July 2014

School Choice 101Educational Choice and

Achievement in NebraskaPART 1

BRIEF

Educational Choice and Achievement in Nebraska, Part 1

2

IntroductionPrograms to increase educational opportunities and choic-es for students of different backgrounds, abilities, needs and economic circumstances are increasing throughout the country. Nebraska is noteworthy for the absence of any school choice programs in the state. Nebraska ranks at or near the bottom of all states for the options the state offers parents for educating their children.1 Nebraska residents might not be concerned by this ranking if the performance of Nebraska schools precluded the need for consideration of education reform measures. However, trends in a number of student achievement and success measures suggest Nebraska’s students and schools have lagged behind most other states.

Nebraska ranks relatively high (16th) for the percentage of its students living in families with incomes at least 200 percent of the federal poverty level, and the percentage of students in families with at least one parent with a postsecondary degree (14th).2 Both of these measures are correlated with student achievement and success. How-ever, Nebraska students’ math and reading achievement, as measured by the National Assessment of Educational Progress (NAEP), ranks in the middle range of all states. As importantly, achievement gains for Nebraska students between 2003 and 2011 were well below the national average, with the state ranking 43rd on achievement gains in fourth grade math, 49th on eighth grade math, and 24th and 30th respectively on fourth and eighth grade reading. Nebraska also ranks low (45th—tied with West Virginia) on the percentage of its students taking advanced placement tests who receive high scores (3 or above).3 These achievement disparities are even more pro-nounced for students in the state’s largest school district, Omaha Public Schools (OPS), especially for Latino and African-American students. Comparisons with student achievement in Omaha Catholic Schools, where the minority achievement gap largely disappears, suggest that institutional factors, not demographic ones, are chiefly responsible for the disparate education outcomes.4

Nebraska ranks 16th for high school graduation rates but has seen virtually no improvement (+0.6%) over the past decade, while the national graduation rate has improved by 7.9 percent during the same time period. Nebraska’s high school graduation rate is still four percentage points higher than the national average, although the gradua-tion rate for most minority students in Nebraska is well

below national averages, and only six states increased their graduation rates by a smaller percentage than did Nebras-ka between 2000 and 2010.5

Research indicates students with more engaged parents tend to receive higher grades and test scores and are more likely to graduate from high school.6 The most fundamen-tal way to engage parents is to give them the authority to make decisions about where their child should attend school. Although affluent families have always exercised a lot of choice in their children’s education, the vast major-ity of families need financial assistance to make choices that allow them to select high-quality schools.

Education Policy TrendsAt the time of this report, there were 22 voucher pro-grams in 13 states and the District of Columbia, as well as 16 scholarship tax credit programs operating in 14 states. Eight states also have individual income tax credit or deduction programs that allow families to offset some portion of the cost of education expenses for children. In total, 21 states and the District of Columbia have enacted one or more private school choice programs. Further, 2.3 million students are educated at public charter schools in 42 states and the District of Columbia. Only Nebraska, Montana, North Dakota, South Dakota, Kentucky, Ala-bama, West Virginia, and Vermont do not have legislation enabling charter schools.

The bulk of existing private school choice programs have emerged during the last ten years and are found mainly in states that also have charter schools. Despite solid public support for school choice in Nebraska,7 neither the state nor any individual school district has a private school choice program in place. Recent years have seen a number of school choice proposals debated but not adopted in the Nebraska Legislature.

Charter schools, scholarship vouchers, and scholarship tax credits all seek to provide alternatives to traditional public schools and to increase parental engagement. Re-search shows that both charter schools and private school voucher and scholarship tax credit programs can improve student achievement and improve the public schools from which they draw students. In addition, they tend to increase the chances that students will graduate from high school on time and enroll in college.8

Platte Institute Policy Brief

3

Charter SchoolsCharter schools are publicly funded, independently man-aged, semi-autonomous schools of choice. They cannot charge tuition and must adhere to the same academic ac-countability measures as traditional public schools (TPS). Similar to traditional schools, charter schools receive their primary source of revenue from state and local funding; however, they have more freedom over budgets, staffing, teaching methods and curriculum than traditional public schools. In exchange for this freedom, they must demon-strate academic results and must generate enough demand for enrollment to remain open. Data shows that charter school enrollment is growing much faster than enroll-ments at traditional public schools and private schools. As a percentage of public school enrollments, charter school enrollment has risen from 1.4 to 4.6 percent over the past 10 years.9

Charter schools receive funding based on the number of enrolled students; the state per pupil funding typically transfers with the student from the resident district to the charter school. The amount of per student funding varies greatly from state-to-state. Some states fund charter schools based on the per pupil allocation of the student’s resident district. This method requires school districts to transfer the student’s state and local funding to the charter school.

Other states base per pupil funding on a uniform, state-wide formula that ensures charter schools receive the same amount of funding wherever they and their students are located.10

Several studies suggest that charter schools are underfund-ed relative to traditional public schools. The Fordham Institute found that charters received about 22 percent

Figure 1: The Number of States With Private School Choice Programs Has Grown Dramatically

DC

Source: National Conference of State Legislatures.

States With Scholarship Tax Credits

States With Voucher Program(s)

States With Both

Educational Choice and Achievement in Nebraska, Part 1

4

less funding per pupil relative to the TPS in their respec-tive districts.11 Similarly, Batdoff, Maloney, and May found the funding gap was about 19 percent.12 Finally, Miron and Urschel found a charter revenue gap of about 30 percent, but suggested that much of the spending dif-ferential is the result of higher spending in TPS for special education, student support services, transportation, and food services. Some of the funding gap is offset by private contributions to charter schools.13 In his discussion of charter school funding gaps, Buddin notes that because funding formulas are complex for both districts and char-ters, the true differentials are difficult to identify.14

Scholarship Tax CreditsScholarship tax credit programs allow corporations and/or individuals to allocate a portion of their owed state taxes to private, nonprofit organizations that award scholarships to students enrolling in private schools. When businesses or individuals make a contribution to a scholarship grant-ing organization (SGO), they directly target the use of

their tax dollars to support education and receive a tax credit for their donation. The amount of the tax credit is all or a portion of the contribution. Scholarships allow students to choose among private schools—and some-times public schools outside their assigned district—that have been approved by the SGO.

By providing tuition assistance, scholarship tax credit programs seek to provide private school options to parents who otherwise would not have that option. They can also target at-risk populations such as low-income students, students at failing schools, or students with disabilities.

Under a scholarship tax credit program, responsibility for scholarship funding is handled in the private sector. The state government’s role is to provide an incentive for donations through tax credits, and to establish program rules and administrative requirements. The state provides indirect funding by foregoing revenue in the form of tax credits awarded for contributions to SGOs.

Figure 2: Over 2 Million Students Attend Charter Schools Nationwide, Representing Almost 5 Percent of Students in Public Schools and Rising

Scholarship Supply and Demand ($10 Million Program)

0

250,000

500,000

750,000

1,000,000

1,250,000

1,500,000

1,750,000

2,000,000

2,250,000

2,500,000

99-00 00-01 01-02 02-03 03-04 04-05 05-06 06-07 07-08 08-09 09-10 10-11 11-12 12-13

School Year

Cha

rter

Enr

ollm

ent

0.5%

1.0%

1.5%

2.0%

2.5%

3.0%

3.5%

4.0%

4.5%

5.0%

Enr

ollm

ent a

s a

% o

f Pub

lic

Enr

ollm

ent

Charter Enrollment

Charter Enrollment as a % ofPublic School Enrollment

Platte Institute Policy Brief

5

State legislatures can establish limitations on student eligibility for scholarship tax credit programs. Most states, with the exception of Georgia and Arizona, tie student eligibility to household income in relation to either fed-eral poverty guidelines or eligibility for free and reduced priced lunch. Also, some programs have more specific eligibility requirements, such as students with disabilities or students who are attending failing schools. Some states require students to have previously attended a public school to be eligible to receive a scholarship.

VouchersSchool vouchers are state-funded scholarships that pay for students to attend private schools. Legislatures typically set minimum standards for private schools that accept voucher recipients. Further, legislatures also set student eligibility standards that typically target subgroups of stu-dents such as low-income students, students who attend chronically low-performing schools, students living in a specific area, or students with disabilities.

State legislatures often determine which students are eligible for school voucher programs. Currently, thirteen states and the District of Columbia have some type of school voucher program. Eight states offer vouchers to students with disabilities, five award them to students un-der a certain income threshold, and three give vouchers to students who attend low-performing schools. Most school voucher programs also require students to have previously attended a public school.

ConclusionNebraska is one of just seven states without private school choice or charter school enrollment opportunities. Other states have enacted school choice programs as educational reform strategies, but Nebraska has so far limited educa-tion reform to changes in its school finance system and to the amount of spending on public schools. Over the last decade, gains in student achievement and gradua-tion rates in Nebraska have seriously lagged compared to gains nationally. This prompts questions about whether policymakers should consider more creative strategies for improving student achievement in the state.15

Endnotes1 The Center for Education Reform. “Parent Power Index On-

line” [URL: http://www.edreform.com/in-the-states/parent-power-index/#ne]

2 Editorial Projects in Education Research Center. “Nebraska State Highlights 2013.” [URL: http://www.edweek.org/rc]

3 Ibid.

4 Alger, Vicki, “Ending Nebraska’s Achievement Gap: A First Look at Student Achievement in Omaha’s Public and Catholic Schools,” Platte Institute for Economic Research, April 2014.

5 Nebraska’s Latino student population was the only minority group to exceed national average graduation rates according to data from the Editorial Projects in Education Research Center.

6 Henderson, Anne T. and Karen L. Mapp. “A New Wave of Evidence: The Impact of School, Family, and Community Connections on Student Achievement.” SEDL. 2002.

7 DiPerna, Paul. “Nebraska’s Opinion on K-12 Education and School Choice.” Foundation for Educational Choice. Septem-ber 2009.

8 Zimmer, Ron, Cassandra Guarino, and Richard Buddin. School Choice: Options and Outcomes, in Urban and Regional Policy and Its Effect. Vol. 2, ed. M. Turner, H. Wial, and H. Wolman. Brookings Institution. 2010. See also David N. Figlio. “Evaluation of the Florida Tax Credit Scholarship Pro-gram Participation, Compliance and Test Scores in 2009–10.” University of Florida, Northwestern University, and National Bureau of Economic Research. August 2011.

9 National Alliance for Public Charter Schools [URL: http://dashboard.publiccharters.org/dashboard/students/]

10 Cunningham, Josh. “Comprehensive School Choice Policy: A Guide for Legislators.” National Conference of State Legisla-tures. September 2013.

11 Speakman, Sheree, Chester E. Finn Jr., and Bryan C. Hassel. “Charter School Funding: Inequity’s Next Frontier.” Fordham Institute. 2005.

12 Batdorff, Meagan, Larry Maloney, and Jay May. “Charter School Funding: Inequity Persists.” Ball State University. 2010.

13 Miron, Gary and Jessica Urschel. “Equal or Fair? A Study of Revenues and Expenditures in American Charter Schools.” Western Michigan University. 2010.

14 Buddin, Richard. “The Impact of Charter Schools on Public and Private School Enrollments.” Cato Institute. Policy Analysis #707. 2012.

15 A forthcoming Platte Institute policy brief will identify factors important in analyzing the fiscal impact of such strategies.

The Platte Institute for Economic Research: Leading the Way

Our Mission: Advance public policy alternatives that foster limited government, personal responsibility and free enterprise in Nebraska. By conducting vital research and publishing timely reports, briefings, and other material, the Platte Institute will assist policy makers, the media and the general public in gaining insight to time-proven free market ideas.

A non-profit foundation, the Platte Institute relies on the resources and innovative thinking of individuals who share a commitment to liberty and the best possible quality of life for Nebraskans.

900 South 74th PlazaSuite 400

Omaha, NE 68114402.452.3737

platteinstitute.org

Gail Werner-Robertson

Director and President of the Platte Institute. Founder and President of GWR Wealth Management, a family office focusing on investments, taxes, philanthropy, and legacy planning. As a result of her long-time interest in academic excellence and free market values, she is co-founder of Creighton University’s Werner Institute. Appointed by the Governor to the Nebraska Investment Council.

Warren Arganbright

Director and noted north-central Nebraska lawyer and water resources activist. He has practiced throughout Nebraska and South Dakota and has represented the Niobrara Council since its creation.

Michael Groene

Director and farm equip-ment sales representative. Co-founder of the Western Nebraska Taxpayers Association.

Travis Hiner

Former president and chairman of Hiner Imple-ment, Inc., and president/chairman of Hiner Lease Company. He has served as a board member of the Kos-man Banking Family since 1990 (now Platte Valley Companies).

Jeff Dinklage

Owner and operator of Herman Dinklage, Inc. A fourth-generation cattle feeder, he served on the Nebraska Cattle Board for four years and was a bank director for twenty years. He is also an avid Husker fan and enjoys flying.

Jason Dworak

Leader of a Private Wealth Team with UBS Financial Services. Served on the board of Lincoln City Mission, Christian Heritage Children’s Homes, Lincoln Christian School, and Leadership Resources.

Kyle Hanson

General counsel for The Buckle Inc., Kearney since 1998. Served as first vice pres-ident and trial attorney for the Mutual of Omaha Companies and as an attorney at Kutak Rock law firm, Omaha. On the boards of Faith Christian School and Kearney Area Family YMCA.

Jim Vokal

Jim, a lifelong Nebraskan, adds to his record of public service a solid business and financial background. He has an unwavering com-mitment to the Nebraska community through key civic board positions.

Chief Executive Platte Institute Board of Directors:Officer:

Brian Gubbels

Originally from a farm in Randolph, Nebraska, entrepreneur Brian Gubbels graduated from the Univer-sity of Nebraska at Lincoln and is the CEO and owner of DataShield Corporation and a co-founder of Firstar Fiber Corporation.

/PlatteInstitute

@PlatteInstitute