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AAE Federal Update April 18, 2011
posted by: Alix | April 19, 2011, 12:10 AM   

U.S. Supreme Courts Rules in Favor of Tax Credits

Two weeks ago, the U.S. Supreme Court ruled that ordinary taxpayers cannot challenge government programs that use tax breaks to direct money to religious activities and schools, providing a huge victory for school choice advocates nationwide. The high court ruled 5-4 in favor of an Arizona scholarship program that has mainly benefited religious schools in offering a dollar-for-dollar reduction in the income tax bill of taxpayers who participate in the program.

For more than 13 years, Arizona has allowed residents to send up to $500 to a tuition scholarship organization that they would have otherwise paid the state in taxes on their incomes. The state has passed up nearly $350 million in income tax payments over the course of the scholarship program.

Because the program operates as a tax credit and not direct funding, "contributions result from the decisions of private taxpayers regarding their own funds," Justice Kennedy said in his majority opinion.

The Supreme Court's ruling sets a legal precedent that allows private citizens to contribute to a private, religious, and or educational cause, empowering taxpayer to spend their money as they see fit. Only time will tell if this legal argument will spread to other state tax-credit programs, especially at a time when states and localities are facing difficult financial decisions.

House Committee on Education Discusses Solutions to Encourage Maximum Flexibility for Schools

Last week, the House Committee on Education and the Workforce held the first in a series of hearings to examine specific education reform proposals. The hearing, entitled "Education Reforms: Promoting Innovation and Flexibility," brought school superintendents and administrators to Washington, D.C. to discuss solutions needed to fix the problems in the nation's education system.

In his opening remarks, Committee Chairman John Kline (R-MN) praised the parents, teachers, reformers and community leaders who are "shining a bright light on a broken system and pursuing real change that puts children first." However, he noted the federal bureaucracy and its prescriptive mandates often weigh down the nation's schools and make it more difficult for reformers to make meaningful progress. "Clearly a one-size-fits-all approach doesn't work, resulting in frustration among parents and educators and missed opportunities for students," said Chairman Kline.

Citing the challenges presented by current federal law, Oklahoma State Superintendent of Public Instruction Dr. Janet Barresi said, "On the one hand, the U.S. Department of Education has issued guidelines that on the surface seem to offer states more flexibility to meet local needs. But there seems to be a disconnect between good intentions at the top level and what actually occurs in practice."

During the debate, many questions were asked about creating more flexibility within the system. Mr. Yohance C. Maqubela, chief operating officer of a public charter school in the District of Columbia, noted the unique opportunities improved flexibility affords charter schools, "Through the flexibility provided in charter school legislation, we have been able to create a truly unique educational model for our student population that takes into account and addresses the specific circumstances that have shaped their lives, without compromising our commitment to the highest levels of academic excellence."

Chairman Kline expressed cautious optimism that the Committee may soon introduce the first in a series of federal education reform bills designed to increase flexibility at the state and local level.

Federal Budget Agreement

Education advocates are already bracing for the impact the newly approved federal budget will have on education spending. The hard-fought agreement followed months of debate between Republicans in the House, who fought to cut federal spending, including for K-12 education, and the Obama administration, which sought to preserve education and other social welfare spending priorities.

Though a number of smaller, targeted programs ended up being eliminated or cut back, in the end just over $1 billion was cut from the U.S. Department of Education's total budget.

Among the cut backs were decreases in funding to the Educational Technology State Grants program, which provides formula grants to states to purchase technology as well as Teach for America, the National Writing Project and the Reading is Fundamental program.

Some education programs, including Title I grants to school districts and special education grants to states will stay at approximately pre-budget funding levels. The maximum Pell Grant award, for example, will stay at $5,550.

There is also new funding for certain programs, with approximately $700 million allotted for a new round of Race to the Top grants, $150 million for another round of Investing in Innovation (i3) grants, and a $20 million increase for the Promise Neighborhoods program.

Secretary Duncan Tours the Country, Comments on State Education Reforms

Last week Secretary of Education Arne Duncan stopped by a townhall meeting hosted by Indiana Governor Mitch Daniels and commented on the need for meaningful reforms across the country. Secretary Duncan indicated that "with a quarter of our students dropping out of high school, with less than half earning any kind of college degree, and with America slipping further behind other countries, we cannot stand still any longer," in regards to education reform.

Secretary Duncan congratulated the Governor on his leadership and his tenacity to pursue broad reforms but indicated that his support ends when it comes to collective bargaining privileges. "Where I part ways with you is over two issues: vouchers and limiting collective bargaining rights. Our position on both issues has been clear and should not come as a surprise to anyone," Duncan stressed.

In another meeting in Illinois, Secretary Duncan again expressed support for reforms in the state, "Illinois has steadily and effectively built consensus for real and meaningful change among all of the key stakeholders, and set a national example of constructive collaboration for other states to follow."

Both states are currently in the midst of passing legislation that enacts significant education reforms and limits union power. Read AAE's state-by-state analysis for the latest on the state policy front.

Secretary Duncan's comments have been widely discussed as both an endorsement of the education reform legislation in that states but also a way to appease some of the Obama administration's biggest contributors– the teachers unions. If the labor reform legislation pending in the states is any indication, a combination of both seems to be the theme of legislation sessions across the country.

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