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Tuesday, January 2, 2018

A Lousy School Choice

From U.S. News & World Report

By Andrew J. Rotherham
December 27, 2017

Education was mostly a sideshow in the massive tax overhaul Congress passed just before Christmas. But one marginal issue passed in the dead of night may end up playing a big role in the school choice debate going forward.

Under the new law, money from 529 college savings accounts can now be used for private elementary and secondary education expenses. 529s are savings accounts where you can put dollars earmarked for college expenses (and now elementary and secondary expenses) into an account where that money grows tax free.


That change was the result of a late-night amendment by Republican Texas Senator Ted Cruz that only passed with Vice President Pence casting a tie breaking vote. The provision is lousy public policy and even many choice advocates opposed it, but it's a big political win for proponents of education tax credits and using the tax code rather than direct spending to advance school choice.

Although proponents of school choice are frequently lumped together, there are actually lively and important policy differences around preferred strategies to expand choice. The role of government regulation is a particularly acute flashpoint. For some choice proponents, tax policy offers the advantage of side-stepping a variety of regulatory questions.

Tax credits or accounts like 529s allow parents to spend money as they see fit without various rules about everything from student assessments to civil rights. In addition, tax proposals are an easier budget lift than direct government expenditures.

However, tax policies tend to benefit more affluent Americans rather than the low-income parents many school choice advocates see as the most important audience. This is especially true of 529 accounts. Almost all of the benefits of 529 plans flow to households making at least six figures and the greatest benefits flow disproportionately to the wealthiest Americans.

In that way, the 529 proposal was part and parcel of a tax bill that was skewed to the most advantaged Americans. Poor families simply can't afford to save the kind of money it takes to benefit from a 529 for college, let alone for elementary or high schools, and the tax breaks that come with 529s are worth less to them. In fact, there already was a tax provision for private school expenses in current law but it explicitly did not benefit wealthy families.

It's as bad as it seems, which is why even supporters of the tax bill's change don't really argue it's an expansion of school choice for lower income Americans.

But, perversely, that's why the provision is a bigger win for proponents of education tax credits than it might seem at first glance. Now, the debate will shift from whether to have a provision like this in the tax code at all to how to expand it to benefit more families.

Most immediately, the new provision will create debates in some states that offer their own tax-benefits for 529 bills about whether money used for K-12 expenses, rather than the original higher education purposes of 529s, should qualify for additional state tax breaks.

Then the debate will shift to how to make the provisions more equitable. In other words, after inserting an inequitable provision into the tax code its champions can now slip onto their opponent's flank and argue to make that provision more equitable by expanding it in various ways. A provision to allow home school parents to use 529s was removed from the tax bill because of a budget rules issue; expect it to be back soon, along with other ideas.

That's why the 529 shift is a big win for pro-tax credit school choice proponents and their Republican allies. Not because it's good policy, but precisely because it's so bad. Perhaps with this provision on the books, the debate will shift to more equitable choice policies like charter schools, vouchers or public school choice strategies. Or perhaps it will end up just being a distraction.

But it seems more likely that creating a "better" tax credit will now be an easy focus, and one that likely comes at the expense of the variety of school choice policies that could actually empower low-income families with better educational choices.

Andrew Rotherham is a cofounder and partner at Bellwether Education Partners, a national nonprofit organization working to support educational innovation and improve educational outcomes for high-need students.

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