President Bush proposes tuition tax credits

2/19/02 – President Bush's budget proposals for fiscal year 2003 include a new tuition tax credit program. The program would provide up to $2,500 a year in private school tuition for children attending public schools that are considered to be failing under state standards.

According to the budget document, the proposal would cost an estimated $3.7 billion in lost revenue over five years.

"This proposal is a back-door voucher that opens the way to funding private education at the expense of public schools," says NSBA Associate Executive Director Michael A. Resnick. "This money would be better spent to meet the underfunded federal obligation for special education or the new ESEA program, which was just signed into law," he says.

The education tax credit would cover 50 percent of the first $5,000 spent on K-12 education. In addition to private school tuition, the money could be used for books, computers, and other equipment to set up a home school or for transportation to a private school or another public school.

The education tax credit would be refundable, which means that even low-income workers who owe no taxes would receive a cash benefit. If approved by Congress, the tax credit would take effect for tax returns filed in 2003.

"Because the money goes directly to the parents, the U.S. Supreme Court has ruled that education tax credit programs are constitutional," the budget document states, "and there is an extensive body of case law that backs up these programs."

Sen. Christopher J. Dodd (D-Conn.) says the proposed tuition tax credit would undermine public education and predicts it won't be passed by Congress. "Why did we spend all these months trying to improve public schools and then turn around and say, 'Here's some money, go off to private schools?" he asks. Dodd and other Democrats are considering an alternative to the President's proposal for a child care or elder care tax credit.

But House Education and the Workforce Committee Chair John Boehner (R-Ohio) expressed support for the tuition tax credits. "Giving parents this choice will broaden the escape route for students trapped in failing schools," he says. "It will also energize the public education system and spur struggling schools to succeed."

The budget also includes several initiatives in support of school choice. It proposes a new $50 million Choice Demonstration Fund to support local experiments for private schools and alternative forms of public schools, such as charter schools and magnet schools.

The budget also proposes $100 million to help charter schools buy, lease, or renovate buildings. Bush proposed a similar program last year, but Congress did not fund it.

Several Democrats spoke out against the President's budget proposals. Rep. George Miller (D-Calif.) says it's the "smallest increase we've had in many, many years."

The budget request calls for $50.3 billion in discretionary funding for the Education Department, a 2.8 percent increase over the amount approved for the fiscal 2002.

"President Bush's budget demonstrates his continued commitment to meeting the needs of disadvantaged children," says Education Secretary Rod Paige, with much of the money targeted to programs that help poor and minority students.

The budget proposes a $1 billion increase (8.4 percent) for Title I grants to local school districts, which would bring the total funding for this program to $13.3 billion. Most of the increase ($920 million) would go to the targeted grants component.

A $100 million increase is proposed for the Reading First state grants program, an 11 percent increase.

For the Individuals with Disabilities Education Act, a $1 billion increase is proposed (13 percent) for a total of $8.5 billion. This would move school districts from a federal funding shortfall of $10.5 billion in fiscal 2002 to $10.1 billion in 2003.

"It's all a question of priorities," Resnick says. "At this rate, it will take another 35 years for a total of 62 years before Congress finally meets its commitment to fund just 40 percent of the cost of special education."

The President proposes eliminating about 40 programs, including rural education, Preparing Tomorrow's Teachers to Use Technology, Smaller Learning Communities, Gifted and Talented, Star Schools, foreign language assistance, community technology centers, women's educational equity, and others.

Many other programs would be level funded or would receive minimal increases. Among them: Title I concentration grants, Early Reading First, Title I comprehensive school reform, impact aid, Improving Teacher Quality state grants, innovative state programs, Safe and Drug-Free Schools state grants, 21st Century Learning Centers, and bilingual and immigrant education grants.

The budget for the Department of Health and Human Services includes a $33 million increase (33 percent) for the abstinence-only education program, bringing the total to $135 million. To receive funding under the program, schools may not teach about contraception to prevent pregnancy or sexually transmitted diseases.