Endnotes for Education Savings Accounts: A Vehicle for School Choice

References for Dan Lips’ landmark 2005 proposal.

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Endnotes

1. Arizona Joint Legislative Budget Committee (JLBC) data for fiscal year 2002, cited by Michael Hunter, “Equalization Formula Only” in The Grass is Always Greener: District and Charter School Finance Compared, Arizona Tax Research Organization, 2004.
2. “The Big Payoff: Educational Attainment and Synthetic Estimates of Work-Life Earnings,” U.S. Census Bureau, July 2002.
3. For complete results on the 2003 NAEP exams, http://nces.ed.gov/nationsreportcard/about/.
4. The NAEP 2003 reading exam, http://nces.ed.gov/nationsreportcard/about/. For example, students in the 52 percent of fourth graders in urban areas scored “below basic” on the 2003 reading examination compared to just 38 percent across the nation. See also Anthony D. Lutkus and Arlene W. Weiner, “The Nation’s Report Card: Trial Urban District Assessment, Reading Highlights 2003” Education Statistics Quarterly 5 (4): 2004, http://nces.ed.gov/programs/quarterly/vol_5/5_4/3_4.asp.
5. School violence is highest in city schools. For background on national trends in school violence, see U.S. Department of Education, National Center for Education Statistics (NCES). Violence in U.S. Public Schools: 2000 School Survey on Crime and Safety, NCES 2004–314, by Amanda K. Miller. Project Officer: Kathryn Chandler. Washington, DC: 2003, http://nces.ed.gov/pubs2004/2004314.pdf.
6. National Center for Education Statistics (NCES), “Trends in International Mathematics and Science Study,” Results from 1999, http://nces.ed.gov/TIMSS/.
7. Patrick Gonzales, Juan Carlos Guzman, Lisette Partelow, Erin Pahlke, Leslie Jocelyn, David Kastberg, and Trevor Williams, NCES, Highlights From the Trends in International Mathematics and Science Study (TIMSS) 2003, (Washington, D.C.: U.S. Department of Education, December 2004), 24, and Tables 6 and 12, http://nces.ed.gov/pubsearch/pubsinfo.asp?pubid=2005005.
8. Ibid., 24, and Tables 3 and 9, http://nces.ed.gov/pubsearch/pubsinfo.asp?pubid=2005005.
9. The United States achieves “by some margin, the highest expenditure per student from primary to tertiary education (in equivalent U.S. dollars converted using purchasing power parities) at $10,871.” See Barry McGaw, “Education at a Glance 2004,” September 14, 2004, p. 6, OECD.
10. “Ten Facts about K-12 Education Funding,” U.S. Department of Education, June 16, 2004. See also U.S. Department of Education, National Center for Education Statistics (NCES). Digest of Education Statistics, 2002, NCES 2003–060, by Thomas D. Snyder. Production Manager, Charlene M. Hoffman. Washington, DC: 2003, Table 29, p. 33, http://nces.ed.gov/pubsearch/pubsinfo.asp?pubid=2003060.
11. NCES, Digest of Education Statistics 2002, Table 1.
12. NCES, Digest of Education Statistics 2002, Table 169.
13. Andrew T. LeFevre and Rea S. Hederman, Jr., Report Card on American Education: A State-by-State Analysis 1976–2001 (Washington, D.C.: American Legislative Exchange Council, October 2002).
14. According to NCES, there are 6.3 million children enrolled in private school and approximately 1.1 million students are being home-schooled in the United States. See U.S. Department of Education, National Center for Education Statistics (NCES), Mini-Digest of Education Statistics 2003, NCES 2005–017. Thomas D. Snyder. Washington, DC: 2004, Table 2, p. 3. For projected private-school enrollments, see ibid., Projection of Education Statistics to 2013, NCES 2004–013. Debra E. Gerald and William J. Hussar, Washington, DC: 2003, Table 1, p. 45, http://nces.ed.gov/pubsearch/pubsinfo.asp?pubid=2004013. For the number of home-schooled students, see Dan Princiotta, Stacey Bielick, and Chris Chapman (2004). 1.1 Million Home Schooled Students in the United States in 2003 (2004–115), NCES, http://nces.ed.gov/pubsearch/pubsinfo.asp?pubid=2004115.
15. According to NCES, as of 2003 there were approximately 48 million children enrolled in K-12 public schools in the United States. See Mini-Digest of Education Statistics 2003, Table 1, p. 2. Combined, there are 7.4 million private and home-school students, or 13.4 percent of the total K-12 population.
16. For a history of the charter-school movement, see “U.S. Charter Schools: History,” U.S. Department of Education.
17. For an overview of the nation’s publicly funded school-choice programs, see Robert Enlow, “Grading Vouchers: Ranking America’s School Choice Programs,” Milton and Rose D. Friedman Foundation, 2004.
18. Ibid.
19. For a snapshot of each state’s home-schooling laws, see the Home School Legal Defense Association’s website “State Laws,” available online at: http://www.hslda.org/laws/default.asp. For the number of students currently being home-schooled, see NCES, 1.1 Million Home schooled Students in the United States in 2003, http://nces.ed.gov/pubsearch/pubsinfo.asp?pubid=2004115.
20. See Clive R. Belfield and Henry M. Levin, The Effects of Competition on Educational Outcomes: A Review of the U.S. Evidence, National Center for the Study of Privatization, Columbia University, originally published September 2001. An updated version is available online at http://www.ncspe.org/publications_files/688_OP35V2.pdf. This study was subsequently published in Review of Educational Research, (2002), 72(2), 279–341. See also Caroline M. Hoxby, “Rising Tide,” Education Next, Winter 2001. For a discussion of school choice and parental satisfaction, see Dan Lips, “The Impact of Tuition Scholarships on Low-Income Families: A Survey of Arizona School Choice Trust Parents,” Goldwater Institute, Policy Report no.187, December 11, 2003.
21. Author calculations. The average per-pupil expenditure in public school was $6,900 in 2000.
22. This report builds upon previous work by the Heartland Institute, which has advocated incorporating education savings accounts into school-choice proposals since 1992.
23. For background information on HSAs, see Nina Owcharenko, “Health Savings Accounts: How to Broaden Health Coverage for Working Families,” The Heritage Foundation Web Memo #481, April 16, 2004.
24. Michael Barone, “The Secret of Health Savings Accounts: They Work,” The National Ledger, June 14, 2005.
25. NCES, Digest of Education Statistics 2002, Table 169.
26. T.D. Snyder, A.G. Tan, and C.M. Hoffman, Digest of Education Statistics 2003, (NCES 2005–025). U.S. Department of Education, National Center for Education Statistics (NCES), Washington, DC: Government Printing Office, Table 157, p. 192, http://nces.ed.gov/pubsearch/pubsinfo.asp?pubid=2005025.
27. For information on the federal Thrift Savings Plan (TSP), see the official government website at http://www.tsp.gov.
28. Figures are based on fiscal year 2003 data. See Susan L. Aud and Vicki Murray, Ph.D. “A Guide to Understanding State Funding of Arizona Public School Students,” Goldwater Institute, Policy Report no. 200, January 19, 2005, p. 23. Charter schools and traditional public schools receive different formula and non-formula funding student amounts. According to JLBC data, the average traditional public school received $7,800 per student in total funding, and the average charter school received $6,300 in total funding in fiscal year 2002. See Hunter, “All Reported Funding FY 2002,” in The Grass is Always Greener.
29. Ibid., p. 2. The authors explain, “These are minimum averages because they apply to students who do not have special educational needs, such as learning or physical disabilities and English language learner status, and who do not attend schools in districts that are small and/or located in rural areas.”
30. Ibid., p. 3.
31. Current figures provided by Lee McIlroy, research and statistical analyst with the Arizona State Board for Charter Schools, to Vicki Murray, Ph.D., director of the Center for Educational Opportunity, Goldwater Institute, in response to a December 17, 2004, email query. The charter school enrollment figure for the 2003–2004 school year is 81,612 children. Regarding enrollment figures, McIlroy notes: “Enrollment counts represent a head count of all active enrollments on October 1 of each school year reported to the Arizona Department of Education. During each school year, schools are required to submit enrollment and student activity data to ADE [the Arizona Department of Education] every 20 days for funding purposes and for purposes of calculating dropout rates and student activity rates which capture student movement. It should be noted that these figures do not represent unduplicated counts and may overstate enrollment because concurrently enrolled students are counted as having an active membership in each school where he or she is enrolled. Changes in data collection from 2003 forward now include concurrent enrollments in technology schools, which may additionally overstate aggregated enrollment figures.” According to the National Center for Education Statistics, in 2005 public K-12 enrollment in Arizona is 967,000 students. See Debra E. Gerald and William J. Hussar, NCES, Projections of Education Statistics to 2013, (Washington, D.C.: U.S. Department of Education, October 2003), Table 4, available online at http://nces.ed.gov/pubs2004/2004013.pdf.
32. JLBC data for fiscal year 2002, cited by Michael Hunter, “Equalization Formula Only” in The Grass is Always Greener: District and Charter School Finance Compared, Arizona Tax Research Organization, 2004.
33. According to the Superintendent’s Annual Report for Fiscal Year 2002–2003, total traditional public school revenue for 839,865.459 students (total attending average daily membership) was $7,131,659,265, or $8,491 per student on average. Local, county, and state contributions to total traditional public-school revenue account for 88.2 percent of that average, or $7,489 per student. Total charter-school revenue for 66,957.943 students (total attending average daily membership) was $453,492,400, or $6,771 per student. Local, intermediate, and state contributions to total charter-school revenue account for 86.82 percent of that average, or $5,879 per student. See “State Totals” for traditional public and charter schools in vol. II, pp. I-254 and II-322, respectively.
34. Lewis C. Solmon and Pete Goldschmidt, “Comparison of Traditional Public School Students and Charter Schools on Retention, School Switching, and Achievement Growth,” Goldwater Institute, Policy Report no. 192, March 15, 2004. See also Lewis C. Solmon, “Arizona Charter School Parent Satisfaction Survey: 2002,” (Phoenix, AZ: Arizona State Board for Charter Schools, March 10, 2003); and Hoxby, “Rising Tide.”
35. The complexity of state public-school finance systems makes it hard to know how much is being spent. For example, a 2004 Educational Testing Service (ETS) poll found that nearly one in two Americans thinks per-student funding averages less than $5,000. However, U.S. Department of Education figures put average state spending between $7,000 and $9,000. See Peter D. Hart and Robert M. Teeter, “Equity and Adequacy: Americans Speak on Public School Funding,” ETS, 2004; NCES, Projections of Education Statistics to 2013, Table 4, p. 49; and U.S. Department of Education, National Center for Education Statistics. Projections of Education Statistics to 2012, (NCES 2002–030), by Debra E. Gerald and William J. Hussar. Washington, DC: 2002, Table 4, p. 14, http://nces.ed.gov/pubsearch/pubsinfo.asp?pubid=2002030. See also Jay P. Greene & Marcus A. Winters, “The Public Schools’ Dirty Little Secret,” New York Post, July 02, 2004; and Vicki Murray, Ph.D. “Rankings cloud real school indicators,” Arizona Republic, March 27, 2005.
36. Vicki Murray, Ph.D. and Ross Groen, “Survey of Arizona Private Schools: Tuition, Testing, and Curricula,” Goldwater Institute, Policy Report no. 199, January 5, 2005, p. 3.
37. Ibid., p. 4.
38. Ibid.
39. NCES, Digest of Education Statistics, 2003, Table 60, p. 80.
40. In 2000, the average private elementary tuition in the United States was $3,267 and the average private secondary tuition was $6,053. See NCES, Digest of Education Statistics 2003, Table 60.
41. NCES, Digest of Education Statistics 2003, Table 61.
42. Aud and Murray, p. 3. There are savings because the K-8 and high-school education grant amounts suggested by Aud and Murray, $3,500 and $4,500 respectively, are less than the average per-student equalization formula funding required by the state, $4,300 for K-8 students and $4,600 for high school students. Moreover, the grant amounts Aud and Murray propose do not include non-equalized formula funding, which average $4,309 per-student.
43. McIlroy, Arizona State Board for Charter Schools, December 17, 2004.
44. This is a three percent, or $1.7 billion, increase over the 2004 level. See U.S. Department of Education, “Fiscal Year 2005 Budget Summary — February 2, 2004,” available online at http://www.ed.gov/about/overview/budget/budget05/summary/edlite-section1.html.
45. NCES, Digest of Education Statistics 2003, Table 156.
46. NCES, “The Nation’s Report Card: Long-Term NAEP Trends,” available online at http://nces.ed.gov/nationsreportcard/about. For example, on the NAEP long-term reading scores, scores for American nine-year-olds increased from an average score of 208 in 1971 to 212 in 1999.
47. Andrew J. Coulson, Market Education: The Unknown History (London: Transaction Publishers, 1999), p. 179.
48. Dan Lips, “Reagan’s ABCs,” National Review Online, May 22, 2001.
49. Veronique de Rugy & Marie Gryphon, “Elimination Lost: What Happened to Abolishing the Department of Education?” Cato Institute Daily Commentary, February 11, 2004.
50. U.S. Department of Education, Historical Budget Tables, http://www.ed.gov/.
51. Andrew Cain and George Archibald, “Bush proposes major overhaul for education,” The Washington Times, January 24, 2001.
52. Statistics on the National School Lunch program from the USDA Food and Nutrition Service.
53. Author calculations.
54. Dan Lips, personal interview with Rick Hough, National Program Director for the Children’s Scholarship Fund, March 9, 2001. See Darcy A. Olsen, Carrie Lips, and Dan Lips, “Fiscal Analysis of a $500 Federal Education Tax Credit to Help Millions, Save Billions,” Cato Institute, Policy Analysis 398, May 1, 2001.
55. Internal Revenue Service, Tax Tip 2004–60, “Coverdell Education Savings Accounts Can Make Education Costs Less Taxing,” March 26, 2004.
56. Internal Revenue Service, “Tax Benefits for Education.”
57. Lamar Alexander, “Putting Parents in Charge,” Education Next, Summer 2004.
58. Ibid.
59. Ibid.
60. Lawrence M. Rudner, “The Scholastic Achievement and Demographic Characteristics of Home School Students in 1998,” Home School Legal Defense Association.
61. Home-school students in high- and low-regulation states both scored in the 86th percentile on average national percentile rankings. See Brian D. Ray, “Home Education Across the United States,” National Home Education Research Institute, 1997, p. 12.
62. Specifically, “For compulsory education purposes, states generally license, register, accredit, or approve private schools. Many states ‘approve’ elementary and secondary private schools for this purpose. The criteria for approval usually include compliance with basic education requirements and health and safety standards. Nine states have voluntary approval provisions for private schools. Fourteen states have mandatory approval provisions; two of these states provide exemptions or alternatives to approval while three of these states mandate approval only on a limited basis. No state in the union mandates the accreditation of all private elementary and secondary schools. Some states accept accreditation in lieu of approval (Nebraska, Maine), registration (Kansas), certification (Kentucky), and licensing (Nevada). Fifteen states, Puerto Rico and the Virgin Islands, will accredit private schools upon request generally in the same manner as public schools. It should be noted that eleven states do not engage in any of these processes.” See Michelle L. Doyle, State Regulations of Private Schools, Office of Nonpublic Education, U.S. Department of Education, June 2000, pp. 2–3.
63. For example, according to the U.S. Department of Education, “Private school students generally perform higher than their public school counterparts on standardized achievement tests.” On the 2000 NAEP exam, private-school students’ scale scores in fourth, eighth, and 12th grade science and math were an average of 16 and 13 points higher, respectively, than their public-school peers. Private-school students’ scale scores in fourth-grade reading were 19 points higher. Significantly, “students who had attended private school in 8th grade were twice as likely as those who had attended public school to have completed a bachelor’s or higher degree by their mid-20s (52 versus 26 percent),” and students from the most disadvantaged backgrounds were nearly four times as likely to do so (30 versus 7 percent). See U.S. Department of Education, National Center for Education Statistics, Private Schools: A Brief Portrait, NCES 2002–013, by Martha Naomi Alt and Katharin Peter. Washington, DC: 2002, p. 21, Table 11, and p. 24. Homeschooled children are also among the nation’s best and brightest. By eighth grade, typical home-school students outperform the national average by four grade levels. See Lawrence M. Rudner, “The Scholastic Achievement and Demographic Characteristics of Home School Students in 1998,” Home School Legal Defense Association. Home-school students in high- and low-regulation states both scored in the 86th percentile on average national percentile rankings, suggesting regulation does not significantly affect student performance. See Brian D. Ray, “Home Education Across the United States,” National Home Education Research Institute, 1997, p. 12.
64. See Public Law No: 107–110, the “No Child Left Behind Act of 2001,” signed by President George W. Bush signed H.R. 1 on January 8, 2002. Quotation from Part E, Subpart, Section 9506(b). Available online at http://frwebgate.access.gpo.gov/cgi-bin/getdoc.cgi?dbname=107_cong_public_laws&docid=f:publ110.107.pdf. In fact, according to Michael Smith and Michael P. Farris of the Home School Legal Defense Association, “Any attempt to require a homeschooler to be tested by an assessment designated in P.L. 107-110 will violate federal law and jeopardize their state’s federal funding.” See Smith and Farris, “Federal Prohibition of State’s Authority to Mandate Assessments on Homeschool Students,” Home School Legal Defense Association Issue Analysis, January 8, 2003.
65. H. Lillian Omand, The Struggle for School Choice Policy After Zelman: Regulation vs. the Free Market, Cato Institute, Policy Analysis no. 495, October 29, 2003; and Vicki Murray, Ph.D. and Ross Groen, “Survey of Arizona Private Schools: Tuition, Testing, and Curricula,” Goldwater Institute, Goldwater Institute, Policy Report no. 199, January 5, 2005.
66. Omand, Struggle for School Choice Policy After Zelman.
67. NCES, Mini-Digest of Education Statistics, Table 2.
68. Caroline M. Hoxby, “Does Competition among Public Schools Benefit Students and Taxpayers?” The American Economic Review, 90 (5) (December 2000): 1209. Hoxby refers to inter-district choice as “Tiebout choice,” which is named after Charles M. Tiebout, who, in 1956, first described the traditional choice process in the United States as one in which households making residential choices determine the quality of and expenditures on local public goods. For a summary of the statistical analysis see, Belfield and Levin, The Effects of Competition, p. 25, n. 14 (pagination from the September 2001 version).
69. Caroline M. Hoxby, “School Choice and School Productivity (or Could School Choice be a Tide That Lifts All Boats?),” National Bureau of Economic Research (NBER), Working Paper no. 8873, April 2002, p. 47.
70. Ibid. While these results are encouraging, Hoxby urges restraint since “the typical Phoenix area school that is now competing with charter schools will take ten years to catch up with top performing Phoenix area schools,” p. 48.
71. Hoxby, “Rising Tide,” Education Next.
72. Ibid.
73. All state constitutions except Iowa contain an “establish and maintain” clause. However, Iowa’s constitution does have a provision on school finance. See Education Commission of the States, “State Notes” Governance,” updated October 2000.
74. See, for example, Rochelle Riley, “Perilously close to losing greatness,” Tallahassee Democrat, November 21, 2004.