Order Code IB98035
CRS Issue Brief for Congress
Received through the CRS Web
School Choice:
Current Legislation
Updated September 12, 2003
David P. Smole
Domestic Social Policy Division
Congressional Research Service ˜ The Library of Congress

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 Involving Private Schools
Current Federal Choice Programs
ESEA Programs (as Amended by P.L. 107-110)
Major Types of Proposals to Expand Federal School Choice Support
Choice Options in Existing Programs
Demonstration or Targeted Choice Programs
Block Grants
Tax Subsidies
Why Is There Debate Over Federal Support of Expanded School Choice?
LEGISLATION
Proposals in the 108th Congress
House and Senate Bills
Administration Proposal — FY2004 Budget
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School Choice: Current Legislation
SUMMARY
Legislative proposals to provide parents
— the Voluntary Public School Choice pro-
enhanced opportunities to select their chil-
gram.
dren’s schools are varied and widely debated.
Many school choice proposals have been
Public school choice also continues to be
made with the intent of improving the quality
supported under the ESEA through
and increasing the range of educational oppor-
reauthorization of the Innovative Programs,
tunities available to students. Some propo-
Charter Schools Programs, and Magnet
nents of school choice suggest that the avail-
Schools Assistance programs. During floor
ability of school choice will both provide
debates of the NCLBA, both the House and
more students with access to better schools
Senate rejected amendments that would have
and also induce public schools to improve as
authorized federal aid to support school choice
a result of market competition. Some oppo-
programs involving private schools.
nents express concern about potential negative
effects of choice on public schools and their
In June 2002, the Supreme Court ruled
pupils, including the redirection of public
that the Constitution allows for public funding
education resources and an erosion of the ideal
of school vouchers used to support children’s
of a common public education.
attendance at religiously affiliated schools, so
long as their parents also have the opportunity
The 107th Congress expanded the federal
of selecting from among options that include
role in providing support for elementary and
public and private secular schools. This ruling
secondary (K-12) school choice through
allays previous concerns about the constitu-
changes in federal tax policy and through
tionality of directing public funds to reli-
enactment of the No Child Left Behind Act
giously affiliated schools. Still, many state
(NCLBA), which amended and extended the
constitutions may prohibit the transfer of
Elementary and Secondary Education Act
public funds to religiously affiliated schools.
(ESEA). Major new school choice initiatives
of the 107th Congress include:
In the 108th Congress, several bills have
been introduced to expand the range of school
— authorization for distributions from
choices available to the nation’s schoolchil-
Coverdell Education Savings Accounts
dren. Proposals include:
(ESAs) to be used for K-12 education ex-
penses, including private school tuition;
— authorizing federal funding for scholarship
programs to be operated in the District of
— public school choice for students attending
Columbia or in select localities with low-
schools that fail to make adequate yearly
performing schools;
progress (AYP) for 2 consecutive years;
— authorizing federal tax credits for K-12
— supplemental education services for stu-
education expenses, or for contributions to
dents attending schools that fail to make AYP
organizations that provide students with schol-
for 3 consecutive years;
arships to attend private schools; and
— school choice for students who are victims
— authorizing school choice programs for
of violent crimes or attend unsafe schools; and
students with disabilities.
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MOST RECENT DEVELOPMENTS
On September 9, 2003, the House of Representatives voted to approve H.R. 2765, the
FY2004 District of Columbia Appropriations Act, which authorizes and provides funding
for a school voucher program in the District of Columbia. On September 4, 2003, the Senate
Appropriations Committee reported S. 1583, the FY2004 District of Columbia
Appropriations Act, which provides for a federal payment of $40 million for school
improvement, including $13 million to improve public school education, $13 million to
expand quality charter schools, $13 million for a school voucher program, and $1 million for
administration. In the voucher programs contained in both bills, students who are residents
of the District of Columbia and whose family income does not exceed 185% of the poverty
line would be eligible to receive scholarships valued at up to $7,500 per year to support their
attendance at private elementary or secondary schools located in the District of Columbia.
On July 10, 2003, the House Committee on Government Reform approved H.R. 2556,
the DC Parental Choice Incentive Act of 2003. The bill would authorize the establishment
of a competitive grant program under which the Secretary of Education would award grants
to eligible entities for the operation of scholarship programs in the District of Columbia.
Grantees would award scholarships of up to $7,500 per academic year to students who are
residents of the District of Columbia and whose family income does not exceed 185% of the
poverty level to enable them to attend private elementary or secondary schools located in the
District of Columbia. The bill would authorize the appropriation of $15 million for FY2004
and such sums as necessary through FY2008.
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,
with the increase due primarily to greater numbers of children attending chosen public
schools. Across all income levels, greater proportions of students attended public schools
of choice in 1999 than in 1993. However, among students attending schools of choice
(whether public or private), those from lower-income families were more likely to attend a
public school of choice, whereas those from higher-income families were 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 attended a public school to which
they were assigned. (U.S. Department of Education, National Center for Education Statistics,
Statistical Analysis Report, Trends in the Use of School Choice: 1993 to 1999, May 2003.)
The federal government, and 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.
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This issue brief provides an overview of current local, state, and federal policies and
programs that support school choice and identifies and summarizes recent federal school
choice legislation. It is 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
existing 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 also 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 some state tax codes provide 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 ESAs 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
attendance at a private school. Vouchers are sometimes referred to as scholarships or tuition
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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.
There are also privately financed choice options. For example, private groups (such as
STOs) have established programs in many localities to help pay tuition and related costs for
mostly low-income children to attend private elementary and secondary schools. Also, many
families choose to homeschool their children.
Current State and Local School Choice Programs
Involving Private Schools

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; and two states, Florida and Colorado,
have choice programs which provide vouchers for attendance at private (including religiously
affiliated) schools for a limited number of pupils. Also, in Maine and Vermont, public
funding has long been provided to allow children who reside in areas without public schools
to attend private schools.
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. During the 2002-2003
school year, 11,621 students and 102 schools participated in the program with the value of
the voucher set at the lesser of $5,783 or the private school’s per-pupil costs (State of
Wisconsin, Department of Public Instruction, Milwaukee Parental Choice Program (MPCP):
MCPC Facts and Figures for 2002-2003
, Feb. 2003).
The Cleveland Scholarship and Tutoring Program, first implemented in the 1996-1997
school year, allows students in kindergarten through grade 3 to apply to receive scholarships
to enable them to attend a private school located within the boundaries of the Cleveland
Municipal School District or a public school in an adjacent district, or to receive tutoring
grants for tutorial services delivered by a private or governmental provider. Students from
low-income families are given priority in participating in the program. Once accepted,
students may continue to participate in the program through higher grades. Parents of
students attending private schools or receiving tutorial services are reimbursed by the state
for an amount up to either 90% of the cost of tuition (for families with incomes below 200%
of the poverty line), or 75% (for families with incomes at or above 200% of the poverty line),
with the maximum K-8 scholarship amount set at $3,000 for the 2003-2004 school year. The
program was recently expanded to allow students to continue to receive scholarships worth
up to $2,700 for high school tuition. (Ebony Reed, “High School Freshmen Can Use
Vouchers This Fall,” The Plain Dealer, June 30, 2003). Participating private schools must
agree to charge low-income parents tuition of no more than 10% of the scholarship amount,
all of which may be satisfied by in-kind contributions or services. During the 2002-2003
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school year, 5,147 students received tuition scholarships, and 1,112 received tutoring grants
(SchoolChoiceInfo.org. “Cleveland Scholarship and Tutoring Program Student Enrollment.”
(Based on data reported by the Ohio Department of Education) at [http://www.
schoolchoiceinfo.org/facts/index.cfm?fpt_id=5&fl_id=2].) According to testimony in
Zelman v. Simmons-Harris, no adjacent public school districts have elected to accept
students under the program.
In addition to these two local voucher programs, in 1999, the state of Florida
implemented Opportunity Scholarship legislation, which authorizes the provision of
vouchers to pupils in grades K-12 assigned to low-performing public schools that receive an
‘F’ rating for any 2 years during a 4-year period. The vouchers may be used to pay either the
full cost of private school tuition or the costs of enrollment in another public school in the
same or a neighboring county. For school year 2003-2004, nine public schools have been
designated as failing schools. The amount of funding available for attendance at private
schools is based on that generated by the child for the public schools — generally between
$3,600 and $4,300. Participating schools must accept the scholarship as payment in full for
tuition and fees. School districts are required to provide transferring students with
transportation to public schools within the same district, but not to out-of-district public
schools nor to private schools. (Floridachild.org, “Opportunity Scholarships — The Basics
for Families,” at [http://floridachild.org/opportunityscholarships/basics.html]).
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 $4,500 and $21,000. (Alan Richard, “Florida Sees
Surge in Use of Vouchers,” Education Week, Sept. 5, 2002). If the voucher amount is
insufficient to cover the full cost of tuition and the school does not accept the voucher as
payment in full, families are permitted under the program to make additional payments to the
private school, although most families pay either nothing or less than $1,000 above the
voucher amount. During the 2002-2003 school year, 9,202 students participated in the
program. (J.P. Greene and Greg Forster, Vouchers for Special Education Students: An
Evaluation of Florida’s McKay Scholarship Program
, (New York: Center for Civic
Innovation, No. 38, June 2003).
In April 2003, the Colorado Opportunity Contract Pilot Program, a state-wide school
voucher program was enacted. School districts with at least eight schools that earned “low”
or “unsatisfactory” ratings according to state standards must participate in the program, while
other school districts may participate voluntarily. Under the program, parents of students
who are eligible for free or reduced-cost lunches and who are identified as low-performing
students according to academic assessments will become eligible to enter into an
“opportunity contract” with their child’s school district to receive a voucher for payment
toward their child’s tuition at a private school. To be eligible, students also must have been
continuously enrolled in a public school the year prior to participating in the program, or be
entering kindergarten. The value of the voucher is the lesser of the educational cost per pupil
at the private school or a specified percentage of the sending school district’s per-pupil
operating revenues, varying by grade level: 37.5% for kindergartners, 75% for students in
grades 1-8, and 85% for students in grades 9-12. After allocating funds to voucher
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recipients, sending school districts are able to retain any remaining per-pupil operating
revenues (e.g., 63.5%, 25%, or 15%). In the first year of the program, a maximum of 1% of
a district’s students may participate in the program. Over subsequent years, participation
may gradually increases to 6%. (Title 22, Colorado Revised Statutes, Article 56).
Some states support private 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. (Robert E.
Moffit, Jennifer J. Garrett, and Janice A. Smith, School Choice 2001: What’s Happening in
the States
, Washington, D.C., The Heritage Foundation, 2001. Also see National School
Boards Association, at [http://www.nsba.org/novouchers/vsc_state.cfm].)
Colorado was the first state to enact a school choice program since the Supreme Court
decided Zelman v. Simmons-Harris; however, legislatures in a number of other states also
are considering school choice legislation. In addition, several existing school choice
programs are being challenged in the courts. Some of these challenges involve state
constitutional prohibitions against the provision of state aid to support religious activities,
such as education. It is unlikely that these cases will be decided until the Supreme Court
hears Davey v. Locke, an appeal of a lower court ruling which found a provision of the
Washington State constitution, which prohibited a state postsecondary education scholarship
from being used to support the study of theology, to be in violation of the free exercise clause
of the First Amendment. The Supreme Court’s ruling on Davey v. Locke likely will affect
elementary and secondary education school choice programs that involve religiously
affiliated schools. (For a more detailed review of legal issues relating to school choice,
particularly vouchers, see CRS Report RL30165, Education Vouchers: Constitutional Issues
and Cases
, by David M. Ackerman.)
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. Where appropriate, program
descriptions include FY2003 appropriation amounts.
ESEA 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
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school within their LEA, unless prohibited by state or local law or policy. The lowest
achieving children from low-income families must receive priority in choosing alternate
schools. The U.S. Department of Education has issued regulations prohibiting LEAs from
using lack of capacity as a reason for denying students the opportunity to transfer to a school
of choice (34 CFR 200.44(d)). Schools identified for improvement also are required to
implement school improvement plans.
Pupils attending public schools that fail to meet AYP standards for a third consecutive
year must continue to be offered the option of attending another higher-performing public
school within the same LEA. Pupils from poor families who continue to attend a school that
has failed to make AYP for a third consecutive year must be offered supplemental
educational 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 is required to maintain a list of approved supplementary education service
providers (including those offering services through distance learning) from which parents
can select. In instances where a school fails to meet AYP standards for 4 consecutive years,
it must 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 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. LEAs may
be required to expend an amount equal to 20% of their Title I-A grants on transportation for
public school choice and supplemental educational services.
In instances where an LEA fails to make AYP for two consecutive years, the SEA is
required to identify it for improvement, and require the 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 has the option of authorizing students attending a school in that
LEA to transfer to a higher-performing public school in another LEA, with transportation
costs provided by the sending LEA. If an LEA does not meet AYP for 4 consecutive years,
the SEA is 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 2003-2004, $382.5 million is
appropriated for these programs (FY2003: $97.5 million annual appropriation, and $285
million advance appropriation).
Public Charter Schools (ESEA Title V-B-1&2). The 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 40 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
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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.
Under Title V-B-1, the first $200 million appropriated for the Charter Schools Programs
are reserved for grants to states and eligible applicants for the planning, design, and
implementation of public charter schools and for the dissemination of information about
charter schools; for state revolving loan funds; and for national activities. The next $100
million appropriated for Title V-B-1 is reserved for per-pupil facilities aid programs, in
which competitive grants are awarded to states for purposes of establishing and
administering programs dedicated to funding charter school facilities, in whole or in part, on
a per-pupil basis. Fifty percent funds appropriated in excess of $300 million are reserved for
each of the two uses. For FY2003, $198.7 million is appropriated for Title V-B-1.
Title V-B-2 authorizes funding through FY2003 for grants to public or private entities
(or a combination of the two) for the development of credit enhancement initiatives to assist
charter schools in acquiring, constructing, or renovating facilities. (A 1-year extension of the
program is authorized under the General Education Provisions Act (GEPA) (20 U.S.C.
1226a)). For FY2003, $24.8 million is appropriated. For additional information on funding
for charter school facilities, see CRS Report RL31128, Funding for Public Charter School
Facilities: Federal Policy Under the ESEA
.
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 FY2003, $25.8 million is appropriated for these programs.
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 FY2003 $109.3 million is appropriated for these programs.
Fund for the Improvement of Education (ESEA Title V-D-1). The Fund for the
Improvement of Education (FIE) provides the Secretary authority to support nationally
significant programs aimed at improving the quality of elementary and secondary education
at the state and local levels. Programs may be carried out directly by the Secretary, or
through grants or contracts. Specifically authorized uses of FIE funds include, among others,
the exploration of state and local public school choice programs. For FY2003, $318.1
million is appropriated for FIE programs.
School Choice Offered to Pupils Attending Unsafe Schools. Each state
receiving ESEA funding is 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.
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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.
Coverdell Education Savings Accounts. Distributions from Coverdell ESAs
may be used for elementary and secondary education expenses at public, private, or
religiously affiliated elementary or secondary schools. Annual contributions to Coverdell
ESAs are limited to $2,000. For further information on this tax benefit, 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 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
may consider appropriations language directing how program funds may be spent. The
primary examples of proposals in this category have involved ESEA Title I-A. As previously
noted, Title I-A contains certain choice-related provisions authorizing or requiring public
school choice and the provision of supplemental educational services for students attending
poorly performing Title I-A schools. Previously attempted choice amendments to Title I-A
also have endeavored to include private school enrollment among its choice options.
Additionally, over time the ESEA has been amended to be supportive of public school choice
through the addition of the Innovative Programs, Public Charter Schools, Voluntary Public
School Choice, and Magnet Schools programs. Some have proposed amending the
Individuals with Disabilities Education Act (IDEA) to include a school choice component.
Demonstration or Targeted Choice Programs. Federal support for school
choice might be designed 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, high-poverty LEAs, or the District of Columbia) 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 those in
certain types 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
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“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 IRC
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 ESAs are a current example of a tax
subsidy supportive of elementary and secondary education school choice (these accounts also
support postsecondary education expenses). Proposals also have been made to provide 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
).
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 remains elusive; 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. 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. The
reaction to the ESEA Title I-A school choice provisions requiring LEAs to provide
intradistrict public school choice (including transportation) to students assigned to schools
identified for school improvement and to offer supplemental education services to students
from low-income families assigned to schools identified for a second year of school
improvement has been mixed.
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
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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 have likely been 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
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
Proposals in the 108th Congress
In the 108th Congress, numerous bills have been introduced to increase federal support
of school choice at the elementary and secondary education level. Proposals include those
that would amend the Internal Revenue Code (IRC) of 1986 to support school choice through
the creation of new tax credits or the expansion of existing credits; those that would provide
federal funding of voucher or scholarship programs to be used to provide select students
(e.g., students with disabilities, or low-income students in the District of Columbia) with the
opportunity to attend public or private schools of choice; and those that would amend
existing school choice provisions under the ESEA.
House and Senate Bills. Brief descriptions of a selection of bills introduced during
the 108th Congress explicitly supporting school choice are provided below, as is a description
of the administration’s proposal to increase school choice, which was included in the
President’s FY2004 Budget. Bills in which the support for school choice is incidental or that
would extend education tax benefits currently scheduled to expire are not addressed.
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H.R. 120 (Hoekstra, et al.)
Voluntary Opportunities for Increasing Contributions to Education Act. Amends the
IRC to allow a non-refundable tax credit of up to $500 per year for individuals ($1,000 for
joint filers) and $100,000 for corporations for 75% of qualified charitable contributions made
on behalf of elementary or secondary schools, including contributions to STOs. Introduced
January 7, 2003; referred to Committee on Ways and Means.
H.R. 282 (Hoekstra, et al.)
Education Freedom Act. Amends the IRC to allow a tax credit of up to $250 per year
for individuals ($500 for joint filers) and $50,000 for corporations for 50% of qualified
charitable contributions to education investment organizations which make grants for
qualified elementary and secondary education expenses, or to public, private, or religious
elementary or secondary schools. Elementary and secondary school expenses would be
expanded to include home school expenses. Introduced January 8, 2003; referred to
Committee on Ways and Means.
H.R. 385 (Shadegg)
Leave No Child Behind Tax Credit Act of 2003. Amends the IRC to allow a non-
refundable tax credit of up to $250 ($500 for joint filers) for contributions to STOs that
award scholarships for the purpose of assisting children to attend elementary or secondary
schools. Introduced January 27, 2003; referred to Committee on Ways and Means.
H.R. 499 (Smith, Christopher)
Education, Achievement, and Opportunity Act. Amends the IRC to allow a refundable
income tax credit for qualifying education expenses incurred for each qualifying child of a
taxpayer to attend a public or private elementary or secondary school. A credit of up to
$2,500 would be allowed for elementary school expenses, and up to $3,500 for secondary
school expenses. Introduced January 29, 2003; referred to Committee on Ways and Means.
H.R. 611 (Paul, et al.)
Education Improvement Tax Cut Act. Amends the IRC to allow a non-refundable tax
credit of up to $3,000 for contributions to STOs that award scholarships for the purpose of
assisting children to attend elementary or secondary schools. Also, amends the IRC to allow
a non-refundable tax credit of up to $3,000 for qualified school materials contributions to
elementary or secondary schools or to school materials organizations. Introduced February
5, 2003; referred to Committee on Ways and Means.
H.R. 612 (Paul, et al.)
Family Education Freedom Act of 2003. Amends the IRC to allow a non-refundable
tax credit of up to $3,000 for qualified elementary and secondary education expenses at a
public, private, or home school. Introduced February 5, 2003; referred to Committee on
Ways and Means.
H.R. 615 (Paul, et al.)
Hope Plus Scholarship Act of 2003. Amends the IRC with respect to the Hope
Scholarship Credit (currently available for postsecondary education expenses) to include as
qualified tuition and related expenses, elementary and secondary education expenses and
contributions to the school (other than a home school) attended by a taxpayer’s dependent.
Introduced February 5, 2003; referred to Committee on Ways and Means.
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H.R. 684 (Flake, et al.)
District of Columbia Student Opportunity Scholarship Act of 2003. Establishes the
District of Columbia Scholarship Fund for the purpose of awarding scholarships to District
of Columbia residents from families with incomes not exceeding 185% of the poverty line
for attendance at elementary and secondary schools (including private schools) in the District
of Columbia and seven surrounding jurisdictions, or for the receipt of supplemental
educational services. Limits scholarship awards to $5,000 for students from families below
the poverty line and $3,750 for students above the poverty line. Limits scholarships for
supplemental educational services to $800. Introduced February 11, 2003; referred to
Committee on Government Reform.
H.R. 947 (Weiner, et al.)
School Capacity Relief Act. Amends the ESEA to allow LEAs to prohibit the transfer
of students under public school choice provisions to schools that are at or above capacity or
in which the transfer of such students would increase average class size to a level above that
prescribed by the state. Requires LEAs, to the extend practicable, to establish cooperative
agreements with other LEAs to accept transfer students in instances where all the public
schools in the LEA are ineligible to accept them. Authorizes grants to increase the school
capacity of high-performance schools in LEAs in which a significant number or percentage
of students attend schools identified for school improvement, corrective action, or
restructuring. Introduced March 17, 2003; referred to Subcommittee on Education Reform.
H.R. 1373 (DeMint, et al.)
IDEA Parental Choice Act of 2003. Amends the IDEA to authorize funding for grants,
contracts, and cooperative agreements with eligible entities to support the planning, design,
and implementation of state school choice programs for students with disabilities. In states
with school choice programs for students with disabilities, permits IDEA funding to
supplement state funding; provides that authorization of a parent to exercise private school
choice under such a program fulfills the state’s obligation to provide a free appropriate public
education to the parent’s child while the child is enrolled in the private school; and provides
that acceptance by a private school of IDEA funding deems it to be providing a free
appropriate public education and to be in compliance with section 504 of the Rehabilitation
Act of 1973. Authorizes the use of IDEA funding to support the accommodation of students
with disabilities who are eligible to receive supplemental education services under the ESEA.
Introduced March 20, 2003; referred to Subcommittee on Education Reform.
H.R. 1575 (Paul)
Help and Opportunities for Parents of Exceptional Children Act of 2003. Amends the
IRC to provide a non-refundable credit of up to $3,000 per child with a disability for
qualified educational expenses associated with the child’s attendance at a public, private
(including religiously affiliated), or home school. Introduced April 2, 2003; referred to
Committee on Ways and Means.
H.R. 2147 (Andrews)
Amends the Charter Schools Program (ESEA Title V-B-1) to require the Secretary and
SEAs to give priority in awarding grants to applicants implementing charter schools that
present evidence that the charter school will provide a racially integrated educational
experience and of outreach by the LEA to diverse students. Introduced May 19, 2003;
referred to Committee on Education and the Workforce.
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H.R. 2347 (Franks, et al.)
Children’s Hope Act of 2003. Amends the IRC to allow a non-refundable tax credit of
up to $100 ($200 for joint filers) for contributions to STOs that award grants primarily to
students from low-income families for qualified elementary and secondary education
expenses. Eligibility to claim the credit would be limited to taxpayers in states that provide
state qualified scholarship tax credits of at least $250 per taxpayer for contributions to STOs.
Introduced June 5, 2003; referred to Committee on Ways and Means.
H.R. 2556 (Davis, et al.)
DC Choice Incentive Act of 2003. Authorizes the establishment of a program under
which the Secretary of Education would award grants to entities for the operation of
scholarship programs in the District of Columbia. Grantees would award scholarships of up
to $7,500 per academic year to students who are residents of the District of Columbia and
whose family income does not exceed 185% of the poverty level to enable them to attend
private elementary or secondary schools located in the District of Columbia. Authorizes the
appropriation of $15 million for FY2004 and such sums as necessary through FY2008.
Introduced June 23, 2003; referred to Committee on Government Reform. Ordered to be
reported (amended) by the Yeas and Nays (21-20), July 10, 2003.
H.R. 2732 (Musgrave, et al.)
Home School Non-Discrimination Act of 2003. Amends provisions of the Higher
Education Act of 1965 (HEA), IDEA, IRC, and Family Educational Rights and Privacy Act
of 1974 (FERPA) with respect to home schooling. Supports school choice through home
schooling by allowing distributions from Coverdell ESAs to be used for elementary or
secondary education expenses at any home school which is treated as either a home school
or a private school under State law. Introduced July 15, 2003; referred to Committees on
Education and the Workforce, and Ways and Means.
H.Amdt. 90 to H.R. 1350 (DeMint)
Amends the IDEA to provide that in states with publicly funded school choice programs
for students with disabilities, federal funds may be used to supplement state funding for a
child’s attendance at a private school. Provides that authorization of a parent to exercise
private school choice under such a program fulfills the state’s obligation to provide a free
appropriate public education to the parent’s child while the child is enrolled in the private
school; and provides that acceptance by a private school of IDEA funding deems it to be
providing a free appropriate public education and to be in compliance with Section 504 of
the Rehabilitation Act of 1973. Introduced April 30, 2003; failed by recorded vote: 182-240.
H.Amdt. 92 to H.R. 1350 (Musgrave)
Amends the IDEA to allow LEAs to meet their responsibilities with respect to the
education of students enrolled by their parents in private schools by offering the parents of
such students certificates valued at the lesser of the per-pupil amount of federal funds
available for such students, or the cost of special education and related services. Introduced
April 30, 2003; failed by recorded vote: 176-247.
H.Amdt. 368 to H.R. 2765 (Davis)
Authorizes a school voucher program in the District of Columbia. Students from
families with incomes not exceeding 185% of the poverty line would be eligible to receive
scholarships valued at up to $7,500 per year to support their attendance at private elementary
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and secondary schools in the District of Columbia. Offered September 5, 2003; agreed to
by recorded vote: 209-208. H.R. 2765 agreed to by recorded vote: 210-206.
S. 4 (Gregg, et al.)
Opportunity for Every Child Act of 2003. Authorizes federal funding for education
certificates to be awarded to students eligible for free or reduced price meals who are
assigned to schools identified for school improvement and who are unable to transfer to a
school not identified for school improvement to enable them to attend a private school.
Eligible state, local, or non-profit entities may award federally funded education certificates
that do not exceed the amount of per pupil expenditures in a recipient student’s LEA.
Establishes the District of Columbia Scholarship Fund, managed by a publicly
appointed board of directors, for the purpose of awarding scholarships to District of
Columbia residents from families with incomes not exceeding 185% of the poverty line for
attendance at elementary and secondary schools (including private schools) in the District
of Columbia and seven surrounding jurisdictions or for the receipt of supplemental
educational services. Limits scholarship awards for students from families below the poverty
line to the lesser of District of Columbia per pupil expenditures or the cost of attendance at
the school attended; limits scholarships for supplemental educational services to $800.
Amends the IRC to allow families with a child otherwise assigned to a school identified
for school improvement to claim a refundable tax credit of up to 50% of the first $5,000 in
expenses incurred to enroll their child in a public or private school not identified for school
improvement. Introduced February 14, 2003; referred to Committee on Health, Education,
Labor, and Pensions.
S. 1078 (Landrieu, et al.)
Stable Transitions in Education for Armed Services’ Dependent Youth Act. Establishes
a 5-year demonstration program to assist states and LEAs in establishing high quality
military charter schools which enroll primarily military dependent elementary and secondary
school students. Introduced May 19, 2003; referred to Committee on Health, Education,
Labor, and Pensions.
S. 1551 (McCain)
Excellence through Choice to Elevate Learning Act. Establishes a three year national
school choice demonstration grant program to provide scholarships valued at up to $2,000
per year to children from low-income families who are assigned to poorly performing public
schools to enable them to attend different public or private schools in the state. Introduced
July 31, 2003; referred to Committee on Health, Education, Labor, and Pensions.
S. 1562 (Craig, et al.)
Home School Non-Discrimination Act of 2003. Amends the IRC to allow distributions
from Coverdell ESAs to be used for qualified elementary and secondary education expenses
supporting attendance at homeschools if such schools are treated as homeschools or private
schools under state law. Introduced August 1, 2003; referred to Committee on Finance.
S. 1583 (DeWine)
FY2004 District of Columbia Appropriations Act, Title II — DC Student Opportunity
Scholarship Act of 2003. Provides for a federal payment of $40 million for school
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improvement, including $13 million to improve public school education, $13 million to
expand quality charter schools, $13 million for the DC Student Opportunity Scholarship Act,
and $1 million for administration. The DC Student Opportunity Scholarship Act authorizes
the establishment of a competitive grant program under which the Secretary of Education
would award grants to entities for the operation of scholarship programs in the District of
Columbia. Students who are residents of the District of Columbia and whose family income
does not exceed 185% of the poverty level would be eligible to receive scholarships valued
at up to $7,500 per academic year to support their attendance at private elementary or
secondary schools located in the District of Columbia. Introduced September 4, 2003;
Reported by Committee on Appropriations (S.Rept. 108-142); Placed on Senate Legislative
Calendar under General Orders.
Administration Proposal — FY2004 Budget. In its FY2004 budget request, the
administration proposes two new school choice initiatives: a refundable tax credit for 50%
of up to the first $5,000 in costs associated with attending a different public or private school,
and paid by the taxpayer, for families whose children are assigned to a public school that has
failed to make AYP according to ESEA requirements; and a choice incentive fund. The
administration requests increased funding for the Public Charter Schools Programs, to
include funding for per-pupil facilities aid programs and for credit enhancements for charter
school facilities. Continued funding also is proposed for the following ESEA Title V
programs: Innovative Programs, Voluntary Public School Choice, and Magnet Schools.
Descriptions of existing ESEA Title V programs are provided above. The following
provides a description of the administrations two proposed school choice initiatives.
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 taxpayers qualifying child, to a different qualifying elementary
or secondary school. The refundable credit would apply toward both a taxpayers 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. The
Department of the Treasury estimates that receipt and outlay effects of the program would
total $3.32 billion over 5 years (FY2004 through FY2008).
Under the administrations 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 students 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
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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 taxpayers
son, daughter, stepson, stepdaughter, sibling, stepsibling (or descendant of such individuals),
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
Administrations Fiscal Year 2004 Revenue Proposals
, Feb. 2003, pp. 40-42).
Choice Incentive Fund. The Choice Incentive Fund would provide competitive awards
to states, LEAs, and CBOs that expanded opportunities for parents of children who attend
low-performing schools to attend higher-performing public schools (to include charter
schools) or private schools. Priority would be given to applicants that would provide
expanded school choice opportunities to large numbers of students. The administration is
requesting $75 million to fund the program. Of these funds, a portion would be reserved for
school choice programs in the District of Columbia.
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 RL32019, The DC Parental Choice Incentive Act of 2003: Policy Issues and
Analysis, by David P. Smole.
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 RS21254, Education Vouchers: An Overview of the Supreme Courts Decision
in Zelman v. Simmons-Harris, by Christopher Jennings.
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.
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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