporations can receive for theirdonations.9 A new law also makes it easier for students in failing public schools to transfer to higherperforming public schools. Whereas students werepreviously eligible to leave their school if it receivedan “F” grade from the state for two of the four previous years, students are now able to transfer if theirMap 1 B 2597heritage.orgschool received either a “D” or “F” grade in the previous year. Additionally, legislation makes it easierfor the best charter schools to expand more easily,allowing high-performing charters to add gradesor branches without school board approval. Finally,more students now have the option to participatein online courses due to a new law that allows theFlorida Virtual School to offer classes to elementaryschool students, instead of only middle and highschool students.4. Georgia. Georgia expanded its ScholarshipTax Credit program modestly by passing legislationto annually increase the cap of the tax credit by theincrease of the Consumer Price Index.108. American Federation for Children and Alliance for School Choice, “School Choice Legislation: State by State,” ads/119/original/Legislation State by State.pdf (July 22, 2011).9. Ibid.10. 3

No. 25975. Indiana. Indiana enacted the most expansiveschool choice program in the United States. Thisprogram provides scholarships for low-income andmiddle-income students whose incomes are up to150 percent of the free and reduced-price lunchlevel. Those at 100 percent or below this level areeligible to receive 90 percent of state funding forscholarships, whereas those between 100 percentand 150 percent of the free and reduced-price lunchlevel are eligible for 50 percent of state funding.While the program is limited to 7,500 and 15,000students in its first and second years, respectively,within three years these limits will be lifted. Oncethis cap is lifted, it is estimated that approximately60 percent of Indiana students will be eligible forscholarships. Indiana also added a new tax deduction of up to 1,000 to help parents pay for education costs, such as school tuition and tutoring.6. Iowa. Iowa expanded its Scholarship TaxCredit Program by over 1 million per year.117. Louisiana. Louisiana expanded its Elementaryand Secondary School Tuition Deduction Program.This program previously allowed parents to receivea 50 percent tax deduction for private-schooltuition of up to 5,000 per child. In 2011, the 50percent cap was removed to allow a 5,000 maximum deduction.8. Ohio. Ohio lifted the cap on the number ofscholarships it can provide through its EducationalChoice Scholarship Program from 14,000 to 30,000,and expanded the eligibility requirements. Ohioalso increased the scholarship amount for studentsparticipating in the Cleveland Scholarship andTutoring Program, targeted at low-income schoolchildren.12 Finally, the state added the Jon Peterson Special Needs Scholarship program, which willallow special needs students to receive up to 90 per-August 17, 2011cent of their state education funding to attend private schools of their parents’ choice.13 Ohio is nowthe only state in the nation to provide four privateschool choice programs.9. Oklahoma. Oklahoma passed the Oklahoma Equal Opportunity Education Scholarship Actto provide scholarships for low-income studentsthrough a new tax-credit scholarship program. Theprogram provides tax credits of up to 50 percent ofthe amount donated by individuals and businessesthat contribute to scholarship-granting organizations. Students are eligible to receive scholarshipsof up to 5,000, or 80 percent, of the average perpupil cost of the school district where they live.1410. North Carolina. North Carolina passed legislation to implement its first private-school choiceprogram, a tuition tax-credit program for familiesof special needs students. This program provides anon-refundable tax credit to parents of up to 3,000per semester— 6,000 per year—for private-schooltuition and other education expenses.15 Additionally, legislators passed a law to completely lift thecap on the number of charter schools allowed tooperate in the state, previously limited to 100.11. Wisconsin. Governor Scott Walker signed astate budget that included provisions to expand the20-year-old Milwaukee Parental Choice Program.Previously limited to 22,500 students, the numberof scholarships will now be unlimited. Furthermore,eligibility will be expanded to include childrenfrom families who earn up to 300 percent of thefederal poverty line—a family of four earning up to 67,000 a year—previously limited to families at orbelow 175 percent of the federal poverty line. Thebudget also put into place a similar school choiceprogram for students in neighboring Racine County.This new program will be limited to 250 and 50011. Ibid.12. American Federation for Children, “Ohio Governor John Kasich Signs Significant School Choice Expansion,” June 30,2011, at (July 22, 2011).13. Ibid.14. The Friedman Foundation for Educational Choice, “Oklahoma House Passes School Choice Program with Broad StudentEligibility,” April 26, 2011, at Eligibility.aspx (July 22, 2011).15. The Friedman Foundation for Educational Choice, “A School Choice First in North Carolina,” June 16, 2011, hoice-First-in-North-Carolina.aspx (July 22, 2011).page 4

No. 2597students, respectively, during its first two years, followed by a complete lift of this cap beginning thethird year.1612. Washington, D.C. The U.S. Congress reauthorized the D.C. Opportunity Scholarship Program, which provides scholarships to low-incomestudents in the District of Colombia. Since 2009,the program had been in danger of being phased out,and no new students were being allowed to applyfor scholarships. The 2011 legislation restored theprogram by once again allowing new students toapply for scholarships and increasing the overallappropriation from 13.2 million17 to 20 million.Students in grades K–8 will now receive scholarships worth 8,000, and high school students willreceive scholarships of 12,000.1813. Utah. Utah passed legislation to allow students in grades 9–12 to use a portion of public education funding for online courses.19Potential for Further Reform: Pennsylvania.The Pennsylvania State Senate introduced SenateBill 1 to implement a scholarship program for lowincome students. This program would allow students to receive 100 percent of their state educationdollars to attend either a private school or a publicschool in an outside district.20 While Pennsylvaniadid not enact the proposal, there is possibility forfurther debate when the legislature reconvenes infall 2011.School Choice: 2011 SetbackGeorgia. Georgia experienced a setback ineducational choice. In spring 2011, the GeorgiaSupreme Court ruled that the state could no longer commission charter schools and that the localAugust 17, 2011school board must authorize charters. Unfortunately, this fox-guarding-the-henhouse policy,which had previously been in place, resulted invery few charter schools receiving authorization.Georgia’s charter school commission was enactedby the legislature in order to ensure that morecharter schools would receive authorization. Thecourt’s reversal of this policy will make it significantly more challenging for a charter schoolto open its doors and has already put successfulcharter schools at risk for closure.Private-School ChoicePrivate-school-choice policies allow parents tokeep their own money and choose a private schoolthat is best for their children. Private-school-choicepolicies include vouchers and scholarship programsthat let parents use a portion of their child’s publicschool funding to enroll in a private school. Theyalso include tax credits or deductions that providetax rebates or relief for the purchase of privateschool tuition or for making a donation to a charitythat awards tuition scholarships. Education SavingsAccounts (ESAs) provide families with control overtheir child’s portion of state education funding.Through ESAs, the state deposits per-pupil educationfunds into a savings account controlled by parents,which can be used for private-school tuition, onlineeducation, homeschooling, or saving for college.Unused funds can be rolled over from year to year.In 2011, 18 states and the District of Columbiaprovide some form of private-school choice:1. Arizona. Families in Arizona benefit fromthree different private-school-choice programs.Since 1997, the state has provided a dollar-for-16. Press release, “Wisconsin Legislative Committee Acts to Expand School Choice in Milwaukee & Create New Programin Racine,” PR Newswire, June 3, 2011, at 43.html (August 9, 2011).17. Consolidated Appropriations Act, 2010, at f/BILLS-111hr3288enr.pdf(August 10, 2011).18. American Federation for Children and Alliance for School Choice, “School Choice: Legislation State by State.”19. Parents for Choice in Education, “Utah Statewide Online Education Program,” at com content&view article&id 783&Itemid 208 (July 22, 2011).20. American Federation for Children, “School Choice Legislation: State by State.”21. Andrew Campanella, Malcom Glenn, and Lauren Perry, Hope for America’s Children: School Choice Yearbook 2010–2011(Washington, D.C.: Alliance for School Choice, 2011), p. 38, at es/Home/School%20Choice%20Yearbook%202010-11.pdf (July 22, 2011).page 5

No. 2597dollar state income tax credit for individuals whomake contributions to non-profit organizations thataward private-school scholarships to students. Thisindividual scholarship tax credit is currently cappedat 500 (or 1,000 for a married couple).21 In 2010,more than 27,000 children received scholarshipsthat were funded by the tax-credit program, whosesupporters donated a total of more than 43 million.22 In July 2009, Governor Jan Brewer signedlegislation to allow individuals to deduct contributions directly from their paychecks, making it easierfor people to plan their donations.23Families in the Grand Canyon State also benefitfrom the Corporate Scholarship Tax Credit Program,which allows corporations to take a dollar-for-dollar taxcredit for donations made to private-school tuitioningorganizations that provide scholarships to students.Scholarships provided through the state CorporateScholarship Tax Credit Program—up to 4,700 perchild for kindergarten through eighth grade, and upto 5,900 per child for grades nine through 12 during2010–2011—are limited to families whose incomesare below 185 percent of the federal poverty line.24A total of 3,626 scholarships were awarded for the2010–2011 school year. In FY 2011, corporate taxcredits in Arizona were capped at 20.74 million.25In April 2011, the U.S. Supreme Court reverseda decision by the Ninth Circuit Court in ArizonaChristian School Tuition Organization v. Winn, whichsought to end the program. The suit, brought tothe courts by the American Civil Liberties Union(ACLU), claimed that by giving taxpayers the opportunity to donate to religiously affiliated schools, theAugust 17, 2011state was advancing religion. The Supreme Courtrejected this claim on grounds that individuals,not the state, choose where to donate their own private dollars.26Finally, as of 2011, Arizona offers ESAs for specialneeds students. Under this policy, Arizona deposits90 percent of the state per-pupil education fundinginto a savings account controlled by parents, whichcan be used for private-school tuition, online education, homeschooling, or saving for college. Unusedfunds can be rolled over from year to year.27 Theflexibility that this program provides makes the ESAprogram one of the most innovative types of schoolchoice available.2. Colorado. Colorado’s Douglas County SchoolDistrict implemented its first private-school-choiceprogram: the Choice Scholarship Pilot Program. Thispilot program provides scholarships for up to 500students to attend private schools of their choice.283. Florida. Florida offers two private-schoolchoice programs. The McKay Scholarship Program,which began in 1999, provides scholarships for aprivate school of choice to children with disabilities.The scholarship amount is based on the amount achild’s assigned public school would have spent, orthe cost of private-school attendance, whichever isless.29 In all, the McKay program awarded nearly 150 million in scholarships during the 2010–2011school year, with 22,198 students receiving scholarships to attend 985 participating private schools.30Governor Rick Scott signed legislation to expandthe eligibility of students who can receive McKay22. State of Arizona, “Individual Income Tax Credit for Donations to Private School Tuition Organizations: Reporting for2010, Executive Summary,” March 31, 2011, at ool-tax-credit-report-2010.pdf (August 9, 2011).23. Press release, “Arizona Governor Signs Laws to Strengthen Two School Choice Programs,” Alliance for School Choice,July 14, 2009, at /PressReleases/index.cfm?ID 3594&blnShowBack False&idContentType 115 (August 9, 2011).24. Campanella, Glenn, and Perry, Hope for America’s Children, p. 39.25. Ibid.26. Press release, “U.S. Supreme Court Dismisses Legal Challenge to Arizona School Choice,” Institute for Justice, April 4,2011, at (August 9, 2011).27. Friedman Foundation for Educational Choice, “School Choice Programs: Arizona–Empowerment Scholarship Accounts.”28. American Federation for Children and Alliance for School Choice, “School Choice: Legislation State by State.”29. U.S. Department of Education, “Education Options in the States: State Programs that Provide Financial Assistance forAttendance at Private Elementary or Secondary Schools,” February 2009, at noptions/report pg12.html (August 9, 2011).page 6

No. 2597Scholarships by opening it to students with 504accommodation plans (previously limited to students with Individual Education Plans).31Florida also offers tax credits to corporations thatcontribute money to private-school scholarshipsfor students with disabilities and foster children.The Corporate Tax Credit Scholarship Program,also known as “Step Up for Students,” which beganin 2001, allows corporations (including insurancecompanies) to take a dollar-for-dollar tax credit forcontributions to scholarship-funding organizations(up to 100 percent of their state income tax liability).32 In 2010, tax credits were capped at 140 million for the program.33 Last year, 32,910 studentsattended nearly 1,100 different private schoolsusing scholarships funded by the Corporate TaxCredit Scholarship Program.34 During the 2008–2009 school year, the average scholarship was 3,950.35 Starting in the 2010–2011 school year,the scholarship was capped at 60 percent of stateper-pupil spending, but after that, will increase by4 percentage points each year the cap is raised untilit reaches 80 percent.36 Prior to 2011, corporationswere limited to redirecting up to 75 percent of theirtax liabilities towards scholarship granting organizations, but this limit was raised to a full 100 percent in 2011.37August 17, 20114. Georgia. Georgia has two private-schoolchoice programs. In 2007, Governor Sonny Perdue signed the Georgia Special Needs Scholarship(GSNS) program into law. GSNS provides scholarships for a private school of choice to students withdisabilities. The amount of each scholarship is equalto what was allotted for the child’s public schooleducation, or for the amount of tuition at the child’schosen private school, whichever is less.38 Duringthe 2009–2010 school year, 2,068 students receivedscholarships for 168 different private schools underthe special needs program. Scholarships averaged 6,342 per child.39In 2008, Governor Perdue signed into law theGeorgia Tax Credit for Private School Costs andScholarship Donations program, which allows bothindividuals and corporations to receive dollar-fordollar tax credits for donations to Georgia StudentScholarship Organizations (SSOs), which providescholarships to children for a private school of theirparents’ choice. Tax credits are capped at 1,000for individuals, at 2,500 for married couples filingjointly, and at 75 percent of a corporation’s incometax liability.40 In 2010, 33 scholarship-granting organizations provided an estimated 6,125 scholarshipsto Georgia students.41 In 2011, Governor NathanDeal signed legislation to strengthen the program30. Florida Department of Education, “John M. McKay Scholarship Program,” June Quarterly Report 2011, cKay/quarterly reports/mckay report june2011.pdf (August 9, 2011).31. American Federation for Children and Alliance for School Choice, “School Choice: Legislation State by State.”32. U.S. Department of Education, “Education Options in the States.”33. Campanella, Glenn, and Perry, Hope for America’s Children.34. Florida Department of Education, “Florida Tax Credit Scholarship Program,” February Quarterly Report 2011,at /quarterly reports/ftc report feb2011.pdf (August 9, 2011).35. Florida Department of Education, “Corporate Tax Credit Scholarship Program,” July 2010, TC/files/ctc fast facts.pdf (August 10, 2011).36. Campanella, Glenn, and Perry, Hope for America’s Children.37. American Federation for Children and Alliance for School Choice, “School Choice: Legislation State by State.”38. Geoffrey Goodman, School Choice Yearbook 2008–09 (Washington, D.C.: Alliance for School Choice, 2009),at es/ResearchResources/Yearbook 02062009 finalWEB.pdf (August 9, 2011).39. Georgia Department of Education, “2009–2010 Georgia Special Needs Scholarship Program (GSNS): End of School YearReport,” November 3, 2010, at 20Gen%20Assembly%20Rpt%20v12%20Final.pdf?p AC720BE76112A2&Type D(August 9, 2011).40. U.S. Department of Education, “Education Options in the States.”41. Campanella, Glenn, and Perry, Hope for America’s Children, p. 7

No. 2597by allowing first-grade students to participate andinserting an annual increase to the statewide cap ontax credits based on the annual increase of the Consumer Price Index.425. Illinois. Since 2000, parents have received taxcredits for education expenses in the Prairie State.Parents can take a tax credit of up to 25 percentfor education-related expenses, including privateschool tuition and book fees up to 500.43 Thisallows for the maximum 500 credit when education expenses reach 2,250. In 2007, the mostrecent year for which data are available, 238,119taxpayers received an average credit of 295.446. Indiana. Since 2009, Indiana has providedprivate-school choice to families through the Corporate and Individual Scholarship Tax Credit Program. The program provides tax credits for 50percent of each dollar contributed to organizations that grant scholarships to children for a private school of their parents’ choice. The program iscapped at 2.5 million annually.45 Scholarships aretargeted at low-income and middle-income families—those with an income at or below 200 percentof the free or reduced-price lunch level.46 The program received 435,000 in donations during the2010–2011 school year and 219 students receivedscholarships.47In 2011, Governor Mitch Daniels signed legislation to implement the most far-reaching privateschool-choice program in the country. Under thisscholarship program, roughly 60 percent of allIndiana students will be able to receive a scholarship to attend a private school of their choice.48 To42. 17, 2011be eligible, a student’s household income cannotexceed 150 percent of the state free and reducedprice lunch level. Those at 100 percent or belowwill be eligible to receive 90 percent of their stateeducation funding for scholarships, and thosewhose family’s income is between 100 and 150percent of the free and reduced-price lunch levelare eligible for 50 percent of their state educationfunding. In the first two years of the program, thenumber of scholarships is capped at 7,500 and15,000, respectively, but within three years the capwill be completely lifted.49In addition to adding the scholarship program,Indiana also implemented a new tax deduction forup to 1,000 to help parents pay for educationcosts, such as school tuition and tutoring.7. Iowa. Iowa has two private-school-choice programs: a state income-tax credit for tuition expensesand a scholarship tax credit to encourage contributions to scholarship-granting organizations. Residents of the Hawkeye State may receive tax creditsfor educational expenses, including those incurredat private schools for tuition and textbooks. Parentscan take a tax credit of 25 percent for educationalexpenses, up to 1,000 per child. Nearly 192,000taxpayers received education tax credits in 2008.50In addition to the tax credits for educationalexpenses, since 2006, the School Tuition Organization Tax Credit program has allowed taxpayers to receive an individual income tax credit forcontributing to nonprofit organizations that provide scholarships to private schools.51 Taxpayersreceive a tax credit worth 65 percent of their dona-American Federation for Children and Alliance for School Choice, “School Choice: Legislation State by State.”U.S. Department of Education, “Education Options in the States.”Ibid.School Choice

8. Ohio. Ohio lifted the cap on the number of scholarships it can provide through its Educational Choice Scholarship Program from 14,000 to 30,000, and expanded the eligibility requirements. Ohio also increased the scholarship amount for students participating in the Cleveland Schola