Emily Eyring Robertson and Dr. E. Vance Randall, Educational Leadership and Foundations
Financial inequities in families and communities lie at the root of many of America’s educational inequalities, including the diminished presence of low-income families among private school populations. Educational equity requires the equal treatment of all children except in cases where equal treatment fails to meet a particular educational need, such as is the case for children disadvantaged by poverty (Catterall 1982, 3; Berne and Steifel 1999). Improved accessibility to the private sector for children from low-income families counteracts some of the obstacles created by poverty and strengthens equity.
Tuition tax credits for private education, which reimburses families in whole or in part for their children’s private school tuition, increase accessibility for low-income families. Arizona, Florida, Illinois, Iowa, Minnesota, and Pennsylvania currently have some form of tuition tax credit. However, in spite of this legislation, attending private schools is still difficult for many families. Outstanding tuition costs, additional fees and expenses, school availability and selection, up front payments, rising tuition prices, transportation costs, lack of leisure time, and refundability issues may yet impair accessibility for low-income students while still benefiting higher income families, creating greater disparities between private and public school populations (Catterall and Levin 1982; Gerritz 1987).
This study had three objectives: (1) to review tuition tax credit legislation in the states, (2) to propose model tuition tax credit legislation that addresses the issue of equity, and (3) to apply this model to the case of Utah. At present, tuition tax credits for K-12 education have yet to improve low-income families’ accessibility to private schools to the extent that they could by incorporating provisions designed to overcome barriers, financial and otherwise, that presently limit their participation. This research analyzes the six states’ policies and evaluates each policy’s facets in light of their social repercussions for equity and compatibility with American educational views on social justice. A model tax credit incorporating provisions to make credits more useful for low-income families is formulated and applied to Utah.
The research gauged equity in tuition tax credit policy using a qualitative and quantitative research design. Accessibility was measured based upon the extent of the credit’s actual reduction in the price of tuition and upon the provisions affecting additional costs associated with private school enrollment. To determine the actual reduction in price of private school tuition, family scenarios with different tax liabilities were run through each state’s tax policy to determine how much of the tax credit each family qualified for. This amount was compared between states, and the percentage of the credit each family was eligible for was compared with average private school tuition costs per state to estimate average outstanding balance for tuition.
Accessibility based on other costs was determined by examining each state’s circumstances and policies to see how they addressed these needs. These other limitations include additional fees and expenses, the extent of school availability and selection, the need for up front payments and transportation arrangements, the possibility of rising tuition prices, a lack of time to spend investigating and selecting a private school, and ineligibility due to having no tax liability. Once the states were evaluated for equity by examining accessibility for low-income families, the paper then created a model for tuition tax credits maximizing utility for low-income groups. This model is applied to Utah, a state which has unsuccessfully tried four times to pass a tax credit in its legislature. The model is compared with previous legislation, and Utah’s prospects for success under the model are then evaluated based upon the state’s demographics, tax code, and educational makeup.
Comparative analysis of the states is a useful analytical tool because it allows continued policy innovation with limited initial impact as states act as individual policy laboratories (Walker 1969; See also Berry and Berry 1999; Heclo 1974). Document analysis was also used in this research to analyze the data gathered from various sources, i.e. original legislation and legislative reports, news reports, journal articles, educational data research centers, and special interest group papers and websites. This research relates to existing work discussing equity in tuition tax credits (Catterall 1982; Cookson & Shroff 1997; Frey 1983) but is unique in its comparative analysis of the six states and their legislation.
Equity among both direct tax credit and STO tax credit programs varied depending on the provisions of each policy, but each was found to serve particular members of low-income classes in various ways. Accessibility based upon reduction in price is shown for Minnesota, Illinois, and Iowa (the three states with direct tax credits). State demographics, varying tuition prices, and cost of living differences had only a marginal effect on equity compared to the previously mentioned raw reduction in tuition price and associated costs of private school attendance. Additional fees and expenses were best addressed through a school fee tax deduction. School selection poses potential problems in Utah, and the implementation of tax credits as a response to Utah’s lack of schools is discussed. IRS withholding polices offer needed flexibility to meet up front payments (though they introduce additional complications), and the possibility of rising tuition prices is discussed. Public education centers and agents as well as simplified tax form instructions aid time-poor families in selecting a private school. Minnesota is the only direct tax credit state offering refundable tax credits, perhaps the most helpful aspect for low-income families.
The model’s application to Utah suggested that combining various aspects such as refundability, a school fee deduction, and a well-developed bilingual public education program would create the most equitable and appropriate tax credit for Utah’s poor. Utah’s growing minority population, growth of the state in general, and its low per-pupil-expenditure suggest that Utah should continue to consider such legislation. The paper concludes with recommendations for Utah and other states to overcome accessibility differences among disadvantaged populations and increase educational equity.
The results of this research signify a step forward in our understanding of tuition tax credits and their propensity to promote educational equity in the private sector. Though present tuition tax credit policy is limited in providing accessibility to children from low-income families, the ongoing project of assisting the poor through better education and choice is a social and moral problem urgent enough to warrant further study on the subject.