Federal Support of School Choice: Background and Options

Federal Support of School Choice: Background and Options

95-344 EPW
CRS Report for Congress
Received through the CRS Web
Federal Support of School Choice:
Background and Options
Updated April 30, 1998
Wayne C. Riddle
Specialist in Education Finance
and
James B. Stedman
Specialist in Social Legislation
Education and Public Welfare Division
Congressional Research Service ˜ The Library of Congress

Federal Support of School Choice:
Background and Options
Summary
Efforts to implement and expand school choice programs, which offer parents
the opportunity to select their children’s schools, are widely debated. The federal
government currently supports public school choice through the Magnet Schools
Assistance program, the Public Charter Schools program, state systemic reform under
the Goals 2000: Educate America Act, and Title I of the Elementary and Secondary
Education Act (ESEA). Legislation providing additional federal support of school
choice has been considered by the 105th Congress, including proposals to provide
private and public school scholarships for low-income pupils in the District of
Columbia, to allow withdrawals from tax-advantaged education savings accounts for
private and public elementary and secondary education expenses, to authorize use of
block grant funds for private school scholarships, and to expand the Public Charter
Schools program.
Congressional consideration of choice options will be influenced by many
factors. There is no single model of a school choice program; rather, choice programs
vary substantially in the ways they address a broad array of key features. Among
these features are the specific objectives sought, educational sectors involved, eligible
students, limitations on student choice, and level of financial support for choice.
Many states and localities are already engaged in school choice efforts that fall into
one or more of several general categories: intradistrict public choice (students may
choose among some or all public schools in a district); interdistrict public choice
(students may choose public schools in different districts); charter schools; and private
school choice. The last includes privately run voucher programs as well as state-
sponsored voucher programs for specific cities.
There are many possible federal options for supporting school choice, ranging
from relatively modest modifications of current programs to establishment of
expansive new legislative authorities. The options have different consequences for
the federal financial commitment, scope of the choice effort, and state and local
flexibility. Among the potential options for legislative action by the 105th Congress
are the following: modify current programs to remove possible “barriers” to school
choice; expand the current choice authority in the ESEA Title I program or authorize
provision of Title I aid in the form of vouchers; establish a choice demonstration
program; expand the current Magnet Schools Assistance program; expand the current
Public Charter Schools authority; create an education block grant program that
includes choice as an authorized use of funds; or establish new tax allowances for
elementary and secondary education tuition and fees. Bills have been introduced in
several of these areas.
Finally, the widespread state and local activity in promoting school choice, and
the absence of conclusive evidence concerning the impact of school choice programs
on students’ academic achievement or the distribution of students among schools,
raise questions regarding whether federal action would substantially increase choice
options beyond what would otherwise be available, and what the academic and social
effects would be of any federally supported increase in choice opportunities.

ABSTRACT
Efforts to offer parents the opportunity to select their children’s schools are widely
debated. The federal government currently supports public school choice through the Magnet
Schools Assistance program, the Public Charter Schools (PCS) program, state systemic
reform under the Goals 2000: Educate America Act, and Title I of the Elementary and
Secondary Education Act. Legislation providing additional federal support of school choice
has been considered by the 105th Congress, including proposals to provide private and public
school scholarships for low-income pupils in the District of Columbia, to authorize tax-
advantaged education savings accounts for private and public elementary and secondary
education expenses, to authorize the use of block grant funds for private school scholarships,
and to expand the PCS program. This report provides background information on school
choice programs throughout the Nation, federal aid to those programs, plus discussion and
analysis of current legislation regarding school choice. This report will be updated regularly,
to reflect congressional action on legislation regarding school choice and related developments
in state and local educational agencies.

Contents
Legislative Status and Recent Developments . . . . . . . . . . . . . . . . . . . . . . . 1
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Major Findings and Conclusions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Background . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Key Features of Choice Programs in General . . . . . . . . . . . . . . . . . . . 3
State and Local Choice Programs . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Federal Choice Programs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Selected Options For New or Expanded Federal Support . . . . . . . . . . . . . . 8
Legislative Proposals in the 105th Congress . . . . . . . . . . . . . . . . . . . . 9
Legislative Proposals in the 104th Congress . . . . . . . . . . . . . . . . . . . 15
General Framework for Consideration of Federal Options . . . . . . . . 18
Selected Options for Federal Support . . . . . . . . . . . . . . . . . . . . . . . . 20
Issues Regarding the Federal Options in General . . . . . . . . . . . . . . . . . . . 29
What are the Effects of School Choice? . . . . . . . . . . . . . . . . . . . . . . 29
Educational Quality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Racial and Ethnic Integration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Socioeconomic Distribution of Students . . . . . . . . . . . . . . . . . . . . . . 31
Would Additional Federal Support of School Choice Have
Significant Effects? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31

Federal Support of School Choice:
Background and Options
Legislative Status and Recent Developments
Action has occurred on several legislative proposals for increased federal support
of school choice in the 105th Congress.
! On April 23, 1998, the Senate passed H.R. 2646, a bill to exempt from
taxation the earnings of education savings accounts used to pay for
elementary and secondary school expenses, and to increase the maximum
annual amount of contributions to such accounts. This bill was amended
during Senate floor debate to add numerous other provisions; an amendment
to increase tax benefits for individual contributions to privately-established
school voucher programs was considered but not adopted. On October 23,
1997, the House passed a version of H.R. 2646 that included only the
education savings account provisions.
! The “District of Columbia Student Opportunity Scholarship Act of 1997" (S.
1502, H.R. 1797, S. 847) would provide scholarships to District of Columbia
resident students in low-income families to attend public or private schools
in the District or nearby suburbs, or to pay the costs of supplementary
academic programs. S. 1502 was passed by the Senate on November 9, 1997,
and in identical form by the House on April 30, 1998. The President has
stated that he will veto the bill when he receives it.
! On November 7, 1997, the House passed H.R. 2616, the “Community-
Designed Charter Schools Act of 1997", that would expand and modify the
Public Charter Schools program. Charter schools are public schools that are
released from many types of regulation; they are generally schools of choice.
A similar bill, S. 1380, has been introduced in the Senate.

! On November 5, 1997, the House considered but did not pass H.R. 2746, the
“Helping Empower Low-income Parents (HELP) Scholarships Amendments
of 1997", which would have amended ESEA Title VI, “Innovative Education
Program Strategies”, to allow the use of funds for private school
scholarships, in accordance with state law.
Several other school choice proposals have been introduced in the 105th
Congress. Among these proposals are bills that would provide federal assistance to
demonstration programs of public and private school choice for educationally
disadvantaged or low-income children attending “unsafe” schools (S. 1) or in
“renewal communities” (H.R. 1031, S. 432). Other bills would authorize tuition tax

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credits for pupils attending private elementary or secondary schools (H.R. 318, H.R.
1633, and H.R. 1816).
Recent judicial developments may affect legislative action on school choice
proposals. On May 1, 1997, a state court of appeals ruled that the Cleveland
voucher program provides aid to religious institutions which violates both the federal
and state constitutions, and that the program further violates the Ohio constitution
because it is available in only one school district. However, the court did not order
an immediate cessation of the program, and the ruling is being appealed to the Ohio
Supreme Court. Finally, on June 23, 1997, in deciding the case of Agostini v.
Felton, the U.S. Supreme Court reversed a 1985 ruling that prohibited local
educational agencies from sending public school teachers into religiously affiliated
private schools to provide Title I, Elementary and Secondary Education Act services
to eligible children.
Introduction
School choice has become a popular, though widely debated, approach to
reforming elementary and secondary education. Many states and localities throughout
the Nation have created and are supporting these programs to increase parents’
control over the selection of schools in which their children are to enroll. The U.S.
Congress, which in recent years has enacted several school choice provisions and
debated others, is considering new legislative initiatives promoting school choice.
This report analyzes selected legislative options for the Congress with regard to
school choice. It begins with a background section that identifies key features of
choice programs in general, reviews current state and local district choice efforts, and
describes current federal programs supporting choice. This background provides a
context for consideration of legislative options at the federal level. The report
identifies seven broad options that may be considered, and analyzes their potential
impact in terms of such factors as cost and expansion of choice opportunities for
students. The concluding section explores the issue of the justification for federal
support of school choice. It focuses on the arguments made concerning choice’s
impact on student achievement and the distribution of students among schools, and
on specific rationales for additional federal support of school choice.
Major Findings and Conclusions. Among the findings and conclusions
presented in this report concerning federal options for new or expanded support of
school choice, the following are particularly significant:
! school choice is already being supported in many states and localities, and by
several federal legislative authorities;
! choice is a complex phenomenon with no single consensus model;
! there are many possible federal options that range from relatively modest
modifications of current programs to establishment of expansive new
legislative authorities;

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! the federal options considered here have different consequences for the level
of federal financial commitment, breadth of choice efforts supported, and state
and local flexibility;
! there is an absence of conclusive evidence concerning the impact of school
choice programs on students’ academic achievement or the distribution of
students among schools; and
! the widespread state and local activity in promoting school choice may raise
questions regarding the role of federal action in this area.
Background1
New efforts to establish sources of federal support for school choice are not
undertaken in a vacuum. As is delineated in this section, several federal legislative
authorities already encourage and finance school choice activities. Further, many
states and localities are engaged in the implementation of school choice. It is
important to consider the diversity and extent of those efforts in designing any new
federal initiative and in considering whether to provide additional federal support.
This section begins with an overview of the key features of school choice programs
in general.
Key Features of Choice Programs in General. School choice programs
provide parents with new or increased control over the selection of their children’s
educational program or setting. These programs may vary substantially in how they
address many key features. As a result, the choice programs being planned and
implemented across the country often differ in their general structure and in their
details. The implications of this variety are considered in the concluding section of
this report. Among the key features of choice programs are the following:
! specific objectives sought (among the possibilities are academic achievement
gains, administrative reform, and voluntary desegregation of school
enrollments);
! levels of education involved (elementary, secondary, postsecondary);2
! educational sector involved (public, private, religiously affiliated);
! students eligible to exercise choice (all students or some subset of students
determined in various ways, such as by level of family income or educational
performance);
! schools students can choose (unfettered choice for eligible students among
eligible schools, or imposition of certain limits, such as those arising from

1 Some of the analysis below is drawn from School Choice in 1993: Status and Issues, CRS
Report 93-1059, by James B. Stedman.

2 Postsecondary involvement in elementary and secondary school choice will be discussed in
the overview of current state and local choice efforts.

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efforts to create or maintain racial and ethnic balance in individual schools, or
from selective admissions standards applied by individual schools);
! administrative units participating (individual schools, one school district,
multiple districts, states);
! level of financial support for different aspects of a choice program (the portion
of students’ tuition, fee, transportation, or other costs of exercising choice met
by the program);
! form of financial support for students’ choices (direct to students’ families,
such as through vouchers, or indirectly made available, such as through tax
credits or deductions for elementary and secondary expenses); and
! auxiliary and supporting activities (including efforts to provide services, such
as information dissemination, and to provide families with substantive choices
by promoting curricular and other innovations in participating schools).
The options section of this report considers these and other features in its analysis of
how federal support for school choice might be structured.
State and Local Choice Programs. Many states and localities are currently
supporting school choice programs at their own initiative.3 This portion of the report
provides a brief overview of some of those activities. Four broad categories of
choice, or choice-related, programs, which often vary significantly in terms of the
features identified above, are considered below:
! intradistrict public choice (students may choose among some or all public
schools in a district);
! interdistrict public choice (students may choose public schools in different
districts);
! charter schools (schools operated under charters with public authorities; often
with attendance policies involving student choice); and
! private school choice.4
Intradistrict Public Choice. Intradistrict public choice programs may be
initiated locally or at the state level. A primary example of intradistrict choice efforts
initiated locally are the magnet schools or programs undertaken to promote school
3 Information on where choice programs are being implemented or have been statutorily
established was derived in part from: Heritage Foundation. School Choice Programs:
What’s Happening in the States. 1995 Edition. March 1995; various overviews of charter
schools, school choice, and voucher programs by the National Education Association; and
review of selected state laws.
4 These categories are not mutually exclusive. For example, a state or locality could
implement interdistrict choice programs that involve private schools.

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desegregation in an estimated 2,400 schools in some 230 districts.5 Often cited in the
debates over school choice are the locally initiated magnet school efforts known as
controlled choice, underway in several urban school districts such as Montclair, New
Jersey, and Cambridge, Massachusetts.6 A primary objective of these programs is to
accomplish voluntary desegregation through the use of closely monitored and
controlled choice. In general, parents of students in the grades participating in one
of these programs have no neighborhood school and must choose the schools in
which their children will enroll. A district attempts to honor parents’ choices to the
extent possible, as long as those choices do not increase racial and ethnic isolation in
its schools. Among steps that a controlled choice district is likely to take are
intervention to improve schools that are unpopular with parents, extensive
information dissemination, and encouragement of innovation and diversity among its
schools in order to offer parents many viable and distinct alternatives.
State-initiated intradistrict choice initiatives can be found in approximately nine
states. These differ not only in terms of whether they are voluntary or mandatory for
individual districts (in most of these states, the choice option is mandatory), but also
in terms of limits that may be placed on intradistrict transfers (e.g., space limitations
or consequences for desegregation plans) and whether all districts in a state or only
selected districts are involved.
Interdistrict Public Choice. Interdistrict choice programs offer students
educational choices within the public sector that take them across school district lines.
The key differences among these programs include whether district level participation
is voluntary or mandatory; what the financial consequences are for sending and
receiving districts; the extent to which transportation costs are met with public funds;
attention to the distribution of racial and ethnic minorities among districts; the
acceptable reasons for parental exercise of the choice option; the number of districts
involved; and the number of students involved. At least 18 states either mandate
interdistrict choice for LEAs or permit districts to participate in such efforts.
There are several other kinds of programs that involve interdistrict choice. For
example, approximately a dozen states expand academic offerings available to high
school students by meeting the costs of postsecondary education courses taken for
high school credit. Also, several urban school districts, such as St. Louis and
Indianapolis, are implementing desegregation plans that support student transfers
between their schools and schools in neighboring suburban districts.
5 Steel, Lauri, and Roger Levine. Educational Innovation in Multiracial Contexts: The
Growth of Magnet Schools in American Education. Prepared for the U.S. Department of
Education. American Institutes for Research, 1994. p. vi. Some districts may be required
to implement magnet school programs, such as under the terms of court orders for school
desegregation.
6 Among the analyses of controlled choice programs are: Glenn, Charles L. Controlled
Choice in Massachusetts Public Schools. Public Interest, spring 1991; and Clewell, Beatriz
C., and Myra F. Joy. Choice in Montclair, New Jersey. Educational Testing Service,
January 1990.

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Charter Schools.7 Twenty-nine states, the District of Columbia, and Puerto
Rico have enacted legislation for the creation and operation of charter schools. The
characteristics of charter schools established under these various statutes differ
substantially in terms of such features as purposes, chartering entity (such as the local
district, a state board of education, or other state authority), financial support, and
extent of regulatory and statutory flexibility. Charter schools may be part of school
choice programs. Most, but not all, charter schools are open to all students from
within the schools’ original attendance areas and their local educational agencies’
boundaries. Further, in some states, charter schools are to be open to enrollment
from outside of their districts’ boundaries.
Private School Choice. Of increasing importance in the public policy debate on
choice is the question of whether public funds should be used to finance student
attendance at private schools, particularly ones that are sectarian (religiously
affiliated). Programs providing such support are often identified as voucher or
scholarship programs. In several cities, programs have been established by private
business corporations to subsidize low-income families’ enrollment of their children
in private schools, including sectarian schools.
Currently, there are only a few programs that permit public funds to support
students’ choosing to enroll in private schools; some of these are limited to enrollment
in nonsectarian schools. The most prominent example of state subsidy for such
enrollment is the program providing private school tuition vouchers worth
approximately $4,400 to each of approximately 1,500 children from low-income
families in the Milwaukee, Wisconsin school district. This program was initiated in
the 1990-91 school year; implementation of subsequent legislation to expand this
program to include religiously affiliated schools is being blocked by a state Supreme
Court injunction stemming from litigation over its constitutionality under the U.S. and
Wisconsin constitutions. Oral arguments in this case were presented to the Wisconsin
Supreme Court in March 1998. In add
8
ition, parents in at least one town in Vermont
(Chittenden) have challenged in court the exclusion of religiously-affiliated schools
from a program in which private school tuition may be paid from public funds on
behalf of high school students in certain localities. A state court has rejected thi
9
s
challenge, but that decision has been appealed to the Vermont Supreme Court, which
heard arguments on this case in March 1998.10
Beginning with the 1996-97 school year, state support for private school choice
has been provided on behalf of approximately 3,000 low-income students in the
7 For additional information on charter schools, see Charter Schools: State Developments
and Federal Policy Options, CRS Report 97-519, by Wayne Riddle, James Stedman, and
Steven Aleman.
8 Vouchers Face Key Legal Test in Wisconsin. Education Week. March 11, 1998.

9 The population of some Vermont towns is considered to be too small to justify establishment
of a public high school. In these towns, public funds are used to pay the costs of attending
either a private high school or a public high school in a nearby school district. Religiously-
affiliated high schools have been excluded from this program.
10 Vt. Voucher Claim Rejected. Education Week. July 9, 1997. See also footnote 8.

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Cleveland, Ohio, school district. This program authorizes financial assistance for
enrollment in public schools outside of the district, as well as private schools,
including religiously affiliated schools, within the district’s boundaries. In practice,
approximately 80% of the participating pupils attend religiously-affiliated private
schools in Cleveland, and no suburban public school systems have agreed to accept
pupils under the program. On May 1, 1997, a state court of appeals ruled that the
11
Cleveland voucher program provides aid to religious institutions which violates both
the federal and state constitutions, and that the program further violates the Ohio
constitution because it is available in only one LEA. However, the court did not order
an immediate cessation of the program; the ruling is being appealed to the Ohio
Supreme Court, which is scheduled to hear arguments on the case in the spring of
1998. The state has recently extended the authorization for the program for an
additional 2 years .
12
Privately-Established School Voucher Programs. In recent years, non-
governmental programs have been established in a number of localities to help pay
tuition and related costs of private elementary and secondary school attendance for
pupils from low-income families. These programs have no relationship to
governmental programs or agencies at the federal, state, or local levels, except that
contributions to them may qualify for personal income tax deductions, as charitable
contributions, and the programs may be tax exempt in other respects. These
privately-established and -funded voucher programs are typically limited to one or a
small number of localities, especially in core urban areas. Most of these programs are
relatively small in scale, supporting at most several hundred pupils in a locality per
year, although there are comparatively large programs in Indianapolis, Ind., and
Milwaukee, Wis., and the San Antonio, Texas area. Several of these ar
13
e
coordinated by CEO America, a private organization which provides technical
assistance and attempts to attract contributions to these programs in several
localities.
14
Federal Choice Programs. Several federal legislative authorities currently
provide relatively limited support for school choice efforts. These are only briefly
cited here; some are considered in more detail in the later analysis of federal options.15
The Magnet Schools Assistance program, authorized by the Elementary and
Secondary Education Act (ESEA, Title V, Part A) supports magnet schools in local
educational agencies (LEAs) that are implementing school desegregation plans.
These schools, with special programmatic and other features, are designed to
Voucher Plan in Cleveland is Overturned.
11
Education Week. May 7, 1997. p. 1.
1 Cleveland’s Voucher Program Renewed for 2 Years.
2
Education Week. July 9, 1997. p.
17.
Private Voucher Programs.
13
Education Week. May 28, 1997.
On the Internet, see http://www.ceoamerica.org/programs.html.
14
15 Each of the programs described below is also covered in: Improving America’s Schools
Act: An Overview of P.L. 103-382, CRS Report 94-872, coordinated by James B. Stedman;
and Goals 2000: Overview and Analysis, CRS Report 94-490, by James B. Stedman.

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accomplish voluntary desegregation through the mechanism of parental choice. The
FY1998 appropriation for this program is $101 million.
The education for the disadvantaged program under ESEA Title I addresses
school choice in several ways. Among them are provisions that: authorize a waiver
allowing schools with 25% low-income enrollment to participate in Title I if they are
involved in desegregation programs under which students change schools (otherwise,
the threshold is 35%); and permit LEAs to use Title I funding to establish choice
programs involving public schools with Title I programs. These provisions were
added in 1994 and no information is yet available on the extent of their use.
Under the state systemic reform grants authorized by Title III of Goals 2000:
Educate America Act, state educational agencies (SEAs) may use the funds available
for state level activities (40% in initial year, 10% in subsequent years) for promoting
public school choice, including magnet and charter schools. At this juncture, it is not
known the extent to which Goals 2000 funds might be supporting school choice.
The Public Charter Schools program (ESEA Title X, Part C) provides federal
assistance for implementation of state charter school programs. These schools are
newly formed under the terms of charters entered into by different community groups
and school authorities. In exchange for exemption from significant state or local
rules, these schools are held accountable for achievement of agreed-upon objectives.
The Public Charter Schools program requires that all students in the community
served by a charter school be given an equal opportunity to attend. The FY1998
appropriation for this program is $80 million.
Selected Options For New or Expanded Federal Support
This section provides a general overview of many of the legislative proposals
concerning school choice that are before the 105th Congress, as well as those
considered by the 104th Congress. That overview is followed by an analysis of the
general framework of policy goals and assumptions that will apply to any legislative
proposal. Some choice options are more consistent with certain goals and
assumptions than others. This section concludes with analyses of several broad
categories of options for federal support, some of which are reflected in the legislative
proposals currently before the 105th Congress.

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Legislative Proposals in the 105th Congress.
16
Proposals on Which Legislative Action Has Occurred. The Senate-passed and
initial conference versions of H.R. 2014, the Revenue Reconciliation Act of 1997,
would have allowed withdrawals from newly-authorized, tax-advantaged education
savings accounts for elementary and secondary education expenses, including private
school tuition. While the elementary-secondary portion of this authorization was
dropped from the enacted version of this legislation (P.L. 105-34), separate bills have
been considered that would accomplish the same purpose, particularly H.R. 2646, the
Education Savings Act for Public and Private Schools. On October 23, 1997, the
House passed H.R. 2646. The Senate adopted a revised version of this bill,
including several provisions in addition to the education savings account language,
on April 23, 1998. During floor debate on H.R. 2646, the Senate considered, but
17
did not adopt, an amendment offered by Senator Coats that would have increased the
tax benefit for individual charitable contributions to privately-established school
voucher programs.
The House- and Senate-passed versions of H.R. 2646 would expand the P.L.
105-34 authorization for Education Individual Retirement Accounts (IRAs), the
earnings from which would be exempt from federal income taxes. These bills would
raise the limit on contributions for beneficiaries under the age of 18 from $500 to
either $2,500 per year (House version) or $2,000 per year (Senate version), and allow
tax-free proceeds from the accounts to be used to pay public or private elementary
and secondary, as well as postsecondary, education expenses, including home
schooling expenses, and computer hardware and software.
On November 7, the House passed H.R. 2616, the “Community-Designed
Charter Schools Act of 1997". This bill would revise the Public Charter Schools
statute in several respects, primarily to extend and increase its authorization; give
priority for grants to states that provide charter schools with financial autonomy,
allow for increases in the number of charter schools, and periodically review the
performance of such schools; and to expand technical assistance to charter schools,
especially regarding their eligibility for federal aid programs. A similar bill, S. 1380,
the “Charter School Expansion Act of 1997", has been introduced in the Senate. As
noted earlier, this legislation is relevant because charter schools are generally schools
of choice. For a detailed description of H.R. 2616 and S. 1380, see CRS Report 97-
519, Charter Schools: State Developments and Federal Policy Options.
16 A note regarding terminology used in legislative proposals, especially those involving
private school choice options: these proposals employ varying terms to refer to aid that might
be used to help pay the costs of private school tuition and related fees. While perhaps the
most common such term is “voucher,” other terms frequently used include “certificate” and
“scholarship.” While there are sometimes substantive differences implied by the use of
different terms, these differences are typically very subtle. In the following discussion, we will
use the terms employed in the text of the relevant proposed legislation without ourselves
intending to imply substantive distinctions beyond those explicitly noted in our descriptions
of the proposals.

17 For additional information, see Education Savings Accounts for Elementary and Secondary
Education, CRS Report 97-852, by Bob Lyke.

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The “District of Columbia Student Opportunity Scholarship Act of 1997" was
introduced in the House as H.R. 1797 by Representative Armey, et al., and in the
Senate initially as S. 847, and later in slightly modified form as S. 1502 by Senator
Coats, et al. The proposal is similar to one that was contained in the House-passed
and conference versions of H.R. 2546 of the 104th Congress (see the next section of
this report). FY1998 District of Columbia appropriations legislation (H.R. 2607), as
initially passed by the House on October 9, 1997, incorporated a slightly modified
version of the provisions of H.R. 1797; but H.R. 2607 as passed by the Senate on
18
November 9 and the House on November 12 does not contain scholarship provisions.
S. 1502 was passed by the Senate on November 9, 1997, and in identical form by the
House on April 30, 1998. The President has stated that he will veto the bill when he
receives it.
The following discussion is based on S. 1502, the District of Columbia
scholarship bill on which action has most recently occurred; however, differences
among the scholarship provisions of S. 1502, H.R. 2607 as passed by the House, S.
847, and H.R. 1797 are minor. S. 1502 would authorize the provision of scholarships
to District of Columbia resident students in grades K-12 from low-income families to
attend public or private schools in the District or nearby suburbs (“tuition
scholarships”), or to pay the costs of supplementary academic programs outside
regular school hours for students attending District of Columbia Public Schools
(DCPS) (“enhanced achievement scholarships”). The authorized appropriation level
for this program would be $7 million for FY1998, rising to $10 million for each of
FY2000-FY2002, plus a one-time authorization of $250,000 for program evaluation.
The bill also appropriates $7 million for FY1998. No more than 7.5% of the
appropriations for any year may be used for program administration or any purpose
other than aid to students.
This program would be administered by a non-governmental District of
Columbia Scholarship Corporation. The Corporation’s Board would have 7 members
— 3 appointed by the President from nominations by the Speaker of the House (in
consultation with Minority Leader), 3 appointed by the President from nominations
by the Majority Leader of the Senate (in consultation with Minority Leader), and 1
appointed by the Mayor. All Board members must be D.C. residents, and none may
be D.C. or Federal Government employees (unless they are on leave). Board
members would serve for 5-year terms, and would receive stipends of $150 per day,
up to $5,000 per year. In carrying out its functions, the Board is to consult with the
District of Columbia Board of Education or other entities with jurisdiction over the
DCPS (such as the current Board of Trustees named by the District of Columbia
Financial Responsibility and Management Assistance Authority), the Superintendent
of the DCPS, and other scholarship programs in the District of Columbia.

18 The Senate version of the District of Columbia scholarship proposal (S. 847) was offered
as a floor amendment to an earlier FY1998 District of Columbia appropriations bill, S. 1156,
on September 25, 1997. On September 30, the Senate failed to invoke cloture on debate over
this amendment (no. 1249); however, the Senate did not take final action on S. 1156, and later
passed a version of H.R. 2607 without a scholarship provision.

CRS-11
Students in grades K-12 who are residents of the District of Columbia with
family income below 185% of the standard federal poverty income threshold for
families of the relevant size would be eligible for scholarships. During the initial years
of the program (1997-99), first priority in the awarding of scholarships would go to
students who have been attending DCPS schools (or are about to enter kindergarten
in DCPS schools). In all years, priority would also be given to previous scholarship
recipients. Thus, the proposal places an emphasis at first on pupils who are attending
public schools in D.C., but pupils already in private school may receive scholarships
after these first priority pupils are served in 1997-2000 (and previous recipients in
2001 and beyond). If funds are insufficient to provide scholarships to all eligible
applicants, recipients would be selected by lottery.
There would be two types of scholarships: (a) “tuition scholarships” could be
used to pay the costs of tuition and fees at a public or private (including a religiously-
affiliated) school in D.C. or the inner ring of suburban jurisdictions ; and (b
19
)
“enhanced achievement scholarships” could pay the costs of tuition, fees, and
transportation for “a program of instruction ... which enhances student achievement
of the core curriculum and is operated outside of regular school hours to supplement
the regular school program” (Section 4(c)(2)). The amount of tuition scholarships
would be the lesser of $3,20020 or 100% of tuition , fees, and transportation costs if
21
family income is below the poverty level, and the lesser of $2,400 or 75% of tuition,
fees, and transportation costs if family income is between 100% and 185% of poverty.
The amount of enhanced achievement scholarships would be the lesser of tuition,
fees, and transportation or $500 for all students with family income below 185% of
poverty. In all cases, the bill states that scholarships would be considered to be aid
to the student, not the institution.
In order for its students to be eligible for either a tuition or an enhanced
achievement scholarship, an educational institution generally must have been in
operation for at least 3 years, with at least 25 students. Alternatively, institutions may
obtain provisional, 1-year, renewable certification after providing a variety of
information to the Corporation (e.g., a business plan, course of study, list of the
institution’s board of directors, etc.). Certification of eligibility may be revoked for
“good cause” (such as failure to meet program requirements) or if 25% or more of
the scholarship recipients at the school fail to “make appropriate progress” (Section
3(f)(2)(D)(i)(II)). Institutions must file annual reports on their budget; and may not
discriminate on the basis of race, color, national origin, or sex, although schools may
operate single-sex classes or institutions. It is explicitly provided that religiously-
affiliated schools may give preference to members of a specific religion in admissions
or employment, and that scholarship funds may be used for sectarian purposes by such
schools. Further, the bill states that, “[N]othing in this Act shall affect the rights of

19 These include Montgomery and Prince Georges counties in Maryland, plus Arlington and
Fairfax counties, and the cities of Alexandria, Fairfax, and Falls Church in Virginia.

20 Each of the specific maximum dollar amounts for scholarships ($3,200, $2,400, and $500)
would be increased in the future by increases in the Consumer Price Index.

21 Participating schools may not charge scholarship recipients tuition and fees in excess of the
amounts charged to other District of Columbia resident students attending the school.

CRS-12
students, or the obligations of the District of Columbia public schools, under the
Individuals with Disabilities Education Act” (Section 8).
Participating educational institutions would be required to make annual reports
to the Corporation containing a variety of data on student achievement, disciplinary
actions, academic program, parental involvement, etc. The Corporation would also
be required to submit an annual report to the Congress, including information on how
program funds have been expended, and the initial achievement levels of scholarship
recipients. The U.S. General Accounting Office would be required to contract for an
evaluation of the scholarship program within 4 years of the bill’s enactment. The
evaluation would include comparisons of scholarship recipients and similar but non-
participating students in the DCPS with respect to test scores, graduation rates,
parental satisfaction, and impact of the program on the DCPS. A one-time
appropriation of $250,000 would be authorized for the evaluation.
A final school choice bill on which action has occurred in the 105th Congress is
H.R. 2746 , the “Helping Empower Low-income Parents (HELP) Scholarship
22
s
Amendments of 1997", sponsored by Representative Riggs, for himself and others.
On November 4, the House debated and did not pass this bill. This proposal would
amend ESEA Title VI, “Innovative Education Program Strategies”, to allow SEAs
and LEAs to use funds for choice programs that include private schools, in
accordance with state law. Under ESEA Title VI, funds may currently be used by
SEAs and LEAs for such a wide variety of activities related to educational innovation
or reform that it is often referred to as a “block grant” program. States may reserve
23
up to 15% of ESEA Title VI grants, while remaining funds must be allocated to
LEAs under state-developed formulas; LEAs have “complete discretion” in
determining the purposes for which funds are used, within the broad limits of activities
authorized in the federal statute (Section 6303(c)). The FY1997 appropriation for
ESEA Title VI was $310 million.
H.R. 2746 would reduce the share of ESEA Title VI funds that may be reserved
by SEAs from the current 15% to 10% in general. However, SEAs may reserve an
additional 15% (beyond the 10%) if those funds are used for “voluntary public and
private parental choice programs” for children in low-income families, which are
authorized by state law, include 1 or more private schools , and are located in either
24
high poverty or sparsely populated areas. Eligibility for such choice programs must
be limited to pupils from families with income below 185% of the standard federal
22 Another bill, H.R. 2724, is virtually identical to H.R. 2746, except that the former bill
includes provisions regarding the treatment of private school scholarships as income for
purposes of federal personal income tax liability and eligibility for federal aid programs.
23 For additional information on this programs and related topics, see Elementary and
Secondary Education Block Grant Proposals in the 105th Congress, CRS issue brief 98013,
by Wayne Riddle and Paul Irwin.

24 While not explicitly listed among specific authorized activities (other than magnet schools),
it may be assumed that public-only school choice programs could already be supported with
ESEA Title VI funds, as long as the Title’s fiscal accountability (e.g., the requirement that
federal funds supplement, and do not supplant, state and local revenues) and other general
provisions were followed.

CRS-13
poverty income threshold. The amount of a scholarship provided under a qualifying
choice program may not be less than 60% of the average expenditure per pupil
(AEPP) for the LEA in which the child resides, or the amount of tuition charged by
the school he or she chooses to attend, whichever is less; and may not be more than
100% of the AEPP. Choice programs must also give priority to aiding children who
transfer from public to private schools, and may not exclude sectarian private schools.
H.R. 2746 would also add “voluntary public and private parental choice
programs”, meeting the conditions described above, to ESEA Title VI’s list of
authorized uses of funds by LEAs. However, a state that uses Title VI funds for
choice programs could not require LEAs to use any of their Title VI funds for this
purpose. Current provisions requiring equitable treatment of pupils attending private
and public schools in Title VI programs would not apply to Title VI funds used for
public-private school choice programs. The bill further states that scholarships
provided under choice programs supported by ESEA Title VI funds are to be
considered to be aid to the students receiving the scholarships, not to the school.
H.R. 2746 also restates general statutory prohibitions against control by ED over the
“curricula, program of instruction, administration, or personnel” of any public or
private school that participates in choice programs supported under Title VI (Section
6405(b)).25
The bill would require the Comptroller General of the United States to contract
with an entity to conduct an series of annual evaluations of the public-private school
choice programs supported under Title VI. The evaluations are to focus especially
on parental satisfaction with the choice programs and a comparison of the
achievement of pupils who receive choice scholarships with that of pupils who do not
participate in the choice program. The evaluations would be funded through an
existing authority for use of up to 0.5% of appropriations for any ESEA program
(except Title I) for this purpose (Section 14701).
Proposals on Which No Legislative Action Has Yet Occurred. S. 1, the “Safe
and Affordable Schools Act,” was introduced on January 21, 1997, by Senator
Coverdell and several Members of the majority leadership of the Senate. This bill
includes, among other provisions, three authorizations for increased federal support
of school choice. First, Title I, Subtitle A of S. 1 would authorize the appropriation
of $50 million for FY1998 to provide demonstration grants for public/private school
choice for pupils from low-income families who would otherwise attend unsafe
schools. “Unsafe schools” are defined generally as schools with “serious crime,
violence, illegal drug, and discipline problems” (Section 113(11)); applicants would
specify how they would select such schools.
A wide variety of public and private/non-profit agencies or entities would be
eligible for 20-30 total demonstration grants. Priority would be given to applicants
that are already operating a public-private school choice program, and for programs

25 Similar prohibitions, affecting all ED programs, may be found in several existing statutes,
including the Department of Education Organization Act (Section 103), General Education
Provisions Act (Section 438), Goals 2000: Educate America Act (Section 318-319), and
Elementary and Secondary Education Act (Section 14512).

CRS-14
involving a diverse range of schools and pupils. Applicants must provide services in
at least one high poverty LEA. Aid would be provided in the form of “certificates”
26
provided to the families of eligible pupils that could be used to pay the costs of
tuition, fees, transportation and, for pupils eligible to be served under ESEA Title I,
supplementary educational services at a school selected by the parents. The value of
the certificate would not be considered federal aid to the school, nor taxable income
to the parents. The amount of the certificate would be determined by the applicant
agencies or entities, but could not exceed the average expenditure per pupil in the
preceding year for the LEA operating the public school an aided pupil would
otherwise have attended. Eligible schools of choice would include public and private
(including sectarian) schools that comply with the anti-discrimination provisions of
Title VI of the Civil Rights Act of 1964. The program would be evaluated by a non-
federal entity under contract to the General Accounting Office.
Title I, Subtitle B of S. 1 would authorize the use of ESEA Title I, Part A
(education for the disadvantaged) funds to pay costs of public/private school choice
options for certain pupils. This provision would apply to pupils eligible to be served
under Title I who become victims of violent crimes while on the grounds of their
(public) school. In such cases, LEAs would be authorized (but not required) to use
Title I funds to pay the “supplementary costs” for pupils to attend another public or
27
private (including sectarian) school within the state, selected by the pupil’s parents,
and in accordance with state law. State education agencies would define “violent
criminal offenses” for purposes of this authorization. Pupils would remain eligible for
continuing assistance under this provision for at least 3 years, regardless of whether
they would otherwise be deemed eligible for Title I assistance in the succeeding years.
As was noted earlier in this report, the current ESEA Title I statute authorizes some
use of Title I funds to support school choice activities, but only in limited
circumstances involving only public schools. In general, provisions applicable to
Subtitle A, described above — e.g., that payments do not constitute federal aid to
recipient private schools or taxable income parents, that all participating schools must
comply with Title VI of the Civil Rights Act of 1964, etc. — would also apply to
ESEA Title I funds expended under Subtitle B.
Finally, S. 1 would authorize use of ESEA Title VI (Innovative Education
Program Strategies) funds for public/private school choice programs similar to those
described above. S. 1 has several elements that are similar to a number of public-
private school choice demonstration program bills introduced in the 104th Congress
(see below).
H.R. 1031, introduced by Representative Watts, Representative Flake, and
Representative Tallent, and S. 432, introduced by Senator Abraham, Senator

26 Specifically, LEAs that receive ESEA Title I concentration grants (in general, these have
at least 6,500 poor school-age children or a school-age child poverty rate of at least 15%) and
that are among the 20% of LEAs in their state receiving concentration grants that have the
greatest number or highest percentage of poor school-age children.
27 These are defined as including, in the case of public schools, the costs of supplementary
educational services and transportation (if the school of choice is in a different LEA), and in
the case of private schools, tuition, fees and transportation.

CRS-15
Lieberman, Senator DeWine, Senator Hutchinson, and Senator Coats, are identical
proposals to provide public-private school choice to pupils from low-income families
who reside in selected localities. Areas designated as “renewal communities” (up to
100 areas experiencing pervasive economic and other distress) would be required to
offer such public-private school choice programs. These programs would provide
scholarships to low-income students’ parents for private school tuition and fee costs,
as well as transportation subsidies for scholarship students and students attending
alternative public schools (including charter schools). The scholarships and
transportation subsidies would be funded with federal appropriations and other funds
raised at the state and local levels. The annual authorization would be $200 million
for each of FY1998-2002.
Among eligible renewal communities, 80% of funds would be allocated in
proportion to the number of school-age children in low-income families (185% of
federal poverty level), and 20% would allocated in proportion to non-federal funds
raised by the renewal communities from state and local revenues or private sources.
This proposal would not supercede state law regarding aid to sectarian schools, but
neither would state law be interpreted to limit the distribution of federal funds
provided under this proposal to sectarian schools.
Under H.R. 1031/S. 432, the amount of the scholarship would be determined by
grantees, but it would be at least the lesser of 60% of the average expenditure per
pupil (AEPP) for the LEA or the tuition and fees charged by a participating private
school, and the maximum would be the full AEPP. The AEPP would be adjusted to
account for the additional costs of educating pupils with disabilities. Scholarships
would not be considered to be taxable income to the parents of participating pupils
or federal aid to participating schools. Participating schools must comply with Title
VI of the Civil Rights Act, but would not otherwise be subject to regulation by ED
beyond those regulations in effect on the date of enactment or established under this
proposal. An evaluation of the program would be conducted by ED. This proposal
is similar to H.R. 3467, introduced in the 104th Congress (see below).
H.R. 318, introduced by Representative Solomon, would authorize tax credits
of up to $1,000 per pupil per year for expenses of tuition, fees, books, supplies, and
equipment for pupils attending private elementary or secondary schools, as well as
public or private vocational schools, and institutions of higher education. H.R. 1633,
the “Children’s Education Tax Credit Act”, introduced by Representative Pitts, would
authorize an annual tax credit of up to $450 for similar purposes, as well as home
schooling expenses. A third bill, H.R. 1816, the “Family Education Freedom Act of
1997", introduced by Representative Paul, would authorize a tax credit of up to
$3,000 per year for elementary and secondary education expenses, including those
related to home schools. These bills are similar to H.R. 156, introduced in the 104th
Congress (see below).
Legislative Proposals in the 104th Congress. The 104th Congress considered
several legislative proposals that would have provided federal support for public and
private school choice. The Congress considered a choice program that was included
in the conference version of H.R. 2546, FY1996 appropriations legislation for the
District of Columbia (D.C.). While the House passed original and conference
versions of this legislation that included authorization for a private-public school

CRS-16
scholarship program, the Senate failed to invoke cloture on a filibuster against the
legislation.
28 The conference version of H.R. 2546 would have supported two kinds
of scholarships for low-income students residing in the District of Columbia. Tuition
Scholarships would have been available to pay the tuition and mandatory fees for
students choosing to attend D.C. private schools, including those that are religiously
affiliated. The size of these scholarships could have been as high as $3,000 for
students from families at or below poverty, and as high as $1,500 for students from
families with incomes not in excess of 185% of the poverty level. Enhanced
Achievement Scholarships would been available to meet the tuition, fees, and
transportation costs for students to receive services to enhance their academic
achievement. These services would have been provided outside of regular school
hours. These scholarships could have been as high as $1,500 for students from
families at or below the poverty level, and as high as $750 for students from families
with incomes not in excess of 185% of the poverty level. The authorized annual
appropriation level for these two kinds of scholarships would have been $5 million for
FY1996, $7 million for FY1997, and $10 million annually for FY1998 through
FY2000. For FY1996, the conference version of H.R. 2546 would have appropriated
$5 million.
As noted earlier, the Senate failed to invoke cloture on a filibuster against the
conference version of H.R. 2546, and it was not adopted. However, both the
conference version of H.R. 2546 and the FY1996 D.C. appropriations legislation that
was finally enacted (H.R. 3019, P.L. 104-134) authorize the establishment of charter
public schools in the District. These would be public schools that are provided with
a great deal of autonomy and freedom from usual regulations in return for
accountability in the form of specified student outcomes. Charter schools would be
open to enrollment by all District pupils of the relevant grade level and subject
specialization (if the school has one), and could not charge tuition to D.C. residents.
They would be governed by a board of trustees, and could be established as new
schools, or by conversion of existing public or private schools. Two charter schools
began operation in D.C. in the 1996-97 school year.
Among other bills in the 104th Congress, three would have authorized federal
grants for private school choice demonstration projects (H.R. 1640, introduced by
Representatives Weldon and Riggs; S. 618, introduced by Senators Coats and

28 District of Columbia Public Schools: Status of Federal Legislation Affecting Them, CRS
Report 95-1030, by Wayne Riddle.

CRS-17
Lieberman; S. 1210 and S. 1904, both introduced by Senator Coats). Under these
29
bills, education “certificates” would have been made available to low-income students
in the demonstration areas to help meet tuition, fees, and allowable transportation
costs in public and private schools, including religiously affiliated schools. H.R. 1640
and S. 618 would have authorized $30 million for FY1996 and such sums as may be
necessary for FY1997 and FY1998, to fund a limited number of demonstration sites
(10 to 20). S. 1210 and S. 1904 would have authorized $600 million for FY1996 and
such sums as may be necessary for FY1997 through FY2000, for at least 100
demonstration sites.30
Other legislation would have funded private school choice programs in
communities designated as empowerment zones under the Internal Revenue Code, as
well as Los Angeles, Cleveland, and Washington, D.C. S. 1252, introduced by
Senator Abraham for himself and others would have authorized $12 million for
FY1996 and such sums as necessary for FY1997 and FY1998 for choice programs
open to low-income students residing in the eligible communities. A similar bill —
S. 1533, introduced by Senator McCain — would have required the reservation of
$25 million from the appropriation each year for ESEA Title I for public-private
school choice programs in high poverty localities. H.R. 3467, introduced by
Representative Watts for himself and others, would have required designated
“renewal communities” to administer school choice programs with provisions similar
to those of H.R. 1031/S. 432 in the 105th Congress (described above), although H.R.
3467 had substantially higher appropriations authorization levels (rising to $2.5 billion
for FY2002).
Federal income tax credits for educational expenses at educational institutions,
including private elementary and secondary schools, would have been authorized
under other legislation introduced in the 104th Congress (H.R. 156, introduced by
Representative Solomon). The credit for any individual could not have exceeded
$1,000.31
Similar proposals have been offered in previous Congresses. In the 102nd Congress, one
29
such proposal was offered by Senator Hatch, for himself and others, and with the explicit
support of the Bush Administration, as a floor amendment to the Neighborhood Schools
Improvement Act, S. 2, on January 23, 1992. In the 103rd Congress, on February 4, 1994,
Senator Coats offered, for himself and others, an amendment to S. 1150, the Goals 2000:
Educate America Act (P.L. 103-227). This proposal (“Low-Income School Choice
Demonstration Act of 1993") was virtually identical in its major provisions to the Hatch, et
al., amendment described above. The third such proposal, entitled “Fight or Flight:
Protecting American Students,” was offered during the 103rd Congress by Senators Dole,
Coats, and Lieberman as an amendment to S. 1513, the Senate version of the Improving
America’s Schools Act, on July 27, 1994. This third version would have authorized grants
to states to make individual scholarships to students from low-income families attending
“violence-prone” schools. None of these amendments was adopted.
30 The option of choice demonstration programs is considered in some detail later in this
report.

31 This bill is similar to H.R. 318 in the 105th Congress. The option of federal tax legislation
to support school choice is considered in some detail later in this report.

CRS-18
General Framework for Consideration of Federal Options. An initial
question for consideration of federal support for school choice is: what is the specific
reason for proposing support for an expansion of school choice? Major alternatives
here include: demonstrating and evaluating the effects of expanded school choice;
eliminating possible barriers to choice that may be associated with some current
federal policies or aid programs; increasing access of pupils to private schools;
expanding school choice options for pupils who are educationally disadvantaged or
come from low-income families; making a wide range of choices available to all
pupils; or such broader goals as supporting state school reform initiatives or
furthering voluntary desegregation of schools.
Another basic consideration is the assumed level of funds that will be available,
and the corresponding program size or scope that would be consistent with this. If
only relatively low annual appropriations are likely to be available, a program limited
to a small number of localities may be indicated. Another alternative would be
expanding school choice options under an existing program, without necessarily
changing its funding level. In contrast, if a much larger level of funding is
contemplated — either through federal appropriations or tax allowances (credits or
deductions) — then a much more expansive program might be considered.
In addition, it should be kept in mind that virtually all of the variations described
above with respect to current state and local programs and proposals — e.g., types
of schools eligible, information and transportation services provided, etc. — might
need to be specified in federal legislation, depending on the nature of the federal
option. If the federal proposal is for a block grant that has school choice as one of
many authorized activities, it might be necessary and appropriate to have very few
details about the kinds of such choice that can be supported. Alternatively, in a
proposal to demonstrate and evaluate the effects of school choice, it might be
appropriate to have detailed provisions regarding the nature of programs to be
supported, to assure that competition among types of schools is fair, or that the
choice models being demonstrated meet the expectations of the legislation’s
proponents.
What Aspects of a Choice Program Should the Federal Government
Subsidize? A key question underlying all possible forms of federal financial aid to
school choice is what are the particular aspects of expanded school choice that a
federal program should subsidize? This question involves both policy and budgetary
issues. The factors involved in addressing the question are quite different for public
school-only versus public-private school choice programs.
If a choice program involves only public schools, it may be argued that the
federal government should, at most, help pay for the additional costs of operating a
state or local school system with expanded school choice options, not the basic
expenditures that would be paid from state and local revenues absent the enhanced
choice. While there might be some difficulties or disputes over exactly what are these
additional costs and whether there are any for which federal funds should not be used,
this seems to be a relatively manageable task in the public school-only context. Major
costs might include transportation, development and dissemination of information to
parents, counseling, or possible costs of developing and implementing the distinctive
school programs that often accompany and enhance expanded school choice. It might

CRS-19
also be suggested that even if only public schools are involved, federal support of
choice should be limited to disadvantaged pupils, especially pupils from low-income
families, under an assumption that students from more affluent families already have
substantial opportunity to choose their schools through their choice of residence.
However, the question of what aspects of a choice program the federal
government should subsidize becomes especially important and more complex if the
choice options include private schools, raising significant issues of efficiency, cost,
and fairness. With private school involvement, the potential costs are not simpl
32
y
marginal ones such as transportation, but also the basic costs of tuition and related
fees. If full tuition and fees may be covered by federal aid, the net increase in public
funds per pupil due to a choice program might be much higher than a program
covering public schools only. But if only a portion of tuition and fees may be
covered by the program, the aid may be of limited value to pupils from low-income
families.
33

A related issue is whether there ought to be any limit on the dollar value of a
voucher, or on the level of tuition that the voucher can be used to pay. While limits
of this sort reduce the range of choices available, most proposals include some such
limit — e.g., the expenditures per pupil for public schools in the state or locality —
primarily in order to avoid having a large proportion of the aid go to a relatively small
number of pupils at high cost schools, and to prevent spending more per pupil in
private than public schools. A limit on voucher and/or covered tuition levels might
also be appropriate to minimize an effect of tuition increases resulting from increased
demand on a relatively fixed (in the short run) supply of private schools.
A related issue concerns which pupils should be supported — only for pupils
from low-income families, or all pupils. Costs would be more limited, and the net
increase in effective choice relative to expenditures would be greatest, if financial
support were made available only to pupils in low-income families, who presumably
have the fewest effective choices currently. This might also be considered to be the
most equitable way to allocate limited federal funds, and would follow the model of
most federal postsecondary student aid programs. Nevertheless, provision of

32 The question of the constitutionality of federal support for enrollment in private, religiously
affiliated elementary and secondary schools is discussed in a following section on barriers to
school choice.
3 A secondary, more hypothetical issue related to costs and school choice is whether som
3
e
possible forms of federal school choice legislation might constitute “unfunded federal
mandates” in the eyes of some observers, if federal aid were insufficient to pay all of the
increased costs of the school choice activities required under the program. For example, if a
program required a participating locality to offer all families a broad range of choices among
public and private schools, and federal aid was insufficient to pay the net increase in aggregate
costs of transportation, private school tuition, etc., even an increase in public expenditures per
pupil due to fixed costs, as pupils move out of public schools, then the result might be
considered by some to be an unfunded federal mandate. However, in addition to arguing that
such conditional requirements are not really mandates, opponents of this view might argue that
it is unlikely to occur because private school tuition levels are currently substantially below
average public school expenditures per pupil nationwide.

CRS-20
vouchers or other financial aid only to pupils from low-income families might seem
unfair to the families and pupils thereby eliminated from eligibility for aid, especially
those just above the income eligibility threshold. One possible way to reduce this
concern would be provision of aid on a sliding scale, so that the amount changes
gradually, rather than abruptly, with differences in family income.
A final question regarding coverage of private school costs is whether they
should be paid on behalf of all pupils in eligible families (in terms of income or other
factors), or only pupils not already attending private schools or other “schools of
choice” — i.e., those who switch schools under the program. The relative gain in
34
exercise of choice would be greatest at a given funding level if families already
sending children to private or other “schools of choice” are excluded. This approach
would also avoid having federal funds supplant whatever private source aid may be
currently provided to some low-income families to help them pay private school
costs.
35 However, the provision of vouchers to some families in a locality and not to
others of the same income level and other relevant characteristics might strike many
as being inequitable. Further, the savings would presumably be only temporary, as
pupil mobility and movement through the educational pipeline steadily increase the
proportion of private and other “school of choice” pupils whose families initially
enroll them in such schools after initiation of the federal choice program.
Selected Options for Federal Support. Selected options for a new federal
school choice program or initiative are discussed individually below. The basic nature
of each option is described, along with major potential advantages and disadvantages.
The options are taken up in order of their general level of probable cost, beginning
with those which are essentially costless, and ending with relatively expensive options
(in terms of either appropriations or tax allowances).
Modify Current Policies or Programs to Remove Possible “Barriers” to
School Choice. One option to expand school choice would be to remove possible
barriers to choice that might result from existing federal programs or policies. While
federal programs and policies may directly inhibit school choice only in rare instances,
they sometimes indirectly limit the maximum provision of choice by states or LEAs.
Constitutional and Civil Rights Barriers. The primary indirect barriers to school
choice in federal policy may be the most difficult to remove, since they derive from
federal court interpretation of the Constitution and statutes in the sensitive and
controversial areas of church-state relations and civil rights. For example, a variety

34 The term, “schools of choice,” is used to refer to schools other than the public school at the
relevant grade level serving a pupil’s residential area. “Schools of choice” include private
schools as well as public schools other than the one a pupil would attend “by default” — i.e.,
public schools outside the pupil’s residential area or LEA, charter schools, etc.

35 Some private schools offer at least some financial aid to pupils from low-income families.
In addition, there are in some localities limited programs funded privately that offer private
school tuition vouchers to some pupils from low-income families. See: Private Plans Seen
Key to Showing Power of Vouchers. Education Week, November 25, 1992. And Albany
Program Puts New Spin on Private Vouchers. Private Voucher Programs. Education Week.
May 28, 1997.

CRS-21
of past Supreme Court decisions have substantially limited government aid to, or
involvement with, religiously affiliated private schools. At least partially as a result
of this, as well as various state constitutional provisions,36 current school choice
programs almost always limit participation only to public schools, or public and
nonsectarian private schools. However, on June 23, 1997, in deciding the case of
Agostini v. Felton, the Supreme Court reversed a 1985 ruling that prohibited LEAs
from sending public school teachers into religiously affiliated private schools to
provide ESEA Title I services to eligible children.3 In addition, certain tax allowance
7
and student assistance programs that include sectarian, private institutions have been
approved by the Supreme Court in recent years, and it is an open question whether
38
a new form of aid to school choice that involves both public and private, including
sectarian, schools would prevail over federal court challenges as well.39
Federal courts and agencies have also been involved in efforts to decrease the
racial segregation of pupils in the public schools of many localities. These efforts
have had a substantial, yet mixed impact on school choice options. In several cases,
efforts to meet desegregation goals through magnet schools and other school choice
policies have expanded choice options for many families. Nevertheless, efforts to
desegregate enrollments have in some instances constrained family choice of schools
if exercise of the choice would increase segregation of pupils.
Other Options for Modification. Some current federal education assistance
programs may also marginally limit school choice in selected cases. For example,
since the program of aid for the education of disadvantaged children under Title I of
the ESEA generally authorizes programs in relatively high poverty schools, there can
be instances in which pupils who transfer from a high poverty school to a low poverty
school may effectively lose access to Title I services. The statute could be amended
40
to require LEAs to continue providing Title I services to eligible pupils who transfer

36 See: Education Vouchers: The Constitutional Standards, CRS Report 97-50, by David
M. Ackerman. And Choice Programs and State Constitutions: The Inclusion of Sectarian
Schools, CRS Report 92-260, by David M. Ackerman.
See:
37
Title I, ESEA: Current Status and Issues, CRS Report 96-380, by Wayne Riddle.
38 See: Mueller v. Allen, 463 U.S. 388 (1983), in which a Minnesota state income tax
deduction for certain private and public school expenses was upheld by the Supreme Court;
and Witters v. Washington Department of Services for the Blind, 474 U.S. 481 (1986), in
which use of vocational rehabilitation funds to pay tuition at a religious seminary was upheld.

39 A detailed analysis of what types of school choice programs might survive scrutiny by the
federal courts is beyond the scope of this report.
40 While Section 1115A allows Title I funds to be used for school choice programs, this
provision is limited to schools eligible to participate in Title I, and has certain other limitations
— e.g., Title I funds cannot be used to pay choice-related transportation costs, and both the
sending and the receiving school must agree to a pupil’s transfer. Further, Title I services
could possibly be provided off-site to an eligible child who transfers from an eligible school
serving her or his residential area to a non-eligible public school, but in practice this would
be administratively difficult and is unlikely to occur.

CRS-22
to another school.41 More extensive revisions to extend choice options in Title I
could be considered, as are discussed in the next section of this report.
The primary advantage of the option of removing barriers in existing programs
is that it would not directly require any additional appropriations. The primary
disadvantages are that the impact would be indirect and relatively small, and efforts
to change federal court rulings would be difficult, controversial, and might not be
effective.
ESEA Title I — Expansion of Current Choice Authority or Provision of Aid
in the Form of Vouchers. This option is related to the previous one in that it
involves modifying an existing program at little or no direct increase in federal costs,
but it is discussed separately because it could lead to a basic change in the nature of
the affected program, not just a relatively modest shift in one of its provisions. As
noted above, the ESEA Title I program generally provides services only to low-
achieving pupils attending public schools serving relatively low-income areas, or to
low-achieving pupils residing in the areas served by such public schools, but who
attend private schools. An existing authority (Section 1115A) to use Title I funds to
pay some of the costs of providing choice among public schools already participating
in Title I could be expanded to cover all public and private schools in a geographic
area, to remove other constraints now placed on available choices (such as the
requirement that both receiving and sending schools must agree to the transfer), and
to pay a broader range of choice program costs (such as transportation). I
42
f
extended to the maximum, this would have essentially the same advantages and
disadvantages as the broader “voucher” approach (see below).
Another approach would be to allow the provision of Title I services in the form
of vouchers that could be used by participating families to “purchase” educational
services at a variety of public or private schools or possibly additional providers of
supplementary educational services. The decision on whether to provide Title I aid
as vouchers might be left to states or localities, or the entire program might be
transformed into a voucher format nationwide. Proposals were made by the Reagan
Administration to allow LEAs to use a portion of their Title I grants as vouchers;43
however, these proposals were not adopted.
As with the first option, this option need not directly increase federal costs.
Unlike that option, it might significantly increase choice options for a large number

41 Another Title I provision, Section 1113(a)(7), authorizes LEAs to select public schools, that
would otherwise not be eligible, for Title I programs, if the schools are involved in
desegregation plans, and if the percentage of children enrolled in the school from low-income
families is 25% or more. While this may partially reduce a barrier to choice under Title I, it
still limits the range of choices available to disadvantaged pupils, and only applies to school
choice as part of formal desegregation programs.
42 Section 1115A was added to ESEA Title I in 1994, based on an amendment offered by
Representative Boehner. Earlier versions of this amendment, that were offered during House
Committee consideration but not adopted, would have been less restrictive.
43 See: Vouchers for the Education of Disadvantaged Children: Analysis of the Reagan
Administration Proposal. Journal of Education Finance, v. 12, summer 1986. p. 9-35.

CRS-23
of educationally disadvantaged children living in relatively low-income areas, given
the relatively large scale of the program. However, aid would not be limited to the
44
poor, since a large proportion of Title I participants are not from low-income families
themselves (unless the program were also revised to make low income a criterion for
individual participation).
The main disadvantage is that the essential nature of Title I would be changed
in ways that are untested and may be less effective than the current structure.
Currently, the program attempts to concentrate aid on relatively high poverty schools.
Services are almost always provided to groups of low-achieving pupils, and they may
be provided on a schoolwide basis in very high poverty schools. This has been done
not only because such schools are assumed to have the greatest needs, but also
because of an assumption that Title I funds will have greater effect if concentrated in
this manner. Under this option to expand choice opportunities, aid and services
would be much more dispersed. It is an open question whether more dispersed
services, combined with potential benefits of expanded school choice and attendance
at lower poverty schools, will be more effective than the current strategy, the
effectiveness of which has itself been limited. A specific concern regarding the Title
45
I voucher concept is that the current amount of funds per participating pupil ($954
in 1992-93)46 is significantly below the average tuition level for private schools (an
average of $3,116 for private elementary and secondary schools in 1990-91). Thus,
47
if a purpose in providing the vouchers is to enable families to use them to pay private
school tuition, Title I aid would have to be supplemented from other sources, total
funding would have to be increased, or the number of participating pupils would have
to be reduced in order to raise grants per participant closer to average tuition levels.
Demonstration Program. The Congress may focus on legislation supporting
projects to demonstrate the effects of expanded school choice in a limited number of
localities, primarily in order to test the impact of broad choice while keeping the
aggregate federal funding relatively low. For example, aid might be provided to all,
48
or to only low-income, families in a few LEAs to enable their children to attend any
public school in their LEA, any public school in a larger geographic area
(metropolitan area or state), or any public or qualified private school in a specified
area. The authorized funding level could be adjusted to be consistent with the
assumed number of participating LEAs and eligible families within them.
Grantees, which, among other entities, could be LEAs or other local units of
government (e.g., cities, counties, etc.), would distribute aid in the form of vouchers
or certificates to parents in eligible families. In order to constrain costs, eligibility
The FY1998 appropriation for Title I grants to LEAs is $7.4 billion.
44

45 See Title I, Education for the Disadvantaged: Perspectives on Studies of Its Achievement
Effects, CRS Report 96-82, by Wayne Riddle.
46 U.S. Department of Education. Office of the Under Secretary. State Chapter 1
Participation and Achievement Information—1992-93. 1994. p. 14.
4 U.S. Department of Education. National Center for Education Statistics.
7
Digest of
Education Statistics, 1995. p. 72.
See previous section discussing legislative proposals in the 105th Congress.
48

CRS-24
might be limited on the basis of family income (e.g., only pupils in low-income
families) or current school attendance (e.g., children who already attend private or
other “schools of choice” might be excluded), although such limitations might raise
issues of fairness. Vouchers might be used to pay tuition and fees for attendance at
private schools, or to pay transportation and related costs of attending either private
or “non-neighborhood” public schools. The recipient locality might also be allowed
to use some funds for information dissemination or related activities.
Consistent with the demonstration nature of this option, provisions for a
comprehensive evaluation of its effects should be included. Major provisions for the
demonstration would presumably depend upon the specific policy questions the
demonstration is intended to help resolve. For example, priority might be given to
targeting grants on relatively low-income areas if the focus were on the effects of
expanding choice among those who currently have the fewest options, or on the
relative effectiveness of public versus private schools for disadvantaged pupils.
Alternatively, it might be appropriate to include a broad geographic and income level
mix among the recipient localities if the primary interest is in the effects of broadened
choice in a representative group of localities. Whatever the type of area served, if the
purpose of the demonstration were not only to estimate the response to expanded
school choice options, but also to evaluate the relative effectiveness of public versus
private schools for different types of pupils, it might be appropriate to include
provisions intended to “level the playing field” between the two sectors (e.g., either
increasing the regulation of participating private schools, or reducing the regulation
of public schools; providing roughly equal expenditures per pupil in different types of
participating schools, etc.),49 or to assure that similar types of pupils attend both
public and private schools (to the extent this is possible without unduly limiting family
choice of schools).
Although this option would be relatively inexpensive in the aggregate (but costs
per pupil might be substantial), it might provide a significant test of the effects of
expanded school choice and/or the relative effectiveness of public versus private
schools for certain types of pupils, and it might substantially increase the choice
options for families in the affected localities. The main disadvantages are that the
number of participating localities and families would be quite limited, there may be
constitutional challenges if religiously-affiliated private schools participate, and it
might be difficult to reconcile efforts to make the demonstration fair and valid with
efforts to maximize school choice.
Expansion of Current Magnet Schools Assistance Program. The largest
current federal program that supports school choice is the Magnet Schools Assistance
program. Participation in Magnet Schools is limited to public schools in LEAs

49 There has been substantial debate over the relative effectiveness of private versus public
schools in stimulating academic achievement among pupils of various types, especially those
from low-income families. Advocates of public schools often argue that in such
“competition,” private schools have an advantage of being subject to fewer regulations (e.g.,
regarding education of disabled pupils, or labor-management relations) than public schools,
while proponents of many private schools (other than the small, “elite,” high tuition part of
the private sector) frequently argue that public schools benefit from higher levels of
expenditures and instructional resources (equipment, laboratories, etc.) per pupil.

CRS-25
implementing formal desegregation plans, whether court-ordered, or adopted
voluntarily and approved by the U.S. Secretary of Education under Title VI of the
Civil Rights Act. If a LEA is unwilling or unable to meet this requirement — perhaps
because it is located in a region with extremely few minority students, or has an
almost all-minority enrollment and is unable to form a consortium with one or more
LEAs with substantial nonminority enrollment — then it cannot receive Magnet
Schools Assistance grants. In order to expand the range of eligible LEAs, this
program could be revised to limit or remove its desegregation-related requirements,
or a new program could be authorized that is similar to the existing one but has no
special desegregation requirements (beyond the requirements that apply to all federal
aid recipients). If proponents wanted to emphasize the expansion of eligibility for
50
Magnet Schools Assistance to LEAs not currently eligible because a very high
proportion of their enrollment consists of minority pupils, making significant
desegregation within the LEA infeasible, they may want to limit eligibility for a new
program (or a portion of the grants thereunder) to such high minority enrollment
LEAs.
The potential advantages and disadvantages of this approach are similar to those
for the choice demonstration option above, especially those related to scale and cost,
except that the focus would be on individual schools in a larger number of LEAs
rather than on all eligible pupils in a smaller number of LEAs. Another difference is
the emphasis on providing distinctive instructional programs in magnet schools. The
existing magnet school program is limited to public schools, although a new program
need not be so constrained. Finally, explicit use of the magnet schools model might
lead to some confusion unless desegregation were a goal of the new proposal as well.
Expansion of Current Public Charter Schools Authority. Another, more
recently adopted, authority that might be expanded to increase federal support of
school choice is the Public Charter Schools program. Because they combine public
funding with limited public regulation, and because some of the charter schools in
states initiating this idea were originally private schools, the charter school concept
is not easily contained within orthodox notions of either “public” or “private” schools.
As with the Magnet Schools program, this Public Charter Schools authority
could be expanded to increase school choice options. Primary ways in which this
could be accomplished include increasing the appropriations level ($80 million for
FY1998, representing rapid growth over the initial, FY1995 level of $6 million), and
adding more explicit requirements that all pupils residing in a LEA or broader area are
eligible to enroll.
Although authority to establish charter schools is spreading rapidly among the
states, it is a relatively new concept, and relatively few charter schools have been in
operation for more than 2 years. This, combined with the somewhat anomalous
Such a
50
program was authorized during FY1989-1993, but was never funded, under Title
IV, Part F, Section 4606 of the ESEA, Alternative Curriculum Schools. No funds could be
appropriated for this program unless the Magnet Schools Assistance program appropriation
for that year was $165 million or more. There were minimum minority enrollment thresholds
for eligible LEAs (or consortia) of 65%, and for eligible schools of 50%.

CRS-26
nature of charter schools, falling somewhere in between traditional notions of “public”
and “private” schools, makes it especially difficult to foresee the implications of a
substantial expansion of federal aid to charter schools. Nevertheless, this option
would presumably share the advantages of relatively low cost, and a potentially
substantial increase in choice options for a limited number of families, with the choice
demonstration and magnet school options above. As with magnet schools, the
instructional programs of charter schools are intended to be distinctive. It would also
seem to share with the last two options the disadvantage of relatively small scope, at
least presently. A unique aspect of this option is the combination of choice with
deregulation in charter schools.
Block Grant With Choice as an Authorized Use of Funds. An option that
would be broader in scale and funding overall than the preceding ones, although the
share of those funds used specifically for school choice activities would likely be
uncertain, would be a block grant consolidating many current federal elementary and
secondary education programs, and including school choice among its authorized
activities. Block grants may be defined as federal grants to states that provide a 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. Typically, block grants
are developed through the consolidation of multiple, existing programs with more
specific authorized uses of funds. There has been substantial discussion during the
105th Congress about the possible consolidation of several of the current federal
elementary and secondary education programs into one or more block grants.51
There are at least three ways in which support for school choice might be
incorporated into a block grant, especially a block grant supporting a variety of
“school reform” activities. Under a block grant, school choice might be one of the
explicitly authorized uses of any of the federal aid. This highly flexible version would
perhaps be most consistent with the block grant approach, with its emphasis on state
and local decisionmaking. However, it is possible that support for school choice in
a block grant might be stated in stronger, less flexible terms, through either a
minimum (or maximum) share of the funds that must be used for choice programs, or
even a requirement that states or LEAs adopt certain school choice policies in order
to be eligible for the block grant.
Inclusion of school choice support in a block grant for elementary and secondary
education would have the advantages of placing choice in a broader school reform
context, along with other activities deemed to be relevant to reform and authorized
in the block grant; of potentially emphasizing both choice and state/local flexibility or
authority; and of supporting increased choice without establishing a new “categorical”
program. Such a block grant might also be part of a strategy to reduce overall federal
spending for elementary and secondary education — i.e., increasing flexibility while
reducing total spending from the previous level for the programs that are
consolidated.
51 For more information on this topic, see: Elementary and Secondary Education Block
Grant Proposals in the 105th Congress, CRS Issue Brief 98013, by Wayne C. Riddle and
Paul M. Irwin. (Hereafter cited as Education Block Grants)

CRS-27
A disadvantage of the block grant approach to expanding school choice is that,
unless one of the less flexible variations of this option were adopted, there would be
no assurance that any funds would actually be used for school choice activities. Even
if a minimum level of funding or state policy support for choice were required, such
specificity would be inconsistent with the block grant strategy. It would also be
inconsistent with the block grant approach to specify what types of school choice
were acceptable (e.g., only choice that included private and public schools). Further,
if funds were spread among all LEAs, as would typically occur under a block grant,
the amount per pupil received by each LEA might be too low to add significantly to
state and local resources in support of school choice, especially in view of the
competing demands on those funds. Finally, at least in the past, broad federal block
grants for education have experienced declines in funding over time, especially in
comparison to programs where the activities or eligible population were more
narrowly defined.
52
Tax Benefits for Elementary and Secondary Education Tuition and Fees.
Over the last several decades, proposals have often been made to provide tax benefits
— deductions, credits, or exemptions from taxation of certain income — for families
paying tuition or related costs for postsecondary, secondary, or elementary
education. While federal tax benefits are not currently authorized for privat
53
e
elementary and secondary education, private schools receive favorable tax
treatment in other respects. Limited tax deductions, credits, and savings incentives
54
for certain postsecondary education expenses were enacted in 1997. Two states
55
— Iowa and Minnesota — authorize relatively small state income tax deductions or
52 See: Education Block Grants for additional, general advantages and disadvantages of
federal block grants for elementary and secondary education.

53 Tax deductions may be distinguished from tax credits as follows: A deduction would allow
families to reduce their taxable income by an amount equal to some or all qualified expenses.
Tax deductions are usually, but not necessarily, available only to taxpayers who itemize their
deductions, as opposed to using the standard deduction. In contrast, a credit would directly
reduce tax liability and might even be paid to families with no tax liability (a refundable
credit). For general information on tuition tax credit and deduction concepts and previous
proposals, see Tuition Tax Credits, CRS Report 93-124, by Bob Lyke. (Hereafter cited as
Tuition Tax Credits)
54 For example, the income of such schools is not subject to federal taxation, charitable
contributions to the schools may be deducted from taxable income by the donors, and
scholarships for students at such schools are not taxable income to the recipient or her/his
family if they do not exceed the cost of tuition and related fees, books, etc.

55 See Tax Benefits for Education in the Taxpayer Relief Act of 1997, CRS Report 97-915,
by Bob Lyke.

CRS-28
credits for private elementary or secondary school tuition and fees plus certain
expenses related to public school attendance.56
Historically, most proposals for federal tax benefits related to private elementary
and secondary education expenses would have authorized tax credits or deductions
for tuition and related expenses. However, more recent attention and legislative
activity have focused on proposals to exempt from taxation the income from
education savings accounts if such income is used to pay tuition or other costs for
pupils at both public and private schools. As was discussed earlier, H.R. 2646, the
Education Savings Act for Public and Private Schools, was passed by the House on
October 23, 1997, and is scheduled for Senate floor debate beginning April 20, 1998.
This bill would expand the current authorization for Education Individual Retirement
Accounts (IRAs), to allow tax-free proceeds from the accounts to be used to pay
public or private elementary and secondary, as well as postsecondary, education
expenses, including home schooling expenses, and computer hardware and software.
It would also raise the limit on contributions for beneficiaries under the age of 18.57
While maximum amounts, as well as income eligibility criteria, can be established
for a deduction, credit, or education savings account, the tax benefit would
presumably be available nationwide to all eligible families. Therefore, this sort of
option is very broad in scope, and might increase choice options very substantially,
if the maximum dollar value of the benefit were significant. Such tax benefits would
alleviate what some advocates call the “double taxation” experienced by families that
pay taxes for public school systems as well as private school tuition. Some would
consider it advantageous that this form of aid to school choice would not be a
“program,” with accompanying administrators, regulations, etc., (other than those
involved with administering the tax allowance at the Internal Revenue Service), but
would be an addition to taxpayer net income. Further, the benefits of a tax benefit
would be dispersed broadly, principally on the basis of individual and family decisions.
A tuition tax benefit is potentially very expensive, although the spending would
be primarily in terms of “tax expenditures,” not federal appropriations. Unles
58
s
public schools were allowed to charge tuition or other fees eligible for the tax
allowance, most of the aid would go to families with pupils attending private schools.
There might be a large increase in demand for private education, and a large increase
in the tuition and fees private schools charge. There might also be a negative impact
on those remaining in public schools, especially if pupils from the lowest income
families, or those with disabilities or other educational disadvantages, are most likely

56 In Minnesota, legislation was adopted in July 1997 that increased the previously preexisting
tax deduction, and authorized a new tax credit for students from families with income of
$33,500 and below. The credit cannot be applied to private school tuition expenses, although
it might be applied to other expenditures related to private school enrollment (e.g.,
transportation or textbooks). (Minnesota Expands Tax Breaks Tied to Education. Education
Week. July 9, 1997. p. 14.)

57 See Education Savings Accounts for Elementary and Secondary Education, CRS Report
97-852, by Bob Lyke.
58 An exception might be the costs of the refundable portion of a tax credit for low-income
families.

CRS-29
to remain in public schools. The oversight or monitoring of participating private
schools might be virtually nonexistent. There may also be constitutional difficulties
if religiously-affiliated private schools can participate, or if public schools do not
receive a significant share of aid. Finally, authorization of new tuition tax allowances
would be counter to recent proposals to simplify the federal income tax system and
reduce special tax allowances within it.
Issues Regarding the Federal Options in General
The following section of this report provides discussion and analysis of two
broad sets of issues that are related to all of the possible federal policy options
considered above, as well as state and local programs. These are the basic questions
of what are the effects of increased school choice, and what would be the net effect
of new federal support of choice? In other words, why should choice be supported,
and is greater federal aid likely to have a significant impact on the evolution of choice
policies in states and localities, or would it probably be marginal to that process?
What are the Effects of School Choice? Although the federal government
already supports school choice (see discussion above), the legislative debate over
options for further federal support is likely to include, among other issues,
consideration of educational and other effects of school choice. This debate may
center on whether school choice positively affects students’ academic achievement,
and the distribution of students in terms of their racial/ethnic and family income
characteristics. This section highlights some of the arguments made on either side of
these particular issues. Congressional proponents and opponents of different choice
programs are likely to find evidence to support their positions, but definitive
conclusions on the effects of choice on achievement and distribution of students
remain out of reach. Among the factors that preclude definitive conclusions are:
! the wide variation in school choice efforts currently underway (there is no
single choice model to assess, and the consequences for achievement and the
distribution of students are likely to depend upon the specific details of any
particular choice program);
! the relative newness of the kinds of choice initiatives at the forefront of
policymaking (such efforts as statewide public school choice have been
established relatively recently, and voucher programs supporting public and
private school choice are not only new but rare);
! the very nature of choice programs which involves self-selection by students
and families, making it difficult to untangle cause and effect; and
! the resulting limitations of existing research on choice (these stem partly from
the newness of choice initiatives and the lack of adequate controls on such
factors as family background in many analyses of the effects of school choice).

CRS-30
A comprehensive treatment of the research and arguments advanced on the
consequences of school choice is well beyond the scope of the present report. The
59
text below presents general arguments for and against choice in the particular areas
under consideration. It must be stressed that, because of the many different
approaches possible to school choice, the groups and individuals supporting or
opposing choice also vary depending upon the particular approach under
consideration.
Educational Quality. Choice proponents assert that, because choice opens up
an educational marketplace requiring public schools to compete for students, those
schools will either come to provide students with a higher quality education or will
cease operation as more and more students leave. In creating this marketplace,
choice, it is argued, shifts the balance of power in school systems from bureaucracies
concerned primarily about their self preservation to parents whose interests are
focused on academic quality. Further, private school choice advocates point to some
evidence of higher levels of academic achievement in the private sector overall as
evidence that a choice program, which would enable more students to have access to
the private sector, would lead to higher overall levels of academic achievement.
Opponents counter that the competition generated by choice will not function
so neatly with regard to educational quality. They are concerned that the loss of
students and financial resources will leave some schools less able to improve but still
responsible for educating many students unwilling or unable to leave; these may be
primarily educationally and economically disadvantaged students. Opponents state
that an educational marketplace can work to the disadvantage of some parents and
students who are unlikely to receive adequate information with which to make
educationally sound choices. Further, they suggest that choices may be made on the
nonacademic, not the academic, features of schools. The academic superiority of
private schools has also been challenged by choice critics who contend that, when

59 The analysis which follows draws from previous CRS reports on school choice, as well as
other sources. The consideration below on racial/ethnic and socioeconomic distribution of
students is based largely on: School Choice in 1993: Status and Issues, CRS Report 93-
1059, by James B. Stedman. More detail on the issues considered in this section are provided
by: Public School Choice: Recent Developments and Analysis of Issues, CRS Report 89-
219, by Wayne Riddle and James B. Stedman. Among the articles and reports marshaling
arguments and evidence in favor of school choice are: Henderson, David R. The Case for
School Choice. Hoover Institute, 1993; Allen, Jeanne. Nine Phoney Assertions About School
Choice. USA Today, July 1993; and Greene, Jay P., et al. The Effectiveness of School
Choice in Milwaukee: A Secondary Analysis of Data from the Program’s Evaluation.
Harvard University Program in Education Policy and Governance, Occasional Paper 96-3,
Aug. 1996. Among the articles and reports that challenge evidence advanced in favor of
choice are: School Choice. The Carnegie Foundation for the Advancement of Teaching, 1992;
Rosenberg, Bella. Public School Choice: Can We Find The Right Balance? American
Educator, summer 1989; Witte, John. Who Benefits from the Milwaukee Choice Program?
in Elmore, Richard, et al. Who Chooses? Who Loses? Culture, Institutions and the
Unequal Effects of School Choice. Teachers College, Columbia University, 1996. p. 118-
137; and Metcalf, Kim K., et al. A Comparative Evaluation of the Cleveland Scholarship
and Tutoring Grant Program, Year One: 1996-97. School of Education, Indiana University.
March 16, 1998.

CRS-31
similar groups of student are compared, the private school advantages fade to
insignificance.
Existing evidence specifically on the academic achievement effects of the current
public-private voucher programs in Milwaukee and Cleveland is inconclusive and/or
contradictory. Evaluations which find significant effects of these choice programs on
pupil achievement have been criticized on methodological grounds, particularly with
respect to ways in which pupil sample groups and/or test scores are adjusted for
comparability. The relatively recent implementation of the Cleveland program, plus
the high rate of pupil mobility and difficulties in obtaining all relevant pupil records
in both programs have created serious difficulties for those attempting to evaluate
these programs.
Racial and Ethnic Integration. Choice has strong historical links to school
desegregation, both as an approach used in the 1950s and 1960s to thwart the
dismantling of segregated school systems, and more recently in the form of magnet
schools as a way to desegregate schools voluntarily. The consequences of expanded
school choice programs for racial and ethnic segregation among students are being
debated.
Proponents of choice argue that many minority students and parents do not have
the economic and other resources necessary to select their schools, either by enrolling
in private schools or moving to another school attendance area or school district. As
a result, it is argued, racial and ethnic minorities are increasingly isolated in poorly
performing schools. Choice would offer these parents the opportunity to select their
children’s schools, potentially ending racial isolation.
Critics counter that choice programs will encourage white flight, that is, the
changing of schools by white students in order to avoid enrolling with minorities.
Further, they contend that choice programs may include various barriers to full
participation by minorities, such as inadequate dissemination of information about
choice options and limits on subsidy of transportation costs.
Socioeconomic Distribution of Students. The arguments with regard to the
consequences of choice for students from different socioeconomic backgrounds are
similar to those made concerning minority segregation. Proponents assert that choice
promotes equity by enabling economically disadvantaged students to have educational
options, something usually reserved for those students and families with the requisite
economic resources. Opponents reply that choice may exacerbate current inequities
because the most disadvantaged students and families may be the least likely and least
able to take the steps needed to change schools. Their inaction on behalf of their
children, it is argued, may be only partly a function of limited economic resources.
Would Additional Federal Support of School Choice Have Significant
Effects? As is apparent from the brief review of state and local developments
regarding school choice, this is currently an active policy area in much of the Nation.
This is occurring in spite of a lack of broad federal initiatives in support of school
choice — just modest size programs such as magnet schools or the new (1994)
initiatives on charter schools and choice within Title I programs, and some “bully
pulpit” exhortations in support of choice, especially during the Reagan and Bush

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Administrations. There are also relatively few barriers to school choice emanating
from the federal government, with the possible exception of constraints arising from
school desegregation orders (some of which also encourage choice through such
mechanisms as magnet schools), or possible constitutional constraints on choice
involving private, religiously-affiliated schools. Therefore, it may be asked whether
new federal aid to school choice activities would have substantial impact — what
additional effect might arise from federal action, beyond activity initiated by state and
local actions? Opponents of new federal school choice programs will likely argue that
additional federal aid would have little net effect, and that states and localities should
continue to make their own decisions in this area with the federal government playing,
in net, an essentially neutral role.
One reason why further federal action on school choice may be significant is that
the perceived barriers to choice found in the policies or decisions of ED or federal
courts could be reduced or completely removed, although, as noted above, there may
be particular difficulty in removing barriers that arise from court decisions. Another
rationale for federal action is that if expanded school choice is deemed by its
proponents to be an essential part of school reform, then perhaps federal support of
reform should include a substantial choice component to provide leadership to state
and local efforts, even if the direct impact of the federal effort is relatively small.
Further, it is possible that some states or localities wishing to provide expanded
school choice options may have insufficient resources to pay the attendant costs
(transportation, etc.) without federal financial assistance. Alternatively, even
relatively small amounts of federal aid may induce some localities to initiate choice
programs where they otherwise might not have done so.
A particular respect in which federal aid to choice might have substantial impact
is the inclusion of private schools among the choice options. Thus far, only a small
number of school choice programs initiated by states or localities include private
schools. As described in the preceding section of this report, several federal school
choice options might include private schools; some might even focus most of the aid
on private schools (e.g., tuition tax allowances). In this respect — inclusion of private
schools, assuming any constitutional challenges could be successfully resolved —
several congressional proponents of school choice seem prepared to expand choices
more broadly than do the great majority of state and local governments, and a federal
choice program might have a distinctive and substantial impact.