School Choice and Competition

Public education is a core function of state and local government. The state constitution, in the words of the N.C. Supreme Court, recognizes the right to a "sound, basic education" for every child in the state. But public education need not and should not be delivered by government monopolies, as diverse magnet, charter, and private schools are demonstrating across the country and here in North Carolina.

Affluent families already exercise choice. They can move to neighborhoods where assigned schools are of good quality, or afford to pay twice for better education — once for private school tuition and then again in taxes to fund schools they don't use.

Middle-income and poor families have few such options. Nor do school-aged students have as much choice as do preschoolers or college students, who have long been able to use tax funds to help defray the cost of private, even religious, instruction. If a preschooler can stay in a church-run day care center, or a student attend a religious university, and receive public funds for doing so, why can't a poor, inner-city child needing effective instruction or special attention attend a private school without financial penalty?

In the end, no system for delivering goods and services functions well without providing a means for consumers to make their desires known and express their level of satisfaction.

Educational Options in North Carolina

Increasing numbers of North Carolina's students are exercising choice. Several districts — including Mecklenburg, Wake, Forsyth, and Cumberland — have established magnet schools or choice-based enrollment policies. A 1996 law established a new category of public schools, called charters, that receive public operating funds and thrive only to the extent they attract students. In 2007-08, there were more than 30,000 students enrolled in North Carolina charter schools.

Research suggests that increasing the number of charter schools in North Carolina will further improve the performance of students who choose to remain in traditional schools. In a study of North Carolina charter schools, researchers George M. Holmes, Jeff Desimone, and Nicholas G. Rupp found that competition from charter schools raised the performance of nearby traditional schools substantially. Charter school competition raised the performance of students at traditional schools who were at or near the cutoff score for grade-level proficiency. In addition, Holmes, Desimone, and Rupp found that school choice is a more cost-effective alternative to lowering class size. Lowering class size increased student performance by 0.36 percentage points, while school choice increased student performance by 1.0 percentage point.

Among the state's private schools, enrollment was about 95,785 in 2006-07, up 16 percent from ten years earlier. Home-school enrollment skyrocketed from 18,400 to 68,700 during the same period. Overall, the proportion of students who attend charter, private, and home schools increased 83 percent during the past decade — but at 13 percent, enrollment in non-district schools of choice remained low compared to district school enrollment.

The Constitutionality of School Choice

North Carolina's Constitution specifies that the public school system must be "general and uniform." This provision does not mean that all schools must be public schools. Instead, this merely establishes a minimum standard for the state, a standard that is not at odds with establishing alternative schools and programs that are not a part of the public school system. Years of legal precedent have decreed that a "general and uniform" school system is one that improves the education of the state's citizens, which a school choice program would do. Therefore, school choice would not violate the "general and uniform" provision in the North Carolina Constitution.

More importantly, the North Carolina Constitution is one of the few state constitutions that do not contain religious clauses that would prohibit school choice for religious schools. The constitution does not contain an Establishment Clause or a "compelled support" clause (also known as a Blaine Amendment) that restrict the government's ability to support sectarian organizations or churches.

Although the North Carolina Constitution does not contain restrictive religious clauses, a school choice program in North Carolina would still have to comply with religion clauses of the U.S. Constitution. In Zelman v. Simmons-Harris (2002), the U.S. Supreme Court ruled that school choice does not violate the separation of church and state because the parents, not the state, determine their child's school. Therefore, neither the state nor federal constitution would prohibit a comprehensive school choice program in North Carolina.

Tax Credits

Education tax credits would enable low- and middle-income parents to exercise school choice. A family education tax credit would reduce the state income tax liability of families that incur out-of-pocket expenses for private school tuition and educational services and expenses. A philanthropy education tax credit would reduce the state income tax liability of individuals and business that donate to scholarship funding organizations. Research has shown that both types of tax credits are educationally and fiscally sound.

Currently, seven states operate education tax credit programs, and the savings to taxpayers in these states has been substantial. For example, tax credits have produced cumulative savings of $144 million in Pennsylvania, $18 million in Arizona, and $42 million in Florida. A legislative analysis found that North Carolina would save between $3 million and $19 million a year in the cost of educating special needs students, so long as at least 5 percent of the special needs students enrolled in public schools used a special needs tax credit to transfer to a private provider or facility.

Recommendations

1. The General Assembly should give parents an "Education Bill of Rights" that attaches funding to the student and gives parents the right to send their children to any public, charter, or private school in the state.

2. North Carolina school districts should make greater use of open enrollment and magnet schools, using choice and competition as tools to improve academic performance and allow diverse learning communities to form. Forced busing for social engineering is poor public policy, but voluntary busing for educational excellence provides children with the opportunity to receive the sound, basic education to which they are entitled.

3. The legislatively imposed statewide cap of 100 charter schools should be lifted, allowing the number of charters to grow as long as parents, educators, and oversight agencies ensure accountability for results.

4. All North Carolina families should be allowed to set up educational savings accounts, with an annual tax-deductible deposit of $4,500 per child, from which they can withdraw funds tax-free for educational expenses such as textbooks, educational materials, or tuition incurred at any time from preschool through college. Needy students in public schools where fewer than 60 percent test at grade level should get $4,500 scholarships to attend private schools.