Order Code IB98035
Issue Brief for Congress
Received through the CRS Web
School Choice:
Current Legislation
Updated August 7, 2002
David P. Smole
Domestic Social Policy Division
Congressional Research Service ˜ The Library of Congress

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CONTENTS
SUMMARY
MOST RECENT DEVELOPMENTS
BACKGROUND AND ANALYSIS
Introduction
Methods of Supporting School Choice
Intradistrict Public School Choice
Interdistrict Public School Choice
Charter Schools
Tax Subsidies
Subsidies to Private Schools
School Vouchers and Supplemental Educational Services
Current State and Local School Choice Programs
Legal Challenges to State and Local Programs
Current Federal Choice Programs
Elementary and Secondary Education Act Programs (as Amended by
P.L. 107-110)
Tax Benefits for K-12 Education Expenses — P.L. 107-16, H.R. 1836
Major Types of Proposals to Expand Federal School Choice Support
Choice Options in Existing Programs
Demonstration or Targeted Choice Programs
Block Grants
Tax Subsidies
Proposals in the 107th Congress
Administration Proposal — FY2003 Budget
Why Is There Debate Over Federal Support of Expanded School Choice?
LEGISLATION
FOR ADDITIONAL READING

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School Choice: Current Legislation
SUMMARY
Legislative proposals to provide parents
Title I-A accountability provisions, students
enhanced opportunities to select their chil-
attending schools identified for school im-
dren’s schools are varied and widely debated.
provement after failing to make adequate
Many school choice proposals have been
yearly progress (AYP) for 2 consecutive years
made with the intent of increasing the range
must be provided intradistrict public school
and quality of educational opportunities avail-
choice, consistent with state law. Further,
able to pupils, including those from low-
students from poor families attending schools
income families, those who attend low-per-
that fail to make AYP for 3 consecutive years
forming schools, and those whose families
must be provided the option of obtaining
seek an education provided by an entity other
supplementary or tutorial services from pro-
than their local public school. Some propo-
viders of their choice. Additionally, public
nents of school choice suggest that the avail-
school choice must be made available to
ability of school choice also will improve
pupils who are victims of violent crimes or
public schools through market competition.
who attend unsafe schools. The NCLBA
Some opponents express concern about poten-
authorizes increased funding for the Public
tial negative effects on public schools and
Charter Schools Program to assist charter
their pupils, including the redirection of public
school start-up and for facilities, and also
education resources and an erosion of the ideal
authorizes the use of Innovative Programs
of a common public education.
funds for activities to promote, implement, or
expand public school choice. Previously,
Recently, the U.S. Supreme Court ruled
during floor debates of the NCLBA, both the
that the Constitution allows for public funding
House and the Senate rejected amendments
of school vouchers used to support the
that would have authorized federal aid to
attendance of children at religiously affiliated
support private school choice programs.
schools, so long as the children’s parents also
have the opportunity of selecting from among
P.L. 107-16 amended Education Individ-
options that include public and private secular
ual Retirement Account authority to increase
schools.
the annual contribution limit to $2,000 and to
permit these accounts to be used for elemen-
Currently, the federal government sup-
tary and secondary school expenses, including
ports school choice under three major program
the cost of attendance at private schools.
areas: ESEA Title I-A — Improving the
These accounts have since been renamed
Academic Achievement of the Disadvantaged;
Coverdell Education Savings Accounts.
ESEA Title V — Promoting Informed Paren-
tal Choice and Innovative Programs (both
Several bills have been introduced in the
amended and reauthorized under the No Child
107th Congress that would support school
Left Behind Act (NCLBA) — P.L. 107-110);
choice via tax credits or deductions. The
and Coverdell Education Savings Accounts
President’s FY 2003 budget also requests
(amended under P.L. 107-16 and P.L. 107-22).
funding for two new school choice initiatives:
a choice demonstration fund; and a refundable
Several provisions in the NCLBA
tax credit for costs associated with attending a
maintain or expand federal support of school
different school for families of pupils assigned
choice for pupils and their families. As part of
to public schools that fail to make AYP.
Congressional Research Service ˜ The Library of Congress

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MOST RECENT DEVELOPMENTS
On June 27, 2002, the United States Supreme Court ruled in Zelman v. Simmons-
Harris, concerning a school voucher program in Cleveland, Ohio, that the Constitution
allows for public funding of school vouchers used to support the attendance of children at
religiously affiliated schools, in instances where parents have the opportunity of selecting
from among options that also include public and private secular schools. This decision
overturns a lower court ruling which found the Cleveland voucher program to be in violation
of the Establishment Clause of the First Amendment to the Constitution.
On February 4, 2002, in his FY2003 budget request, the President proposed two new
initiatives that would be supportive of elementary and secondary education school choice:
a choice demonstration fund to support research, demonstration, and study of expanded
educational opportunities for low-income families, to include private schooling; and a
refundable tax credit for certain costs associated with attendance at a different school for
families of pupils assigned to public schools that fail to make adequate yearly progress.
On January 8, 2002, the President signed into law P.L. 107-110 (H.R. 1), the “No Child
Left Behind Act,” (NCLBA) which contains several school choice provisions including an
expansion of public school choice provisions under ESEA Title I-A, and four choice
programs under Title V: Innovative Programs, Charter Schools Programs, Voluntary Public
school Choice Programs, and Magnet Schools Assistance. Previously, during floor debates
of H.R. 1, both the House and the Senate rejected amendments that would have authorized
federal aid to support private school choice programs.
BACKGROUND AND ANALYSIS
Introduction
According to the National Center for Education Statistics (NCES), during the 1990s,
the proportion of the nation’s school children attending schools of choice increased modestly.
Students from all income levels were reported to be attending public schools of choice in
greater proportions in 1999 than in 1993. However, among students attending schools of
choice, those from lower-income families are more likely to attend a chosen public school,
whereas those from higher-income families are more likely to attend a private school.
Despite modest growth in the exercise of school choice, three-quarters of elementary and
secondary school students still attend a public school to which they are assigned. (U.S.
Department of Education. National Center for Education Statistics. The Condition of
Education, 2001, Table 41-1.)
The federal government, as well as many states and localities, have implemented
numerous policies and programs that have enhanced parents’ ability to select the schools
their children attend, contributing to the modest growth in the exercise of school choice
observed over the past decade. While many school choice policies and proposals have
become popular and broadly supported approaches toward increasing students’ access to
diverse educational opportunities and effecting elementary and secondary education reform,
others remain controversial and divisive. This issue brief begins with an overview of current
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local, state, and federal policies and programs that support school choice. It then identifies
and summarizes recent federal school choice legislation. This brief will be updated regularly
to reflect congressional action on legislation concerning school choice and related
developments in states and localities.
Methods of Supporting School Choice
Students from families with sufficient resources and capabilities may be considered able
to choose from among the panoply of school options. For many students, however, the
extent to which they and their parents can exercise school choice depends upon the scope of
public policies and programs implemented at the federal, state, and local level. While extant
federal, state, and local programs that support school choice with public resources have a
variety of features, they generally fall into six broad categories.
Intradistrict Public School Choice. Students may choose among some or all the
public schools within their home school district. Magnet schools, created to promote
voluntary school desegregation, and alternative schools are examples of intradistrict choice
options.
Interdistrict Public School Choice. Students may choose to attend public schools
outside their home school district. Included in this type are special school districts, such as
secondary education districts providing vocational or technical education and training.
Charter Schools. Students may choose to attend public schools operating under
charters granting them greater operational autonomy in exchange for increased accountability
for outcomes. A charter school may be a school within a local educational agency (LEA) or
may be considered its own independent LEA. A virtual charter school is one that functions
through the exchange of information electronically between student and teacher, such as from
a student’s home and which has no common education facility.
Tax Subsidies. The federal and certain state tax codes provide for deductions or
credits supportive of school choice. These include the exemption from taxation of income
used for elementary and secondary education expenses, such as through federal Coverdell
Education Savings Accounts and certain state deductions or credits for educational expenses
or contributions to school tuition organizations (STOs), which provide private scholarships
to children. The federal tax code also allows deductions for interest paid on a home
mortgage, as well as state and local taxes. These deductions act to subsidize the cost of
families exercising their choice to reside in desired school districts or attendance areas,
which often have higher property values and higher amounts of deductible local property
taxes or home mortgage interest payments.
Subsidies to Private Schools. Private schools are able to provide educational
services at more attractive prices partially as a result of the provision of selected publicly
funded services to private school pupils (e.g., transportation, health, and special education
services), and the deductibility from taxation of certain contributions received by them or
their parent organizations.
School Vouchers and Supplemental Educational Services. Parents may be
granted vouchers that they may use to pay a portion of or the total cost of full-time
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attendance at a private school. Vouchers are sometimes referred to as scholarships or tuition
certificates. Parents also may be granted the opportunity to select the provider of
supplemental educational or tutorial services for their children in much the same way as
under a voucher program.
Privately financed choice programs also exist. These have been established in a number
of localities by private groups (such as STOs) to help pay tuition and related costs of private
elementary and secondary school attendance for pupils, most of whom come from
low-income families. Some parents also choose to homeschool their children.
Current State and Local School Choice Programs
Of policies and programs currently operating or proposed in states or localities, most
involve only public schools — whether selected schools within an LEA or school district,
all schools in an LEA, all public schools in a multi-LEA region or state, or charter schools.
Currently, two localities — Milwaukee and Cleveland — operate choice programs involving
vouchers for attendance at private (including religiously affiliated) schools for a limited
number of pupils from low-income families.
The Milwaukee Parental Choice Program provides state funding for low-income
students to attend private schools located within Milwaukee. When first implemented in
school year 1990-1991, choice was limited to nonsectarian private schools. In the 1994-1995
school year, the program was expanded to include religiously affiliated schools. Students
in kindergarten through grade twelve are eligible to participate. Under the program, parents
receive vouchers to cover the school’s per-pupil costs (tuition, operating expenses, debt
service, etc.), which they then submit to the school for payment. For the 2002-2003 school
year, the voucher amount is the lesser of $5,785 or the private school’s per-pupil costs.
The Cleveland Scholarship and Tutoring Program, first implemented in the 1996-1997
school year, is designed to allow students from low-income families in kindergarten through
the 3rd grade to apply to receive compensation to attend a private school located within the
boundaries of the Cleveland City School District, to attend a public school in a district
adjacent to the Cleveland City School District, or to receive tutorial services from a private
or governmental provider. Once accepted, students may continue in the program through the
8th grade. Parents of students attending private schools or receiving tutorial services are
reimbursed by the state for up to 90% of the cost of tuition. Participating private schools
agree to charge low-income parents no more than 10% of the cost of tuition (the amount not
covered by the voucher), all of which may be satisfied by in-kind contributions or services.
The maximum value of the voucher has remained at $2,250 since the program was first
implemented. No adjacent public school districts have elected to accept students under the
program.
In addition to these two local voucher programs, the state of Florida has implemented
Opportunity Scholarship legislation, which authorizes the provision of vouchers to pupils
assigned to low-performing public schools to pay either the full cost of private school tuition
or the costs of enrolling in another public school in the same or a neighboring county.
Opportunity Scholarships in Florida have been awarded to students who had attended either
of two failing elementary schools in the 1999-2000 school year. Currently, 10 public schools
have been designated as failing schools. Children from these 10 schools will be eligible to
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attend non-failing schools in school year 2002-2003. The amount of funding available for
attendance at private schools is based on that generated by the child for the public schools
— generally between $3,500 and $3,900. The school district is required to provide
transportation to public schools within the same district, but not to out-of-district public
schools nor to private schools.
Florida also operates the John M. McKay Scholarships Program for Students with
Disabilities, distinct from the Opportunity Scholarship Program. Under this program, all
pupils with disabilities who attend Florida public schools may receive a voucher to attend
a public or private school of their family’s choice. The value of the voucher is based on the
amount of aid that is generated by that child and is dependent on the nature of the pupil’s
disability. Generally it ranges between $4,000 and $5,000. Families may make additional
payments to the private school if the voucher amount is insufficient to cover the full cost of
tuition. Approximately 6,500 pupils are expected to participate during the 2002-2003 school
year.
A limited number of localities have implemented policies under which selected
educational services may be provided either by regular public schools or by alternative public
or private providers, as selected by parents and students. The alternative providers of
supplemental educational or tutorial services frequently are private, for-profit firms (Title
I Monitor, July 2001). This differs significantly from other forms of school choice discussed
in this issue brief, since it involves only selected instructional services, not entire school
programs.
Some states support school choice through tax policy. Arizona provides tax credits to
individuals for contributions to STOs that provide scholarships to students to meet the costs
of private school attendance. Florida provides tax credits to corporations that fund
organizations providing scholarships to low-income children. Pennsylvania also grants
corporations tax credits for contributions to organizations that award scholarships allowing
children to attend the school of their choice. Additionally, Illinois and Iowa allow
individuals to claim a tax credit for certain educational expenses, including private school
tuition; and Minnesota allows tax credits and deductions for similar expenses.
Legal Challenges to State and Local Programs. There have been numerous
recent challenges to state and local programs involving public-private school choice. Most
recently, on August 5, 2002, a Florida circuit court judge ruled Florida’s Opportunity
Scholarship Program unconstitutional in Holmes v. Bush, finding that the Florida
Constitution prohibits the use of public money to fund religious schools or institutions. (An
appeal has been filed and it appears that pending the appeal, the program will be allowed to
continue.) This decision flows from an October 3, 2000 ruling by Florida’s First District
Court of Appeals (2000 Fla. App. LEXIS 12658) that remanded the case back to the circuit
court after ruling that the Florida Opportunity Scholarship program does not violate Article
IX, Section 1 of the Florida Constitution and reversing an earlier ruling by a state circuit
court judge. The August 5, 2002 ruling is based on a challenge to the program under a
different section of the Florida Constitution. The Florida Constitution, like many state
constitutions, contains provisions prohibiting the provision of public funds to religious
institutions or organizations, including schools.
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On June 27, 2002, the U.S. Supreme Court ruled in Zelman v. Simmons-Harris (2002
U.S. LEXIS 4885) that the school voucher program in Cleveland, Ohio, in which publicly
funded school vouchers may be used to pay for the attendance of disadvantaged children at
religiously affiliated schools, is not in violation of the Establishment Clause of the First
Amendment to the Constitution, in instances where parents themselves have the opportunity
of selecting from among options that also include public and private secular schools. This
decision overturns a lower court ruling which found the Cleveland voucher program
unconstitutional.
On February 8, 2001, in Toney v. Bower, an Illinois appellate court upheld under the
Illinois Constitution a state tax credit for 25% of qualified K-12 educational expenses over
$250 (with a maximum credit of $500; 2001 Ill. App. LEXIS 248). The Illinois Supreme
Court has declined a petition to review the case. More thorough analysis of these and other
recent cases involving legal challenges to school choice programs can be found in CRS
Report RL30165, Educational Vouchers: Constitutional Issues and Cases, and CRS Report
RS21273, The Law of Church and State: Public Aid to Sectarian Schools.
Current Federal Choice Programs
Currently, elementary and secondary education school choice is supported through
several ESEA programs and through the federal tax code. The following provides a brief
description of current federal school choice programs.
Elementary and Secondary Education Act Programs
(as Amended by P.L. 107-110)
Local Educational Agency Plans (ESEA Title I-A). Schools with 25% low-
income enrollment may be granted a waiver allowing participation in Title I-A if they are
involved in desegregation programs under which students change schools (the threshold
otherwise is generally 35% or higher). This provision was added to Title I-A in 1994.
School Choice as a Component of School Improvement (ESEA Title I-A).
Pupils attending public schools that fail to meet adequate yearly progress (AYP) standards
for 2 consecutive years must be offered the choice of attending a higher performing public
school within their LEA, unless prohibited by state or local law or policy, or by capacity
constraints. Such schools also will be required to implement school improvement plans.
The lowest achieving children from low-income families will receive priority in choosing
alternate schools.
Pupils attending public schools that fail to meet AYP standards for a third consecutive
year will continue to be offered the option of attending another higher-performing public
school within the same LEA, and among these pupils, those from poor families will be
offered supplemental educational or tutorial services from a non-profit entity, a for-profit
entity, or the LEA, unless such services are determined by the state education agency (SEA)
to be unavailable in the local area. The SEA will be required to maintain a list of approved
supplementary education service providers from which parents can select. In instances where
a school fails to meet AYP standards for 4 consecutive years, it will be identified for
corrective action. If, after a year of corrective action, the school still does not improve, the
LEA may begin planning to restructure the school, with one option being to reopen the
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school as a charter school. In instances where there are no schools in the LEA that have
made AYP, LEAs are encouraged to enter into cooperative agreements with surrounding
LEAs to enable students to transfer to a successful public school.
In instances where an LEA fails to make AYP for 2 consecutive years, the SEA will be
required to identify it for improvement, and require that LEA to develop and implement a
new LEA education plan, with technical assistance provided by the state. If an LEA is
identified for improvement, the SEA also will have the option of authorizing students
attending a school in that LEA to transfer to a higher-performing public school in a different
LEA, with transportation costs provided by the sending LEA. If an LEA does not meet AYP
for 4 consecutive years, the SEA will be required to take corrective action, which may consist
of requiring the LEA to provide students the option of attending a higher-performing school
in another district.
Innovative Programs (ESEA Title V-A). As means of achieving education reform,
states may use Innovative Programs funds for the planning, design, and implementation of
charter schools. LEAs may use Innovative Programs funds for magnet schools; for the
planning, design, and implementation of charter schools; for school improvement activities;
to promote, implement, or expand public school choice; and for supplemental educational
services. For school year 2002, $385 million are appropriated for these programs (FY2002:
$100 million; and FY2003 advance appropriation: $285 million).
Charter Schools Programs (ESEA Title V-B-1&2). Charter Schools Programs
support increasing the number of charter schools by providing financial assistance for their
planning, design, and implementation. Charter schools are authorized through charters
entered into by different community groups and school authorities. They are authorized by
law in 39 states, the District of Columbia, and Puerto Rico. In exchange for exemption from
significant state and/or local rules, these schools are expected to be held accountable for
achievement of agreed-upon objectives. The Charter Schools Programs require that all
students in a community served by a charter school be given an equal opportunity to attend.
The potential scope of the Charter Schools Programs was expanded by the authorization
of a per-pupil facilities aid program through which matching funds may be provided for
charter school facilities in states that provide funds for charter school facilities on a per-pupil
basis, and by the authorization of funding for grants to entities for the development of credit
enhancement initiatives to assist charter schools in acquiring, constructing, or renovating
facilities. The FY2002 appropriation for the Charter Schools Programs is $200 million;
however, none of these funds were allocated for either the per-pupil facilities aid program,
or the credit enhancement initiatives. The FY2001 appropriations legislation included one-
time funding of $25 million for a program to demonstrate ways of leveraging financing for
charter school facilities similar to that now contained in the Charter Schools Programs.
Voluntary Public School Choice Programs (ESEA Title V-B-3). These
programs support school choice by providing competitive grants for transportation services
in support of public school choice, and allow funds also to be used for tuition transfer
payments, school enhancement in schools receiving transfer students, and public education
campaigns. For FY2002, $25 million were appropriated for these programs.
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Magnet Schools Assistance (ESEA Title V-C). Magnet schools are schools with
special programmatic and other features, and are designed to encourage voluntary
desegregation through the mechanism of parental choice. The Magnet Schools Assistance
program supports school choice by offering students the opportunity to attend a public school
with a special curriculum that attracts substantial numbers of students from differing racial
backgrounds. For FY2002, $110 million were appropriated for this program.
School Choice Offered to Pupils Attending Unsafe Schools. Each state
receiving ESEA funding will be required to allow pupils who attend chronically unsafe
schools and those who are victimized on the grounds of an elementary or secondary school
to transfer to a safe public school within the LEA.
Funding Allocations for Services to Students Attending Private Schools.
ESEA funds provided under several programs are required to be used to provide certain
education services, on an equitable basis, to eligible pupils enrolled in private schools. The
ESEA also authorizes funding for states to provide subgrants to LEAs to pay for capital
expenses related to the provision of equitable Title I-A services to students attending private
schools; however, for FY 2002, no funds are appropriated for these purposes.
Tax Benefits for K-12 Education Expenses — P.L. 107-16, H.R. 1836. On
June 7, 2001, the President signed into law P.L. 107-16 (H.R. 1836), the Economic Growth
and Tax Relief Reconciliation Act of 2001; and on July 26, 2001, P.L. 107-22 (S. 1190).
This legislation provides that Coverdell Education Savings Accounts (previously Education
Individual Retirement Accounts, which were investment accounts for saving to meet higher
education expenses) be renamed and extended to cover elementary and secondary education
expenses. Annual contributions to Coverdell Education Savings Accounts previously were
limited to $500, and distributions from these accounts excluded from gross income if used
for qualified higher education expenses. P.L. 107-16 increases the annual contribution limit
to $2,000 and expands qualified uses of distributions to include certain elementary and
secondary education expenses at public, private, or religiously affiliated elementary or
secondary schools. These changes affect tax years beginning after December 31, 2001. For
further information, see CRS Report RS20289, Education Savings Accounts for Elementary
and Secondary Education.
Major Types of Proposals to Expand
Federal School Choice Support
The range of school choice proposals that the U.S. Congress might consider is broad
and can be clustered into at least four basic groups — choice options in existing programs,
demonstration or targeted choice programs, block grants, and tax subsidies. These are not
mutually exclusive. Each of these is briefly reviewed below. (See CRS Report 95-344,
Federal Support of School Choice: Background and Options for a more thorough discussion
and analysis of the broad types of federal policy options (but not specific bills) regarding
school choice.)
Choice Options in Existing Programs. Advocates of school choice may seek to
amend existing federal education programs in various ways, such as removing possible
program barriers to choice, adding school choice to authorized uses of funds, expanding
current choice provisions, or reconstituting programs to focus them on choice. They also
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may consider appropriations language directing how program funds may be spent. The
primary examples of past and current proposals in this category involve ESEA Title I-A. As
noted, Title I-A has certain choice-related provisions. These proposals have sought, among
other things, to authorize or require school choice or supplemental services grants under Title
I-A for special groups of students or schools, such as for victims of violence on school
grounds or for students enrolled in poorly performing schools. Choice amendments to Title
I-A have also endeavored to include private school enrollment among its choice options.
Additionally, as previously noted, the Innovative Programs, Public Charter Schools,
Voluntary Public School Choice, and Magnet Schools programs promote school choice.
Demonstration or Targeted Choice Programs. Federal support for school
choice might be fashioned to demonstrate the impact of school choice in a discrete number
of locations (e.g., specific cities or a limited number of places around the country, such as
empowerment zones) or to target choice in a similarly limited fashion to particular kinds of
students or schools. The most frequent examples of this kind of proposal have sought to
expand choice options for special groups of students (e.g., low-income students, victims of
violence on school grounds) or students in specific kinds of schools (e.g., schools
characterized by poor levels of academic performance).
Block Grants. Block grants are federal grants to states that provide an exceptionally
high degree of flexibility in the ways in which aid may be used, perhaps coupled with more
specific requirements for accountability in terms of outcomes. They are frequently proposed
as the outcome for a consolidation of several existing federal education programs. Groups
of existing programs might be transformed into block grants in selected states under
“performance agreement” proposals (see CRS Report RL30835, Elementary and Secondary
Education: Accountability and Flexibility in Federal Aid Proposals). Under a block grant,
school choice might be an explicitly authorized use, a required use (perhaps of some
specified portion of funding), or a precondition for participation (i.e., federal funds are
available only to those implementing choice plans). At times, choice programs have been
explicitly included among the authorized uses of funds under these block grant proposals or
the authorities are sufficiently open for choice to be supported without explicit mention.
Tax Subsidies. Advocates of federal support for school choice often turn to the
federal income tax system in order to provide tax benefits — deductions, credits (refundable
or non-refundable), or exemptions from taxation of certain income — for all or certain
categories of families paying tuition or related costs for K-12 education. Coverdell
Education Savings Accounts are a current example of a tax subsidy supportive of elementary
and secondary education school choice (these accounts also support postsecondary education
expenses). Others have proposed offering tax subsidies for contributions to STOs, which in
turn would award private scholarships to enable children to attend schools of choice. Some
see tax subsidies, especially tax credits, as a viable option to school vouchers, which
supporters have not been successful in having enacted through federal legislation. (For
further information on proposals to support school choice through the federal tax code, see
CRS Report RL31439, Federal Tax Benefits for Families’ K-12 Education Expenses in the
Context of School Choice).
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Proposals in the 107th Congress
Administration Proposal — FY2003 Budget. In his FY2003 budget request, the
President proposed two new initiatives supportive of school choice: a school choice
demonstration fund; and a refundable tax credit for costs associated with attending a different
public or private school for families whose children are assigned to a public school that fails
to make adequate yearly progress for 1 year. The President also proposed to continue
funding for the following ESEA Title V programs: Innovative Programs, Charter Schools,
Voluntary Public School Choice, and Magnet Schools. In addition, he proposes to provide
$100 million in funding for credit enhancements for charter school facilities, which were not
funded for FY2002. Current ESEA Title V programs are described above. The following
provides a description of the administration’s two newly proposed school choice initiatives.
Choice Demonstration Fund. The Choice Demonstration Fund would provide
funding for school choice demonstrations and research into the achievement effects of school
choice options on students, schools, and districts. The administration’s proposal specifies
the inclusion of school choice options that would benefit low-income students and that
include private schools. Grants totaling $50 million would be made to SEAs, LEAs,
institutions of higher education, governmental agencies, or other public or private entities for
school choice demonstrations and research.
Refundable Tax Credit for Certain Costs of Attending a Different School
for Pupils Assigned to Failing Public Schools. The administration proposes a
refundable credit of 50% of the first $5,000 of qualifying educational expenses associated
with sending a qualifying student, who is a taxpayer’s qualifying child, to a different
qualifying elementary or secondary school. The refundable credit would apply toward both
a taxpayer’s regular and alternative minimum tax liabilities. In addition, a taxpayer could
claim credits for more than one qualifying child. Qualifying expenses for the tax credit could
not also be considered as qualifying expenses for distributions from Coverdell Education
Savings Accounts.
Under the administration’s proposal, qualifying educational expenses would include
tuition and required fees, transportation expenses, and certain other expenses (such as
academic tutoring, special needs services for special needs students, books, supplies,
uniforms, room and board, extended day care, and computer technology equipment)
associated with attendance at a qualifying school, but would exclude tuition and fees for any
public school within the same LEA as a student’s assigned local school. A qualifying school
would be any public school (other than the local school), including a public charter school,
that made adequate yearly progress during the prior year, a private elementary or secondary
school, or a home school. A qualifying student is one who attended, at the close of the prior
school year, a public elementary or secondary school identified as failing to make adequate
yearly progress for that year according to the terms of the ESEA, as amended by P.L. 107-
110. In addition, a student newly assigned to a school identified as failing to make adequate
yearly progress for the prior school year also would be considered a qualifying student. Such
students generally would continue as qualifying students from year to year, even if their local
school ceased to be identified as failing, until such time as they would be assigned to a
different school that had made adequate yearly progress (e.g., being newly assigned to a
successful high school for the 9th grade). A qualifying child would be defined as a taxpayer’s
son, daughter, stepson, stepdaughter, sibling, stepsibling (or descendant of such individuals),
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or foster child, who shared the same principal residence as the taxpayer for more than half
of the tax year. (U.S. Department of the Treasury, General Explanations of the
Administration’s Fiscal Year 2003 Revenue Proposals, February 2002, pp. 14-16).
Why Is There Debate Over Federal Support of
Expanded School Choice?
This section considers some of the issues that have framed the debate over school
choice. Over the past several Congresses, many school choice proposals have been
introduced and debated, often vigorously. Most failed to be enacted. The most divisive issue
regarding publicly funded school choice is the provision of direct support to aid pupils
attending private, often religiously affiliated, schools. Conclusive evidence about the impact
of private school choice is not available; however, proponents and opponents alike often cite
conflicting findings from studies of the Milwaukee and Cleveland voucher programs and
some privately financed voucher programs to support their views. In contrast, there is
currently relatively little opposition to federal support of choice options that include only
public schools, as under the ESEA Title V programs: Innovative Programs, Charter Schools
Programs, Voluntary Public School Choice Programs, and Magnet Schools Programs.
Those who support choice proposals that include private schools have argued that in
view of the apparent institutional rigidity and resistance to change in many public school
systems, the most effective way in which the federal government can help to improve
educational performance, especially for pupils in low-income families, is to increase such
pupils’ opportunities to select from a range of schools, including private and religiously
affiliated schools. Proponents frequently state that helping at least some pupils from low-
income families “escape” their current, often poor-performing public schools provides an
immediate benefit to those pupils, and helps to provide such pupils with a degree of
educational choice and opportunity that those from more affluent families already have.
Competition through choice, it is argued, also would stimulate major improvements in the
performance of many public school systems serving large numbers of poor children. Finally,
while recognizing the possibility that new forms of government regulation may accompany
public funding, proponents argue that this threat can be limited through statutory
prohibitions, especially if the aid is provided indirectly (i.e., through pupils’ families).
Supporters likely will be encouraged by the U.S. Supreme Court’s ruling in Zelman v.
Simmons-Harris.
Opponents of federal school choice proposals that include private schools tend to focus
on the limitations of the choice options being proposed, and the potentially negative effects
on public schools and their pupils, including diversion of attention and resources away from
the goal of public school system reform. Many of the current choice proposals generally
involve only a portion of the potentially eligible pupil population — e.g., they would be
available only in one or a few localities, or only for a selected number of pupils in low-
income families nationwide. In addition, they typically are limited in the proportion of
private school tuition and fee costs that may be covered, and/or the maximum voucher or
scholarship per pupil. While these amounts may pay a substantial share of the costs of
attending some private — especially elementary — schools, they are typically sufficient to
pay the full costs of attending only the least expensive types of private schools. Further,
opponents frequently argue that substantial new forms of governmental regulation will
inevitably accompany new forms of governmental financial assistance to them, even if the
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assistance is indirect. Finally, they argue that the effects of competition on public school
systems are more likely to be negative than constructive, including a reduction in funds that
are linked to enrollment levels, abandonment of public schools by pupils whose families are
most alert to the choices available to them, and unequal constraints on public schools (e.g.,
the public schools must continue to serve numerous and diverse hard-to-educate pupils who
might be rejected by private schools).
LEGISLATION
The following is a selection of legislation with provisions explicitly supporting school
choice that received significant action during the 107th Congress. Bills in which the support
for school choice is incidental, such as proposals broadly supporting the renovation and
construction of elementary and secondary schools that include charter schools, and bills that
were not debated on the floor of the Senate or House, or reported by committee, are not
included.
P.L. 107-16, H.R. 1836 (Thomas)
Economic Growth and Tax Relief Reconciliation Act of 2001. Signed into law June
7, 2001.
P.L. 107-110, H.R. 1 (Boehner et al.), S. 1 (Jeffords)
No Child Left Behind Act. Signed into law January 8, 2002.
FOR ADDITIONAL READING
CRS Reports
CRS Report 97-519, Charter Schools: State Developments and Federal Policy Options, by
Wayne C. Riddle, James B. Stedman, and Steven Aleman.
CRS Report RS20289, Education Savings Accounts for Elementary and Secondary
Education, by Bob Lyke and James B. Stedman.
CRS Report RL30165, Educational Vouchers: Constitutional Issues and Cases, by David
M. Ackerman.
CRS Report RL30835, Elementary and Secondary Education: Accountability and Flexibility
in Federal Aid Proposals, by Wayne Clifton Riddle.
CRS Report RL30372, ESEA Title I “Portable Grant” Proposals: Background and Issues,
by Wayne Riddle.
CRS Report 95-344, Federal Support of School Choice: Background and Options, by
Wayne C. Riddle and James B. Stedman.
CRS Report RL31439, Federal Tax Benefits for Families’ K-12 Education Expenses in the
Context of School Choice, by Linda Levine and David Smole.
CRS Report RL31489, Individuals with Disabilities Education Act: Possible Voucher
Issues, by Richard N. Apling, Nancy L. Jones, and David Smole.
CRS Report RS21273, The Law of Church and State: Public Aid to Sectarian Schools, by
David M. Ackerman.
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CRS Report 98-455, Magnet Schools Assistance Program: Overview and Status, by Carol
Glover.
CRS Report RL30663, The Reading Excellence Act: Implementation Status and Issues, by
Gail McCallion.
CRS Report RL30805, School Choice: Legislative Activity by the 104th Through 106th
Congresses, by James B. Stedman.
CRS Report RL31329, Supplemental Educational Services for Children from Low-Income
Families, by David P. Smole.
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