All Schools Are Public Schools: Funding All Schools


Boffetti questions the unspoken premise in education debates that only publicly run schools serve the public good and should therefore be entitled to public money. Training good citizens is the public purpose all schools serve, whether we call them public or private. At various times in world and American history, private schools have been widely recognized as serving the public good and have received public money for the work they do. No one found this unusual.

— All Schools Are Public Schools —
Chapter Three: Funding All Schools


Foreword by Robert Royal
Chapter One: How We Got "Public" Schools
Chapter Two: Private Schools, Public Good
Chapter Three: Funding All Schools


A better way

The greatest challenge to treating all schools as public schools is finding an equitable way to fund them. Many believe that our system of paying for public education cannot be improved upon because it is elegantly simple and admirably egalitarian. It provides primary and secondary education (and beyond, if you include public colleges and universities) for all Americans, rich or poor, on an equal basis. It distributes the cost of that education over the course of our lifetimes through a combination of local property taxes, state income tax, and sales tax.

And yet, our present system of education funding has proven inflexible because it cannot accommodate the thousands of parents who use private schools and home school because they are justly dissatisfied with public education. As we have seen, many parents feel it is their duty as parents to take their children out of failing public schools and send them elsewhere, often at great personal expense. But our current financing system will not permit them to use even some of their own tax dollars for the schools they choose.

Part of the challenge in making a public argument for school choice is overcoming the common misconception that government money can only be used for common enterprises. Many taxpayers assume that public education implies public schools, not just public financing. But as we have seen in the previous chapter, good private schools provide real public services and deserve financial assistance.

While some voters may reject giving a lump sum of public money to private schools, this is only one of several options for treating all schools as public schools. In this final chapter, we will consider various funding options which would open education to more parental choice, not all of which depends on direct government subsidies. In addition to considering tax credits, tax deductions, vouchers, and education savings accounts, we will also consider programs that work through private initiative, like scholarships funds, which may also help low-income parents send their children to better schools.

The myth of a "free" education

Before we consider funding alternatives, we will have to put to rest a myth that many Americans believe about public schools. And unless we unmask it, we'll never be ready for something better. We're told by teachers' unions and politicians that it's our patriotic duty to support "free, public education." We're also told that the public school system we have is the only one worthy of a democratic society. Besides, we're not supposed to complain about something we get for free. "Whatever the problems," supporters say, "public schools are the best deal for the money."

The myth of "free, public education" is just that — a myth. Public schools certainly aren't free. At last count, the United States spent $285 billion a year on education, plus $100 billion more on school construction and maintenance. As sure as death and taxes, every American pays for this. And besides, all schools serve the public good. What makes some schools "private" is how they are funded, not whom they serve.

The problems of public financing of education are different from the problems of public schools. We could easily become sidetracked by questions of whether the hundreds of billions of education dollars are well-spent or whether public schools are as good as they used to be. But the real question is whether our system of public financing of education is the best and only way we can provide a decent education for all, not whether public schools are capable of doing a better job themselves, which we all assume they can.

Publicly funded education ought to be more responsive to parents. If parents aren't happy with a school, they should be free to find a better one, even a private school. We're used to money-back guarantees in the business world. Why not allow parents that same guarantee with public education?

Legal barriers constitute the biggest reason why parents cannot choose between all good, local schools. Even if parents agreed tomorrow that they ought to be allowed to send their children to any school with public money, the courts would have something to say about it. But parents should have something to say as well.

Legal barriers to full choice

The courts object to public funding for nonpublic schools on two grounds. One, because they say that the government may not divert funds for the "private" purposes of private public education that it has raised for the "public" purpose of public schools. And two, because most private schools are religious, the courts have ruled that they may not receive public funding without breaching the First Amendment separation of church and state.

The first argument can more or less be dispensed with by the obvious argument that the essential purposes of all schools are public: They teach children how to function in society and prepare them for careers. In fact, many private schools appear to do better than public schools at these tasks.

But supporters of full choice in education have more trouble with the second argument. In order to see full choice in our lifetimes, religious education will have to overcome more than a century of court decisions and legislative initiatives that have been suspicious of, if not openly hostile to, direct public funding of religious schools. It is an inescapable fact that most private education is religious; therefore, public funding of secular schools alone would allow very few schools to benefit from public aid.

The reign of Blaine

The first obstacle to such aid comes at the state level. Many states still have nineteenth-century Blaine amendments to their constitutions that explicitly deny public aid to religious schools. Blaine amendments were the most visible sign of hostility to education options, and they developed in response to the rising immigrant population during and after the Civil War. Many raised the specter of a national crisis of ethnic fracturing. If free "common schools" were seen as the antidote to the as yet unassimilated new Americans, private schools — particularly Catholic schools — were believed to represent old-world resistance to "Americanization."

A little historical perspective: President Grant supported a constitutional amendment, proposed by Representative James Blaine of Maine, that would have required all states to provide free public schools but would also be free of "any religious, atheistic, or pagan tenets." These amendments forbade funding for "any religious sect or denomination."1

Though the amendment failed to receive the necessary two-thirds in the Senate after a landslide victory in the House, it was subsequently enacted in many state constitutions, and each new state in the West was forced to adopt it before admission to the Union, particularly the Mormon state of Utah.

We might assume that our nation today is beyond this sort of bigotry, but the legacy of the Blaine Amendment persists. Thirty-seven states still have Blaine-like language in their constitutions. So even if federal courts decide that there is no constitutional barrier to such aid, many state courts may still claim one.

In fact, attempts to enact choice plans that include religious schools have recently been thwarted in several states because of these amendments. In the spring of 2000, Massachusetts's attorney general blocked a school-choice program because of Massachusetts's existing Blaine-like language. And in Michigan, supporters of school choice were forced to put a voucher initiative on the 2000 ballot, since that was the only constitutional way to allow public funding of religious schools. The referendum went down to defeat, which is not surprising because ballot initiatives rarely succeed without enormous popular support.

Separation of church and school?

Opponents of public aid to religious schools also argue that the Constitution's First Amendment prohibits such aid on the grounds of separation of church and state in the establishment clause.2 Indeed, this argument forms the basis for the Supreme Court's rulings on this question over the past fifty years. In Lemon v. Kurtzman (1971), the Court struck down aid to religious schools in two states on three grounds that have become known as the three-prong "Lemon test" for all public aid to religious institutions: 1) The statutes must have a secular purpose, 2) they must neither advance or inhibit religion, and 3) they must not entail excessive government entanglements with religion.

The Court uses this test to determine which aid programs represent a breach of the First Amendment. The Court decided in Aguilar v. Felton (1985) that religious schools could not receive assistance for remedial instruction unless that help was provided off-premises because on-site aid gave the appearance of entanglement. Religious schools had to set up trailers so as not to run afoul of "the wall of separation," as though religion might leak into remedial instruction should teachers be too close to crucifixes.

Since 1985, the Court has stepped back from that stricter reading of Lemon. In the 1997 decision, Agostini v. Felton, the Court reaffirmed that the establishment clause prohibits "government inculcation of belief," but remedial aid provided on-site did not excessively entangle church and state. However, to the extent that one believes that any public aid to religious schools helps them inculcate belief, one is inclined to say that such schools should receive little or no aid on account of the First Amendment.

But two facts should give us pause. The sponsors of Blaine Amendments believed that amending state constitutions was necessary, implying that the First Amendment did not explicitly prohibit such funding. Furthermore, Australia's First Amendment is identical to our own and yet Australia gives generous amounts of public money to private and religious schools. Even in France, with its aggressively anti-Catholic nineteenth century history and despite even stricter church and state separation than our own, religious schools also receive lavish state support.

Of course, some private schools do receive some state support, usually in the form of targeted federal or state programs for things like textbooks and remedial learning aid. Such indirect but program-targeted funding has become quite common. In a series of decisions over the past fifty years, the Supreme Court has ruled that public aid may flow directly to private schools in narrow cases for explicitly secular purposes.3

More recently, the Supreme Court held in Mitchell v. Helms (2000) that parochial schools in Louisiana may receive public funding for computers and any instruction related to them, because they do not have an explicitly religious purpose, though they may ultimately be used that way. Justice Clarence Thomas, writing for the majority, stated that "nothing in the establishment clause requires the exclusion of pervasively religious schools from otherwise permissible aid programs." In fact, when government aid "first passes through the hands (literally or figuratively) of numerous private citizens who are free to direct the aid elsewhere, the government has not provided any 'support of religion.'"

Several other recent court rulings have opened the door to more complex indirect aid that goes beyond targeted remedial and emergency assistance. For example, the Supreme Court has approved tax credits for private education because they do not cause states to send money directly to religious institutions. The Supreme Court seems willing to concede the general principle that public money can fund religious schools, as long as schools are not singled out to receive the moneybecause they are religious.

The contentious voucher: A false path?

Publicly financed, private-school vouchers represent perhaps the greatest constitutional test for the idea that the state ought to treat all schools as public schools. A voucher would allow parents to send children to any school, public or private, with a government check worth anywhere from $1,000 to $4,000. Proponents say vouchers are neutral toward religion because the parents choose, not the state; opponents see them as a vehicle for religious indoctrinization or, conversely, for the complete regulation of private education. Although vouchers have experienced great resistance from the courts and teachers' unions, public opinion has moved toward an embrace of vouchers for nearly a decade now.

Phi Delta Kappan and the Gallup polling company have tracked public opinion on publicly funded private education.4 From year to year the numbers fluctuate, but in 2000, 56 percent of respondents opposed the public funding of private education. But that's not the whole story. When the question is worded differently, asking whether they would favor a system where parents could choose to send children "to any public, private or church-related school" at partial or full public expense, 45 percent approved of such a plan. When the word "vouchers" is used, approval/disapproval is almost equally divided. Unfortunately the 2000 poll stopped asking questions about tax credits and partial vouchers. But in 1999, 52 percent approved of a partial payment of private school tuition, 57 percent approved full tuition tax credits, and nearly two-thirds approved of a partial tuition tax credit for private or other church-related schools. But no matter what the system, 77 percent of those polled believe that schools receiving public aid should be "accountable" to the government "in the way public schools are." Clearly, voters are not against the idea of treating all schools as public schools within certain limits.

So far, however, the U.S. Supreme Court has not ruled on the constitutionality of vouchers, though various lower courts have ruled for and against them. The Wisconsin Supreme Court upheld a state voucher program that gives aid to religious schools, while the Vermont and Maine Supreme Courts would not permit religious schools to participate in public voucher programs. In December 2000, a federal appeals court judge agreed with a lower court's ruling, which called Cleveland's voucher system unconstitutional because it "has the effect of advancing religion through government-supported religious indoctrination." In Florida, a state judge held the state's voucher system unconstitutional because the state must provide for public education and may not "farm out" responsibility to private schools. It is not certain that the U.S. Supreme Court will hear the Florida or Ohio cases, but it has refused to hear appeals from Wisconsin and Maine.

Vouchers have also suffered some recent political defeats that make some wonder whether they ought to be discarded altogether as a public funding option. During the 2000 election, two voucher initiatives were easily defeated in Michigan and California, both by similar seven to three margins. In Michigan, Proposal 1 would have allowed students attending poor-performing schools (only 38 schools in the whole state fit this category) to receive a $3,300 voucher to attend any secular or religious private school. Unfortunately, the ballot question also included provisions on teacher testing and language about how the voucher program might be expanded. These provisions confused voters and contributed to its defeat. California's Proposition 38 would have given any parent a $4,000 voucher regardless of how good or bad their schools were. Silicon Valley mogul Timothy Draper led this maverick effort on behalf of vouchers despite the advice of many voucher supporters who told him that his plan was too radical to succeed and that he might damage the voucher movement.

At the very least, these recent defeats convinced voucher proponents that the Michigan and California strategies were flawed. No matter how popular vouchers appear, voters do not want radical change in education. Instead, voters support modest voucher plans targeted at the parents who need them most, those forced to send their children to the worst schools. If such plans look like a Trojan horse, support erodes. Perhaps vouchers will be more successful if they are used as a carrot for some parents and not as a stick for public schools. They should be fashioned to let parents opt out of public schools but without punishing public schools financially.

A national test of vouchers may have to wait a few years. Many believe that President George W. Bush does not have the support in the House and Senate to advance his national voucher program, and his new secretary of education, Rod Paige, while a supporter of school choice, only supports vouchers as a last resort. Someday, voters may be ready for vouchers, but perhaps not just yet. In the meantime, modest state and local programs in targeted locations may help persuade voters that vouchers are nothing to fear.

Promising parental rights

The debate over vouchers serves a very useful purpose: It highlights the fact that we no longer consider it the duty of all parents to make choices for their child's education. If we want to treat all schools as public schools, we will need a return to the philosophical premise behind all good education: Parents should have complete control of a child's education. This short-circuits arguments against public funding and school choice, since it accepts the notion thatparents should determine what school is best for their children. And when they do, the state need not feel as though it is "favoring religion." Rather than succumbing to a knee-jerk reaction that any aid to religion constitutes a breach of the separation of church and state, vouchers let parents decide what kind of education, secular or religious, is appropriate.

There is a powerful legal precedent in the United States that ought to be put to the use of publicly funded school choice. The Supreme Court still holds that it is a parent's right to direct education. This right was affirmed eighty years ago and it is cited frequently in cases that relate to child welfare. In 1922, Oregon passed a law requiring all parents to send children aged eight to sixteen to public schools, a law aimed at destroying parochial education. The law was overturned by the Supreme Court in the landmark case Pierce v. Society of Sisters (1925) in which the Court affirmed the right of private schools to exist and the right of parents to determine the means for educating their children. It affirmed that children were "not mere creatures of the state," and therefore, the state could not claim to have an authority that undermined a parent's choice of educational options.

The Supreme Court seems unlikely to overturn this opinion any time soon, which is good news for school choice. In Troxel v. Granville (2000), in fact, the Court reaffirmed parental rights. The Court concluded that state laws that grant grandparents visitation rights to their grandchildren abrogate parental rights that are "perhaps the oldest of fundamental liberty interests recognized by the court." The Constitution "does not permit a state to infringe on the fundamental right of parents to make child-rearing decisions simply because a state judge believes a 'better' decision could be made." The consequences for education seem obvious. The state should not tell parents where to send their children to school even if it thinks they are making a poor choice. Indeed, the heart-rending story of the Cuban Elian Gonzalez illustrates how far the Court is willing to accommodate parental will, even when it means returning the child to a brutal communist regime.

If the courts applied this philosophy broadly, then full public funding of all schools would be a logical conclusion. Indeed such a conclusion would be in keeping with the landmark case Brown v. Board of Education (1956), which made it abundantly clear that no parent, no matter how poor, ought to be denied access to a good education for his or her child because of race or ability to afford one. And since many poor parents in the worst public schools can't direct their child's education in any real way, even when there are readily available private alternatives nearby, it is plain that school choice is a matter of social justice and legal equality for parents, who, through no fault of their own, cannot exercise their rights as parents.

Optimal choice

Before we move on to the more realistic options that help parents send their children to nonpublic schools, imagine an "optimal choice plan," a funding system that empowers parents to choose any school. If a parent decided that, for whatever reason, the local public school was inadequate, they could choose to go elsewhere. And rather than petitioning a state bureaucrat, who would assess whether the decision was appropriate, parents would simply fill out an enrollment form indicating the private school they have chosen instead. Having established a flat, per-student amount that represents each student's share of public money — a "tuition" baseline — the local government would either write a check to the private school for the amount or issue a rebate to parents on property taxes (since most education funding is local). Parents would still be free to spend more or less at a private school, and any school could elect not to participate in the program to preserve its independence.

Such a system acknowledges that all schools in a community serve the public purpose of educating children, and that parents should not be forced to pay twice because they wish to exercise their rights. And yet, many parents would elect to keep their children in public schools, but because they would be in a position to know what their children's education is worth, they would be more likely to see that the school spends their "tuition" wisely.

At least one school district tried to give parents choice like this. In 1998, the Southeast Delco School District in Pennsylvania faced a shortage of classroom space. The school board voted unanimously to allow parents to send their children to any school, public or private, in another school district, with a modest voucher. The $1.2 million program would have given $250 for each child in kindergarten, $500 for each child in grades one to eight, and $1,000 for each child in high school. Unfortunately, a county judge ruled that the school board had no authority to initiate such a plan. Though the board fell afoul of state law, there is no reason that a state could not recast its legal code for such purposes.

The advantage of this system is that the state and federal government would never be entangled in parental preferences. Parents who opt out would be on their own to find alternatives for the same or a better price; the state would have no interest in their choices. And all decisions would remain local rather than delegated to state and federal authorities.

. . . with one major objection

Some object to such a system, however, because they argue that local public schools don't just educate children, they build community. According to this view, publicly funded private education would splinter local community. For 150 years, the argument goes, we have provided for education in a neighborly fashion, linking us to the communities where we live. We have asked parents and neighbors to pay for schools, and by paying taxes on homes, we pay for the education of others. Even today almost half of this taxation is local.

But if public education could at one time be defended as a community-building enterprise, those times have changed. The decisions parent-teacher associations once made are now being made by executive councils. States now impose curricula on local schools. Regional planning boards, not town meetings, decide when to build new school buildings. And, increasingly, public funding for education comes from the state, not the local community. At last count, 45 cents of every education dollar came from local taxes, 48 cents from the state, and 7 cents from the federal government.5 Fifty years ago, 70 percent of public financing education came from the local government.

If anything, schools have begun to alienate parents, students, and their neighbors. Cozy relationships between parents and teachers have disappeared in many places. Parents are frequently not informed of what is being taught in sex-ed class and, according to a recent court decision, may not even ask the school librarian what books their children are taking out. School health officials freely distribute condoms and other reproductive advice without parental consent. Never before have our social values been more fragmentary. We can't even agree on whether students should be allowed to pray silently during school. No shift in funding for public education could harm communities more than these changes already have.

Of course, most parents will continue to use public schools and fear that any form of school choice will lead to a decrease in school funding locally. As a result, an optimal choice plan would likely meet up with great political resistance, because these parents fail to see that forcing parents of private school students to pay for an education that they don't use is basically unfair, especially when the schools are of a poor quality. Since this self-interest runs very strong, parents who want more choice in education must consider more politically realistic options. Rather than using money already earmarked for public schools, there are some viable ways to help parents send their children to private schools that do not adversely affect public school budgets.

Tax deducations and credits

One of the simplest ways we can make alternative education more affordable is to let parents keep more of their own tax dollars. A few state legislatures have amended tax codes to allow savvy filers to reduce what they owe in much the same way homeowners deduct their mortgage payments and investors write off their stock-market losses. Since many parents go the extra mile for a child's education — quite literally when they drive them to school — tax deductions and credits help them defray costs. Parents with children in private and public school may itemize education costs and deduct them from their taxes for expenses as diverse as driving their children to school, buying textbooks, paying for a tutor, sending them to a private school, and purchasing supplies connected with home schooling.

Not all tax reductions are alike. A tax deduction allows parents to reduce their taxable income by the amount of money they spend on allowable expenses such as tuition, travel, and books. Therefore, a family that is allowed to deduct up to $3,000 for educational expenses in a state with a 10 percent tax rate can save $300 in taxes. But tax credits save families money more directly. They allow parents to deduct expenses directly from the taxes they pay to the government and may entitle a family to a rebate check if they have overpaid.

A clear majority of Americans support such tax benefits. Indeed, they would go beyond the modest benefits currently available. In 1999, 57 percent of those polled in the annual Phi Delta Kappa/Gallup study of education trends said they would support a full-tuition tax credit for parents who sent their children to nonpublic schools, and 65 percent said they would support a partial-tuition tax credit.

Tax benefit reticence

Despite this public acceptance, very few states have enacted such laws, and none of the federal bills for such tax benefits have made it past a presidential veto. Just four states offer tax deductions or tax credits for educational expenses — Iowa, Minnesota, Arizona, and Illinois — and they have all been challenged on constitutional grounds despite the Supreme Court decision in Muller v. Allen (1983), which explicitly approves publicly funded tuition tax credits. But one state has paved the way for all the rest in legislation and court decisions.

Minnesota first legislated deductions and tax credits and still offers the most generous benefits. In 1955, it passed the first legislation allowing tax deductions of $50 for educational expenses. Today, parents may deduct up to $2,500 per child from gross income; the deduction covers tuition, textbooks, transportation, tutoring, computer software and hardware, and even summer camp. Families who earn less than $37,500 per year also qualify for Minnesota's tax credit of $1,000 per child (up to a maximum of $2,000 per family) for the same items. If a family is owed a rebate, Minnesota will write a check for the difference. In 1998, 150,000 families took the deduction and another 38,500 received the tax credit.

Parents in Illinois will claim educational expenses on their tax returns for the first time in 2000 after the credits survived a court challenge. Illinois allows parents to take a tax credit of up to $500 for educational expenses. But they may only claim 25 percent of the expenses above the first $250. The state estimates that parents will save $50 to $60 million. Iowa recently increased its tax-credit maximum from $100 to $250 for all education expenses at public and private schools, which now include books and tuition.

Arizona's tax credit works a bit differently. Rather than putting money back in parental pockets, the 1997 legislation allows taxpayers to take a $500 tax credit for donating money to a scholarship fund that helps students attend private religious and secular schools. The Arizona Education Association (AEA) felt this tax credit threatened public schools and filed suit, challenging its constitutionality. The AEA had already failed to stop the tax credits through a ballot initiative, because it could not find enough signatures. Affirming the importance of alternatives to public education, the Arizona Supreme Court upheld the legislation in January 1999 and stated that the tax credit "achieves a high degree of parity by making private schools more accessible and providing alternatives to public education."6 The Supreme Court has since declined to hear the case.

Antipathy to education tax deductions and credits remains strong in some quarters where animus against nonpublic schools is backed up by law. In many states, legislatures are prohibited by their constitutions and their courts from issuing tax deductions and credits, even for voluntary charitable contributions. By all accounts, Michigan has one of the strictest bans on public funding of private schools anywhere in the country, and voters there failed to pass a referendum in the 2000 election that, among other things, would have eliminated it. Despite this failure, proponents of school choice hope that movements to lift this restriction on public aid might find success in five other states (Florida, New York, Georgia, Montana, and Oklahoma) that do not permit any aid, direct or indirect, to religious schools.

Though the states and the courts are reluctant to give direct aid to religious schools, tax benefits do not entangle the state in the choices of parents and are obviously fair. Why should those who are happy with their public schools deny others the chance to be satisfied when the best choice happens to be a private school? Parents whose children do not use the public system should receive some financial relief.

One of the most common arguments against such plans is that they will hurt public education. Critics worry that tax credits give parents incentives to take their children out of public education; as a result, public education will worsen and maybe even collapse as tax dollars drain from public schools. But tax benefits do not take one penny from existing public school funding. These would be new government programs that will have to find their own money in the budget process. Critics of choice must get beyond the assumption that public schools are entitled to every new government dollar spent for education. And since most tax incentives are only partial payments, parents will still choose between a free education and one that costs $1,000 or more per year for each child. Most will stay put.

Besides, the government frequently encourages its citizens to support private social initiatives when they serve the public good, and none of these is more critical than education. Government encourages charitable giving, even though it also provides government welfare programs. Tax credits and deductions acknowledge that some people also prefer private educational institutions over public ones. Welfare reform is a good example of what school choice could become. We haven't seen a dismantling of the welfare state. Instead, we've seen states get better at providing welfare to the neediest and let private organizations (often religious) provide assistance when they can do it best.

Just like private religious institutions that help the government provide welfare, private schools prefer these tax benefits because, compared to direct government aid, they promise the least government intrusion. There would be no need for new government regulation of private schools because the states already regulate what counts as a school for tax purposes, and courts have consistently held that states do not have the same legal responsibility over tax credits and deductions that might otherwise cause church/state entanglements. With credits and deductions, the government never has to get involved with the transfer of money or negotiation of price between the parent and the school, unlike vouchers.

The downside to deductions

Of course, no plan is perfect, and tax benefits have their own potential shortcomings. I will briefly cover some of their limitations.

Unequal benefits. Such plans do not benefit all parents equally. Judging from the plans already enacted, they favor low-income, but not poor, parents. Politicians are reluctant to grant these benefits to families that make over $40,000 per year because they are afraid to be accused of favoring the rich. And since poor families pay much less in taxes, the government may end up owing them money at the end of the year. States are reluctant to pay out benefits from what citizens have already paid in. In the end, only parents who make enough, but not too much, qualify for the tax benefits.

Driving up costs. Others worry that tax credits will only increase the cost of private education. Just as in higher education, every state and federal dollar that helps parents afford an education is offset by corresponding increases in tuition. If schools know that parents can pay $2,000 this year and receive a $1,000 tax credit, they believe parents will be able to pay $3,000 next year. There is evidence that this is already happening in Arizona, where tuition has begun to rise at private schools.

The nationalization of education. Still others believe that tax credits and deductions place decisions about education policy further away from parents and a bit more out of their control. By granting tax credits, state and federal governments increase their role in public education in general because even a tax refund counts as a government program in the budgeting process. And just as fast as they can be enacted, they can be removed, reduced, or modified when political pressure shifts. Once state and federal government assumed responsibility for more of the education dollar, they assumed a control that they will likely never give back. One can count on one hand the number of government programs that have been discontinued and returned to local political authority.

Although a national tax credit for alternative education would be the least painful way to give tax relief for millions of parents who send their children to nonpublic schools, there are good practical reasons to fight for state tax credit legislation. For one thing, tuition varies state to state. Perhaps Ohio should be more generous than Oklahoma, and perhaps states with large numbers of urban poor and wealthy suburbs should have a progressive tax credit. The federal role in education has always been very small and probably should continue to be, since Washington is very far removed from local communities. But it is realistic to expect that the government's role in education will increase as states attempt to fix inequities of funding between poorer and wealthier communities. Tax credits can help in this.

Before we give up entirely on a national role in alternatives to education funding, we might consider a recent tax proposal that would allow parents to save for their child's education tax-free.

Educational savings accounts

What if parents could set aside hundreds of dollars every year, tax-free, for education expenses? Congress asked that same question about college savings, medical expenses, and retirement plans and successfully passed legislation for each. Educational savings accounts (ESA) would work like traditional IRAs, except that parents would be able to withdraw money from the account to pay for all manner of educational expenses. For several years now, Congress has considered plans that would allow parents to contribute up to $2,000 tax-free every year to a savings account. Parents could withdraw money for tutors, transportation, and tuition at nonpublic primary and secondary schools.

The program would expand ESAs, which may be used to shelter up to $500 per year tax-free for college expenses, to allow parents to use the money for public and private precollege education expenses, including tuition. But the Clinton administration vetoed such bills three times.

Like tax credits and deductions, ESAs are evenhanded and obviously just. Parents who want to contribute something extra to their children's education should not be penalized by the tax code. As the late Senator Paul Coverdell, the leading proponent of expanding ESAs, argued: "Every segment of education in America will be a winner: public education, private education, home schooling. . . . These accounts will infuse new resources for which the government will not have to appropriate a dime." It's not clear, however, that they would work as well as intended.

Possible limitations of ESA's

Limited benefit. ESAs primarily encourage parents to save for college, and would probably not encourage them to spend more on alternatives to public school education since the tax benefits are much greater if the money is left in the account. If someone in the 28 percent bracket did not withdraw the money for five years, the tax savings (assuming a 6 percent return) would be $578; however, after ten years the savings would grow to $2,519. This is an incentive to save, not to spend, especially considering the rising costs of colleges.

Hassle. Despite the benefits, contributing to ESAs might strike the average parent as more trouble than they are worth. It's one thing to save for retirement and watch happily as the money accrues for forty years, but it's not as rewarding to merely draw down funds. Tax credits and deductions are significantly simpler for the average taxpayer because there would be no additional paperwork. By contrast, ESAs would require yearly contributions, fund management, and withdrawals from a special checking account. Like all proposals that make it a little easier and more publicly acceptable to promote alternative schools, however, ESAs should be given careful consideration.

Education tax benefits help make choices easier for parents without making the choice for them and without dismantling public education as we know it. Perhaps the challenge for the 10 to 20 percent of parents opting for alternatives to public schools would be enough to force some much-needed public school reforms. Without programs like tax credits, deductions, and ESAs, secular and religious private schools will need to raise their own money to make choice in education possible for more parents. Fortunately, new charitable help is on the way.

Charitable giving and fund-raising

What if we decide there is no role for the state in nonpublic education? For many parents, that puts anything but public schools out of their financial reach unless they can receive some form of financial aid or charity. Catholic schools have done an exemplary job of providing very generous financial help to their poorer students and larger families. Many of these schools only ask parents to pay $500 to $1,500 for an education that costs the school twice that.

As we have already seen, without some new sources of charitable aid, it is unlikely that many of the schools that serve the neediest communities will be able to survive. Since Catholics have all but abandoned the cities for the suburbs, these schools can no longer depend on regular parish giving. And diocesan-level resources are already spread too thin among a number of vital social needs. Nonpublic schools today need new sources of charitable giving from a combination of sources: individuals, corporations, civic groups, and private scholarship funds.

Fortunately, the potential growth of charitable giving is enormous. During the past five years, the creation and expansion of Internet companies has created unexpected wealth and many thousands of new multi-millionaires — and a few billionaires. Just a small fraction of the $5 trillion made on the "dot-com" windfall could fund enough scholarships for every low-income child.

These new multimillionaires have just started giving their money to good causes. From 1998 to 1999, charitable giving rose 6.7 percent, now accounting for 2.1 percent of our gross domestic product. The American Association of Fund-Raising (AAFR) reported that in 1999, charitable donations reached $190 billion. Ten percent of that would fund a $1,500 scholarship for every child below the poverty line in America.7

AAFR's chairman believes this windfall is not temporary but "the beginning of a new age of philanthropy." The creation of this kind of wealth could spark one of the most philanthropic centuries in history. When overnight millionaires and 35-year-old retirees think about how they want to spend their retirement years, many may conclude that giving money away may make a very rewarding second career. There is every reason to believe that millions, perhaps billions, in charitable donations could pour into scholarship funds and directly into nonprofit, nonpublic schools.

The Internet may not only create billions of new charitable dollars, it may also have inspired a new way to raise money. Companies such as eBay show how to amass piles of money by pennies per transaction with high volumes. The same could be true of charitable giving. Charitable organizations could coax small donations from millions of people. During the 2000 primaries, Senator John McCain raised thousands of dollars because average citizens were willing to make small donations through the Internet.

The Internet boom has just started to impact school fund-raisers as well. The Washington Post has reported that many schools have begun to use "dot-com" companies to raise money for school trips, new books, even school renovations.8 Companies like and eschew the typical candy or greeting-card drives in favor of allowing shoppers to designate 20 percent of the sale to a school.

If the future of alternative schools depends on new money and new ways to raise it, then the horizon has brightened with the advent of the Internet. But the most exciting story in philanthropy in the past decade has been the rise of the private scholarship funds. Millions of new dollars have come to the rescue of desperate schools and parents in some of the neediest places in America because a few philanthropic entrepreneurs have turned their attention to reforming education. Organizations like CEO America and the Children's Scholarship Fund are giving low-income families the kind of education they want without government help.

The private scholarship fund

Wealthy philanthropists have long lent their names to scholarships at all levels of education. But a new kind of scholarship fund has emerged with the explicit purpose of breaking up the public school monopoly at the primary and secondary levels. Some of the founders of these funds see private scholarships as a prod for education reform. If scholarship students experience significant academic improvement, they say, public schools will have to reform, and parents will clamor for full public vouchers. Other benefactors are committed to helping alternative schools in perpetuity. But they all believe that once parents get a taste for private or religious education, they will not want to go back.

Milwaukee's district-wide school choice program provides the perfect example of how a private scholarship fund can reform education. After several years of a very successful private scholarship program called PAVE (Partners Advancing Values in Education) funded in part by the Milwaukee-based Bradley Foundation, the state of Wisconsin, under Governor Tommy Thompson, expanded the school choice program in Milwaukee to a full-scale voucher program.

Other private scholarships have had similar success. The School Choice Scholarship program in New York City provided 2,200 students with $11 million in scholarships in 1997. Though resistant to vouchers, the city has hired a new school chancellor, Harold Levy, who has decided to privatize the city's worst fifty schools. And Virginia Gilder's "A Brighter Choice Scholarship" gave parents in Albany's worst public schools a $2,000 scholarship to select an alternative. The short-lived program has been credited with shaking public education in Albany out of its complacency, forcing at least one school, Giffen, which many scholarship recipients fled, to improve its academic performance.

If some scholarship funds see themselves as an audition for vouchers or a cattle prod for reform, others plan to help low-income families for the foreseeable future. The Children's Scholarship Fund (CSF) is one such organization.

CSF started with the modest hope of helping 1,000 poor students trapped in some of the worst schools across the country attend private or religious schools. Entrepreneurs Ted Forstmann and John Walton began with $100 million to serve low-income families in forty-three cities and three states. The fund has become so popular, however, that it has expanded to supply 40,000 scholarships in all forty-eight contiguous states. By March 31, 1999, there were 1.25 million applications; 29 percent of all eligible parents in New York City, 33 percent in Washington, D.C., and 44 percent in Baltimore had applied for scholarships. Parents applied from every state and 90 percent of all counties in the United States. The CSF scholarships are a helping hand, not a handout. Parents are still expected to pay an average of $1,000; the partial scholarships on average provide $1,700 annually for four years.

So far, the effects of these private scholarships have been limited because many who qualify have been left out. Only one out of every thirty parents who apply receive help. Students who do win the private voucher lottery already appear to be reaping dividends. A team of researchers from Harvard University, the University of Wisconsin, and Georgetown University looked at the academic performance of 1,470 students in New York City, Dayton, Ohio, and the District of Columbia. What makes this study different from most was that the researchers studied students from families who had applied for a voucher — both those who received one and those who did not and returned to public schools. They found that even though all of these parents were motivated toward private education by virtue of applying, the average students who switched to the school of their choice with a scholarship scored six percentile points higher on the Iowa Test of Basic Skills than those who continued going to public schools.9 Simply put: They proved that using a voucher to attend a private school improved academic performance, since the "motivated parent effect" was canceled out.

Now private scholarship funds are getting more ambitious and are asking the question, "What would happen to public schools if all private schools were filled to capacity with low-income students?" Another national scholarship fund, CEO America, with scholarship affiliates in forty cities nationwide, supported a ten-year scholarship program in the Edgewood School District in Texas. There is a scholarship for every low-income child who wants one, but only 700 of the district's 13,000 eligible children left the public schools. The district responded by introducing intra-district choice and charter schools.

In perhaps the boldest move of all, Forstmann and Walton have taken on the city of New York, which has long resisted vouchers, yet has many Catholic schools willing and able to accommodate more students from some of the city's worst schools. The CSF has vowed to provide a scholarship for every open seat in New York's K-8 religious and other private schools — an estimated 7,500 new scholarships. This will ensure that no parochial school will close for lack of capacity.

Nearly every large American city has a private scholarship program affiliated with CEO America, and the number of these scholarship funds expand by ten more every year. They issue tickets to a better education to tens of thousands of parents who cannot afford to wait for school choice or education reform. Regardless of whether a public school gets better in response to competition, these children have an education system that works. But thousands more parents are on waiting lists. No one can know for sure if there will ever be enough money to help every parent who wants it, although scholarship funds hope so.

For millions of middle-income families, a private education still remains out of reach. Private scholarships offer triage within an education system in poor health. Generally, these programs have limited themselves to helping the very small percentage of children who qualify for the federal free-lunch program. For the poorest, charitable giving allows thousands of children to attend schools where it is safe to learn.

While there may not be enough charitable giving available to help every family send their children to the alternative school of their choice, scholarship funds prove that all schools serve the public good even when they do not receive public aid. It is highly, unlikely, however, that there will ever be enough private financial available to help every middle-class family send their children to a private school. The challenge ahead, then, for advocates of school choice will be to convince American voters that all schools and all parents ought to receive some assistance that ultimately rewards good private schools for their public service.

Yet all the funding options discussed here, from optimal choice to tax credits to scholarships, assume that parents will pay something, even if only something nominal, for that alternative education. Vouchers, tax credits, and deductions help parents help themselves with some modest public assistance. And private scholarships help parents with modest means by matching their financial sacrifices. These cooperative social efforts among individuals, schools, government, and philanthropists move us closer to a better way to fund education that matches the egalitarian goals of a "free, public education" without falling into the myth that education can truly be free, that is, without cost.


After nearly twenty years of arguing about it, our nation is poised to take a new and positive direction in education reform. The number of charter schools is at an all-time high and will likely grow. The recently formed Black Alliance for Educational Choice has been blitzing the print and television media with advertisements praising the three existing voucher programs. Education reform topped voters' lists of concern in the 2000 election and President George W. Bush vows to encourage stricter state academic standards and to practice regular testing.

But one question remains unanswered: Will we tie one hand behind our backs and exclude private schools from the solution to our education crisis? President Bush will likely face tough opposition to his plan that would allow children in failing public schools to use a public voucher to attend any other school, public or private.

Treating all schools like public schools is not just a platitude — it's a vital next step in education reform because school choice empowers parents most when they can freely choose among all of the best schools available. As we have seen, private education provides the best education in many of the very places where public schools have been the worst. And yet the state refuses to let parents choose the best local schools when they are not government-run, and therefore does not encourage poor-performing schools to improve.

School choice advocates realize that it is unrealistic for most parents to pay the entire amount for a child's education out of their own pockets. And with education costs continuing to rise, that kind of "school choice" is out of range for most families. Without some form of public aid, few parents can afford these schools, and inner-city Catholic education will continue to disappear under the strain of rising costs. And yet, as we have seen, it was not long ago — even here in the United States — that "private schools" received state funding for their public purposes.

Treating all schools as public schools does not mean that we simply incorporate private schools into the public system, making them clones of what already exists. All the funding options I've discussed, from vouchers to optimal choice to tax credits to scholarships, simply help parents put home schooling and religious schools within their financial grasp while allowing schools to retain their unique and valuable identities. In so doing, we protect the idea that parents, not the state, hold the primary responsibility for directing education. No bureaucracy and no court should stand in the way of this basic human right. If parents want more math, more religion, or more language instruction in their child's curriculum, they ought to be free to send their children to schools that offer them without financial penalty or state overregulation and intimidation.

The theme of this monograph, "All schools are public schools," still maintains that education funding is a cooperative endeavor even as it affirms the fundamental rights of parents. Every one of the alternatives proposed here presumes that education is a social obligation. We have a duty to help all parents, especially those most in need, to provide the best education possible to their children. Opening school choice to all schools that serve the public good preserves our highest ideas of liberty and justice for all. A quality education should be available to every family on a fair and equal basis. And only when we treat all schools as public schools will we have an education system truly worthy of those ideals.


  1. "No State shall make any law respecting an establishment of religion or prohibiting the free exercise thereof; and no money raised by taxation in any State, for the support of public schools, or derived from any public fund therefore, nor any public lands devoted thereto, shall ever be under the control of any religioius sect, nor shall any money so raised, or lands so devoted be divided between religious sects or denominations" Congressional Record, 44th Congress, first session, 14 December 1875).
  2. "Congress shall make no law respecting an establishment of religion, or prohibiting the free exercise thereof."
  3. See Everson on transportation (1947), see Allen on textbooks (1968), see Mueller on tax credits (1983), see Zobrest on special education (1993), see Agostini on remedial aid (1997).
  4. Lowell C. Rose and Alec M. Gallup, "The 32nd Annual Phi Delta Kappa/Gallup Poll of the Public's Attitudes Toward the Public Schools" (Phi Beta Kappan/Gallup Organization, 2000).
  5. NCES, "Statistics in Brief: Revenues and Expenditures for Public Elementary and Secondary Education: School Year 1997-98," released May 2000.
  6. Kotterman v. Killian (22 April 1999).
  7. U.S. Census 1998 poverty figures: 13.5 million children (under 18) living in poverty.
  8. Nancy Trejos, "Schools Turning to No-Fuss Fundraising Online," Washington Post, 23 May 2000.
  9. Paul Peterson of Harvard University, William Howell of the University of Wisconsin, Patrick Wolf of Georgetown University, David Campbell of Harvard University, "Test-Score Effects of School Vouchers in Dayton, Ohio, New York City, and Washington, D.C.: Evidence from Randomized Field Trials," paper prepared for the American Political Science Association (Washington, D.C.: September 2000).


Jason Boffetti "All Schools Are Public Schools: Ch. 3 - Funding All Schools.." Faith and Reason Institute (2001).

Reprinted with permission of the Faith and Reason Institute. The Faith & Reason Institute is at 1513 Sixteenth Street NW Washington, DC 20036.

Copies of the monograph All Schools Are Public Schools are available from the Faith & Reason Institute for $3.


Jason Boffetti is the Programs Co-ordinator and Research Associate in Education for the Faith and Reason Institute.

Copyright © 2001 Faith and Reason Institute

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