by David Safier
Matthew Ladner of the Goldwater Institute put together "10 Myths about Arizona Education" to, in his words, "separate the reality of education funding in Arizona from several often publicized myths." As usual, he mixes truth with fiction and apple-facts with orange-statistics to create a stew of misinformation that "proves" all is well with Arizona education, and things will get even better if we trim the fat from the public schools and get more kids into private schools.
In typical conservative accuse-the-other-guy-of-what-you're-doing fashion, Ladner, who has been creating myths for years, is calling others myth makers.
In a post yesterday, I de-mythologized his assertion that "Arizona school funding ranks in the middle of the states at more than $9,000 per student per year."
Today I want to go after his take on tuition tax credits. According to Ladner, the tax credit money that helps pay private school tuition actually saves the state money.
Here's what he says:
Myth No. 4: Suspending the tax credit for donations toward private school tuition would save money and mitigate the need for education budget cuts.
Fact: Getting children into private schools with $1,000 of foregone tax revenue costs less than the $9,000 spent on a child in the public school system. To save money, the Legislature should expand the private school scholarship tax credit and move more children from public to private schools. Suspending it will disrupt these students’ educations and increase costs to the state as children return to public schools.
Let me explain how individual tuition tax credits work. Basically, they're a way for people who already send their kids to private school to have the state pick up part of the tab. In other words, the tax credits are back door vouchers or, as one educational writer calls them, neo-vouchers.
Anyone who pays taxes can take $500 ($1,000 for a couple) and send it to a Student Tuition Organization (STO) to be used as scholarship money by a private school. Since the taxpayer gets 100% of the money back from taxes due, it costs the taxpayer nothing. Because the money would otherwise go into the state coffers, in a real sense, the state is paying for private school scholarships.
The scholarships can go to anyone who attends private schools. Millionaires can get tax credit scholarships for their kids, because there is no means testing built into the law. And people who send their kids to private schools already can get scholarships, because there is no stipulation that the students getting the scholarships were previously in public schools.
So in theory, tax dollars can go to help people send their kids to private schools even if they can afford it themselves, and even if they were already sending them to private schools. But is that what really happens?
Apparently, yes. Because, amazingly, people can "recommend" that their tax credit dollars be used to give a scholarship to a certain individual. It can't be their own kids. But the Smiths can "recommend" their credits go to the Jones' kids, and vice versa. And grandma and grandpa Jones, as well as aunts, uncles, friends and neighbors can also "recommend" the money goes to the Jones' kids.
Are the recommendations honored?
Apparently yes. I spoke with a gentleman who works for one of the STOs. He told me about 80% of the tax credits the organization receives have recommendations attached, and he said they are generally honored.
So when Ladner says individual tuition tax credits save taxpayers money, he's lying (or, to be generous, half-truthing) and he knows it. A large portion of the money goes to children who otherwise wouldn't cost the state a penny because their parents were already sending them to private schools.
By the way, I can't give you hard figures about the incomes of people who get the scholarships. No one can. The law says private schools don't have to report who is receiving the tax credit money.
AN IN-THE-INTEREST-OF-HONESTY ADDITION: Unlike the Goldwater folks, I try not to skew my information by leaving out items that don't fit my thesis. So here's a side note about corporate tax credits to show that they actually are distributed in a more sensible fashion than individual tax credits.
Unlike individual educational tax credits, the corporate ones are means tested. I believe they can only go to families whose incomes are within 185% of the poverty level. And they can only go to "switchers" — children who were previously in public school — or children entering kindergarten. I still think it's a bad program, and it can be gamed fairly easily, but at least the scholarships can't go to rich folks who are already sending their kids to private schools. (The reason for the restrictions is, the corporate tax credits came on Napolitano's watch. She shouldn't have approved them, but at least she made sure there were reasonable restrictions put on them.)