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» Annual Privatization Report 2005

Education

•  Charter Schools
•  School Choice Popular in State Legislatures in 2005
•  Governors Led the Way
•  Other States Considering School Choice
•  Existing School Choice Programs Continue to Expand in 2005
•  Federal Update

Charter Schools

Charter schools continue to be the largest example of school privatization. According to the Center for Education Reform, as of April 2005, approximately 3,400 charter schools are operating across the United States serving close to 1 million children. For the 2004-2005 school year, 459 new charter schools opened serving an additional 76,000 school children. In addition, according to Arizona State University's Profiles of For-Profit Education Management Organizations, as of the 2004-05 school year there were 535 public schools being operated by 59 for-profit management companies in 25 states and the District of Columbia, enrolling approximately 239,766 students. The virtual charter school market is also growing. More than 31,000 students were enrolled in 86 online charter schools in the United States at the end of 2004, with 62 of them opening in 2000 or later.

There has also been substantial growth of charter schools in the nonprofit sector, resulting in specialization and branding of nonprofit charter schools. For example, the New Schools Venture Fund has a $40 million charter school accelerator fund focused on fueling rapid, scalable growth of nonprofit charter systems. In California alone some of the branded nonprofit charter networks include Green Dot Public Schools, Aspire Public Schools, High Tech High, and Leadership Public Schools. In addition the California Alliance for Student Achievement has begun a new network of College Ready High Schools, and well-known national nonprofit brands such as KIPP Academies and the Seed Charter schools that continue to expand nationally.

The philanthropic community plans on continuing huge investments into branding chains of charter schools. For example, the Philanthropy Roundtable has made a strategic commitment to charter school principles and views charter schools as its main vehicle for school reform. This group includes many business and foundation leaders from the Walton Family Foundation to the Broad Foundation. Some of these leaders are adopting or developing their own specific chains of charter schools—like Frank Baxter with College Ready charter schools.

In addition, the No Child Left Behind Act has created increased opportunities for charters. Urban school districts with large numbers of failing schools are increasing the opportunities for both charter schools and contract schools.

Daniel Weintraub describes this trend in San Diego in a June 12th column in the Sacramento Bee.

First, look at what is happening in San Diego, where determined parents are showing how people in some of the state's toughest neighborhoods can take back their schools from the bureaucracy.

Michelle Evans, 35, says the schools let her down. Promoted through the grades without having to achieve, she dropped out of high school barely able to read and write. But she is a fiercely proud woman, and she was not about to let the same thing happen to any of her three children, or to her community—the long-depressed Chollas View section of this otherwise wealthy city.

"Public education as it stands now is not working for minority children," says Evans, who is African-American. "It's not."

So earlier this year, Evans helped marshal a massive grass-roots campaign that culminated in a declaration of education independence in her neglected neighborhood. More than 700 parents, representing about 70 percent of children in the Gompers Secondary School attendance area, signed petitions demanding that the San Diego Unified School District relinquish control of the campus and hand it over to a board of parents, teachers, academics and community activists. After initially resisting, the district's trustees approved the request.

This fall, the site will reopen as Gompers Middle Charter School under a partnership with the University of California, San Diego. It will have a longer school day, many new teachers and high expectations. The school will combine intense instruction in basic subjects with strong discipline and close attention to the problems many children from this area deal with outside of school.

Three other San Diego neighborhood groups took control of their schools the same day Gompers did. And what is happening here increasingly is happening throughout California.

In Philadelphia, 45 of the city's lowest-performing public schools are managed through contracts with independent firms. Test score data for 2004 reveals that these schools have improved academic achievement for the city's most needy students.

In June 2004, Chicago Mayor Richard Daley announced his six-year, $150 million "Renaissance 2010" plan to shut down Chicago's failing public schools and open 100 new schools by 2010. Mayor Daley has more control over Chicago's public schools than other urban school leaders because the state legislature gave him legal control of the schools in 1995.

The plan will allow the creation of 30 new charter schools and 30 new contract schools created by private groups that sign five-year performance contracts with the district. The proposal would sell some school buildings and reconfigure some high schools and elementary schools into smaller schools catering to no more than 350 to 500 students each. The plan will also allow 60 of the 100 schools to operate outside the Chicago Teachers Union contract.

The effort will be partially funded with $50 million in private donations. The Civic Committee of the Commercial Club of Chicago, an organization comprised of the leaders of 75 of the Chicago region's largest corporations, professional firms, and universities, played a key role in selling Schools Chief Arne Duncan and Daley on the idea of creating independent schools. The committee is leading the effort to raise $50 million to cover startup costs at the new schools, half of which has already been committed by the Chicago Community Trust, the Gates Foundation, and others.

Daley's plan also points to the tendency of the charter movement to specialize in many different types of schools and replicate existing charters. For example, some of Daley's proposed schools include:

• A new military charter high school for Chicago's North Side for fall 2005, through a partnership with the Naval Service Training Command at the Great Lakes Naval Station.

• A new charter school developed by the law firm of Sonnenschein, Nath & Rosenthal scheduled to open in September 2005 in the city's North Lawndale neighborhood. The firm will spend about $200,000 a year to start its school with pre-K classes and kindergarten, and then add a grade each year.

• Daley plans to replicate existing charter schools such as Chicago's Noble Street Charter School, where kids have a longer day and study in smaller classes and Perspectives Charter School in the South Loop, where every student must land a job or show a college acceptance letter to get a high school diploma.

• A new "early college" high school linked with DeVry University.

• Daley is also considering the Knowledge Is Power program, which has two charter schools in Chicago and dozens across the country that run from 7:45 a.m to 5 p.m. daily, as well as a school linked with Outward Bound, the outdoor adventure group.

• Other possibilities include partnerships with Catholic schools, universities, nonprofits, social service agencies and the Chicago Historical Society. For example, Chicago Public Schools officials have invited leaders of the San Miguel Catholic School to run a new public school as part of Renaissance 2010 plan. A not-for-profit secular arm would be established for the contract.

Similarly, in fall of 2004, New York City opened eight new charter schools as part of Schools Chancellor Joel Klein's plan to develop 50 new charter schools over the next five years. Three of the new charter schools opened in the Bronx, two were in Brooklyn, two were in upper Manhattan and one opened in Far Rockaway, Queens. New York City has embraced private-sector involvement, where private donors have invested $41 million to help create 50 new charters in the next five years. In a plan similar to Chicago's, New York school officials will give the charter schools space in their buildings and provide start-up funds.

Charter School Achievement

The Center for Education Reform has found a strong link between student achievement and states with strong charter school laws. Nearly two-thirds of the 26 strong-law states saw significant gains in student achievement in test results and No Child Left Behind data during the most recent two-year period. In the 15 weak-law states, where charters fall under traditional school district management, only two states produced gains in student achievement.

• A 2004 report commissioned by the U.S. Department of Education found that charter schools are smaller than conventional public schools and serve a disproportionate and increasing number of poor and minority students.

• A 2003 national report by the Brookings Institution shows that test scores at charter schools are "rising sharply" and out-gaining conventional schools.

• A December 2004 Harvard University study finds that charter school students are more likely to be proficient in reading and math than students in neighboring conventional schools. The greatest achievement gains can be seen among African-American, Hispanic, or low-income students.

• Charter schools that have been open for significant periods of time boast even higher achievement rates; Harvard found that charter schools that have been operating for more than 5 years outpace conventional schools by as much as 15 percent.

• California's classroom-based charter schools were 33 percent more likely to meet student performance goals in 2004 than were regular public schools, according to a May 2005 research report released by EdSource, an independent nonprofit education research organization.

Note: Charter management organizations, or CMOs, are nonprofit groups formed to start and run centrally managed systems of brand-name charter schools.

Source: NewSchools Venture Fund

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School Choice Popular in State Legislatures in 2005

The year 2005 was a banner year for school choice legislation, when at least 17 states considered school choice proposals. As many state legislative sessions drew to a close for 2005, the fate of several school-choice initiatives was decided for the year.

In 2005 Utah became the first state to enact a new school choice program. Children with autism and other special needs in Utah received help on March 10^th when Gov. Jon Huntsman signed a law providing 600 special-education students with private school vouchers.

The new program was named the Carson Smith Special Needs Scholarship Act, after an autistic Salt Lake City student who attends the Carmen B. Pingree School for Children with Autism. In 2004 over 60 percent of Utah's registered voters supported it, and the state House and Senate narrowly approved the bill in the 2004 legislative session. Citing potential legal concerns, then-Gov. Olene Walker (R) vetoed the measure, but she left intact the $1.4 million the legislature had appropriated for the scholarships.

The bill did not have enough support in the House to override her veto, so the funds remained unspent.

Rep. Merlynn Newbold (R-South Jordan) worked with opponents between the 2004 and 2005 legislative sessions to craft a bill that addressed Walker's legal concerns. The legislature appropriated $2.5 million for the scholarships. Less than 2 percent of Utah's 54,000 eligible special-needs children will be able to receive a Carson Smith Scholarship in the 2005-06 school year. However, the legislature reappropriated the $1.4 million left from last year to fund scholarships for children who would have been eligible in the 2004-05 school year. Future legislatures will decide annually how much to appropriate for the scholarships.

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Governors Led the Way

Although the majority of school choice initiatives have died in state legislatures, in 2005 the governors led the charge for more school choice on the state level. For example, South Carolina Gov. Mark Sanford (R) proposed a tax credit program that would have given families earning up to $75,000 a credit on their state income taxes for the cost of public or private school tuition up to 80 percent of the state's average per-pupil cost.

Public school districts would still have received the local and federal per-pupil dollars, but the state's per-pupil aid would follow the student. The plan also would have created a corporate tax credit scholarship program. Unlike similar programs in Arizona and Florida, the South Carolina plan would have let businesses make unlimited contributions to nonprofit scholarship groups in lieu of paying state corporate taxes. Those groups would then provide tuition scholarships to low-income children.

In a March 2004 report of the South Carolina Policy Council, Fiscal Impact of the Universal Tax Credit Proposal, Clemson University economist Cotton Lindsay found the state would save hundreds of millions of dollars in education costs by implementing a tax credit program.

"Public school spending is tied very closely to the number of students in the school—each child who leaves results in immediate cost reductions. The public school no longer has the cost of educating a tuition-tax-credit child, but still keeps all the local and federal dollars that would be spent on that child," Lindsay concluded in the study. "As a result, South Carolina public school districts will have more money each year per student."

However, a fiscal impact study of the Put Parents in Charge Act by the state Board of Economic Advisors, released in mid-April, claimed paying private school tuition would cost South Carolina as much as $231 million in revenue in five years. Opponents cited the fiscal impact report in condemning as too costly the idea of creating tax credits for private school tuition. The state Board of Economic Advisors estimated the proposal could cost up to $231 million in state revenue over the next five years.

On May 4, legislators in the House voted 60-53 to table the tax credit bill. By tabling the bill—a version of the "Put Parents in Charge Act" proposed last year by Gov. Mark Sanford (R)—the legislators essentially killed it for the rest of the 2005 session.

The revised bill, however, proposed May 4^th by Reps. Shirley Hinson (R-Goose Creek) and Jim Merrill (R-Daniel Island), aimed to correct that problem by giving only students in failing schools in the state's 85 districts the option of attending private school, combining tax credits with vouchers for low-income families.

The plan would have affected about 187 of the state's 1,119 schools, including about 50 in the Charleston area. Members of the House refused to let the measure come up for debate.

In Texas, Gov. Rick Perry (R) proposed a pilot school choice program to help children in failing schools. The Texas Freedom Scholarship would have offered scholarships to students in the seven largest urban schools with the greatest percentage of economically disadvantaged students. In addition, the funds a district receives for a student (such as for special education, ESL, etc.) follow the student and are not subject to the 90 percent cap.

Any chance for school vouchers was scuttled as the legislative session ended May 30^th. It was the first time in eight years that the House debated giving students public funding to attend private and parochial schools. In 1997, the effort failed on a tie vote and the current House debate ended in a similar fashion. The school choice measure would have allowed up to 5 percent of low-income or at-risk students in each of seven large urban districts to receive state money to use at the school of their choice.

The GOP majority in the House narrowly defeated early anti-voucher amendments while Speaker Tom Craddick (R-Midland), a voucher supporter, overruled the parliamentary challenges. However, after supporters won some initial rounds on the bill with tie votes, Rep. Charlie Geren (R-Fort Worth) ended the debate by offering two amendments that killed the measure. One stripped out the Dallas and Fort Worth districts, and the other removed private and parochial schools—essentially making the program a public school choice option, similar to what already exists in many school districts.

Missouri Gov. Matt Blunt (R) endorsed a tax credit scholarship for lower-income families with children enrolled in failing schools. The $40 million tax credit proposal would have allowed businesses and individuals to donate to nonprofit groups, which would award students scholarships to attend private or better-performing public schools. Sponsors said that more than 10,000 of the state's neediest children could receive scholarships. An average scholarship would be $3,800, up to a maximum of $6,500.

However, Missouri legislators killed the proposal by adding three amendments that made it unfeasible. One would have delayed implementation of the tax credit until after the state's education formula was fully funded, in a state where the economy is so weak that doing so could take several years.

Minnesota Gov. Tim Pawlenty (R) proposed a $4 million tax credit scholarship plan that would allow 1,500 low-income students in failing schools in Minneapolis and St. Paul to attend private schools. The scholarships would come from corporate donations made to nonprofit organizations in exchange for tax breaks. The Senate Education Committee voted on April 5^th to keep it from moving on to another committee, and the House Education Committee voted to table the House version of the bill on April 3^rd.

In Indiana Gov. Mitch Daniels (R) supported a school choice program that would give parents money to transfer their children to other public or private schools if their current public school fails to meet annual academic targets. In addition to the voucher provision, the bill would have given tax credits to parents who pay private school tuition or pay a fee to send their children to another district.

In Indiana, state legislators deleted the school voucher component from a bill that would have allowed students in Indiana's 51 lowest-performing schools to exit to the public or private school of their choice. The remainder of the bill gives Indiana families $1,000 in tax credits to offset the extra expenses associated with private and home schools.

The plan creates tax credits for families who make less than $33,000 a year. Those making up to $66,000 would be eligible within two years. Supporters of the more robust voucher proposal say the $1,000 tax credit isn't enough to help the poorest children, whose families can't afford to make up the balance of tuition. The revised version of the bill had yet to make its way through both the House and Senate at press time.

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Other States Considering School Choice

Several other states also had school choice bills in the 2005 legislative session:

• Illinois: the Opportunity Scholarship Act includes a $15 million pilot program offering $500 scholarships in Chicago for after-school tutoring services from approved providers, or $3,500 to help meet tuition costs at qualified and participating public, private, nonsectarian, or religious schools of the eligible family's choice;

• Iowa: on April 20^th, the state House of Representatives passed the School Tuition Organization Tax Credit, which allows individuals to receive a tax credit for donations to a tuition organization, creating scholarships for low-income children to attend the school of their choice. The organizations must give priority for the scholarships to students from families whose incomes are less than 200 percent of the federal poverty level. The bill is currently being considered in a Senate Ways and Means subcommittee.

• New Hampshire: a modest plan for 1,200 vouchers for first graders was dropped in the Senate Finance Committee on April 7^th after a dispute over its funding. The "School Choice Certificate," proposal would have established 1,200 vouchers for first graders in the initial year of the program, with the total number of vouchers expanding to a maximum of 16,000 after eight years for students in grades 1 through 8. The voucher would be worth 80 percent of the state adequacy grant each district receives per student. The state adequacy grant is expected to be $3,580 next year, which means the maximum a voucher would have been worth is $2,864.

• New York: a bill to provide income tax credits up to $3,000 for families sending children to private schools has died in the state legislature.

• Vermont: a voucher bill allowing parents to receive certificates worth $5,000 (for high school) or $2,500 (for elementary grades) to educate their children at independent schools.

• Virginia: a tax credit proposal allowing scholarships for students in under-performing or crowded schools to attend another public or private school failed.

While many governors led the charge for school choice legislation in the states, a few governors vetoed their legislature's school choice bills.

In Arizona Gov. Janet Napolitano (D) has vetoed school tax credits twice in the 2005 legislative session. On March 28^th she rejected a bill, introduced as part of Arizona's overall budget package, to expand the state's tuition tax credit for private and parochial scholarships by allowing corporations to participate.

The second veto came as a shock to school choice supporters. The legislature thought they had reached a budget agreement with Gov. Janet Napolitano (D) on May 6^th to create corporate income tax credits for organizations that contribute to K-12 scholarship programs, and to eliminate the marriage penalty on individual scholarship donations.

Napolitano agreed to an increase in the number of scholarships created by the existing state tax credits, in exchange for legislators dropping a voucher proposal and increasing funding for all-day kindergarten. The school choice provisions would have created an additional $5 million in tax credits beginning in 2006, to provide scholarships for low-income children.

Unfortunately, on May 20^th, Gov. Janet Napolitano vetoed the corporate tax-credit legislation that school-choice supporters expected to become law as part of a budget deal made a few weeks earlier. However, the budget Napolitano signed included her funding priorities such as a new medical school branch campus, expansion of all-day kindergarten and funding for social programs that she negotiated in exchange for approving the tax credit legislation.

Napolitano said she vetoed the tax credit initiative because Republicans did not include a five-year sunset on the legislation. School choice advocates accused the governor of breaking her promise to Arizona children.

It's unfortunate that for the moment this bipartisan agreement has been turned on its head," Milton & Rose D. Friedman Foundation President Gordon St. Angelo said in a May 20^th press release. "Children in Arizona shouldn't have to wait for greater educational freedom because of legislative wrangling."

The tax-credit legislation would have allowed scholarships for 1,000 economically disadvantaged children to attend private schools. At press time, Napolitano was considering calling a special session to resolve the matter, indicating she may approve the corporate tax credit legislation if it includes the five-year sunset term.

Senate Republicans are leaning toward bypassing the governor and taking their case for tuition tax credits directly to voters next year. Republicans say they have enough votes to move a tax credit initiative directly to the ballot in 2006.

According to a survey sponsored by the Milton and Rose D. Friedman Foundation, 91.4 percent of Arizonans supported one or more of the five school choice proposals pending in the legislature this spring, with 65.6 percent "strongly" in favor of one or more of the programs.

In addition, on March 24^th the U.S. District Court upheld Arizona's scholarship tax credit program as constitutional, dismissing a lawsuit from the state American Civil Liberties Union (ACLU) chapter.

Since Arizona enacted the Tuition Tax Credit Program eight years ago, it has been under almost continuous legal assault by opponents of school choice, first in state courts and more recently in federal ones.

"The Tuition Tax Credit is a neutral, secular program whose benefits are available to all Arizona taxpayers and students," U.S. District Court Judge Earl H. Carroll declared in Winn v. Hibbs. "Furthermore, multiple layers of private choice ensure that the State itself does not aid recipients with regard to their religion."

In Wisconsin, the state legislature passed a bill to raise the Milwaukee Parental Choice Program's enrollment cap by 1,500 students, for a total of 16,500 students. Unfortunately, on April 29^th Wisconsin Gov. Jim Doyle vetoed the bill to lift its 15,000-student enrollment cap.

The Milwaukee Parental Choice Program (MPCP), which turned 15 years old on April 27^th, provides vouchers for the city's low-income children to attend the private schools of their parents' choosing. Since 1995, the law has mandated that no more than 15 percent of students enrolled in the Milwaukee Public Schools (MPS) system may receive the vouchers. Based on current MPS enrollment, approximately 14,800 students would have been permitted to receive vouchers.

But the number of children enrolled in the MPCP jumped from 12,900 in the 2003-04 school year to 15,000 in 2004-05, prompting the Department of Public Instruction to propose a seat-rationing program for the 2005-06 academic year, displacing approximately 1,500 students. About 100 private schools participate in the program, with 50 more lined up to begin participating this fall.

The bill was popular in the legislature, where it passed 58-35 in April, and also among the Wisconsin public. Polls show support for school choice stands at about 60 percent statewide and close to 80 percent in the poor neighborhoods of Milwaukee.

A Manhattan Institute study by Senior Fellow Jay Greene, published last year, found Milwaukee's choice students graduate from high school at much higher rates than those enrolled in the city's public schools—64 percent in 2003, compared to 36 percent in public schools.

In Florida, the 2005 session closed May 6^th with the legislature failing to agree on school choice accountability legislation. The proposed measure would have barred schools that accept vouchers from discriminating on the basis of religion, required student progress to be measured using one of four standardized tests, and subjected voucher schools to unscheduled visits by an auditor. On the last day of the 2005 session, House members tacked 281 pages of amendments onto the bill, and the Senate did not take it up again. Gov. Jeb Bush (R) has promised to tighten up school choice accountability and monitoring through an executive order.

In addition, Bush had hoped to dramatically expand the state's voucher program this year. The Reading Compact Scholarship would have given a taxpayer-funded voucher to any student scoring at the lowest level on the reading portion of the Florida Comprehensive Assessment Test for three consecutive years. The Senate voted down the program, saying it didn't want to expand vouchers before the state Supreme Court rules on the Opportunity Scholarship program.

However, Florida's corporate scholarship tax credit program cap increased from $50 million to $88 million. According to a May 8^th press release from the Alliance for School Choice, the tax credit expansion—passed by the legislature as part of an omnibus budget package—nearly doubles the current program and will enable up to 9,000 low-income students to use scholarships to attend private schools over the next 18 months.

Approximately 11,500 students are currently enrolled in the scholarship tax credit program. That number could potentially swell to 15,000 students this fall, and to 20,000 students by the 2006-07 school year. Scholarship funding organizations may award up to $3,500 per student.

A new study by two Harvard University scholars concludes the vouchers offered under Gov. Jeb Bush's (R) A+ Accountability Plan in Florida are spurring gains in student achievement. Researchers Martin R. West and Paul E. Peterson of the Program on Education Policy and Governance at Harvard's John F. Kennedy School of Government found Florida's vouchers have been more effective than the choice provisions of the federal No Child Left Behind Act (NCLB) in bringing about test score improvements.

Under A+, Florida students become eligible for vouchers to transfer to a private school if their public schools receive an "F" on accountability measures twice in a four-year period.

West and Peterson found Florida's fourth- and fifth-graders made modest but significant gains in math and reading when their schools were in imminent peril of losing students to vouchers. Students in schools that received their initial "F" in 2002 scored from 4 to 5 percent of a standard deviation higher the following year than did students in "D" schools, which did not face an imminent voucher threat.

The stigma of publicly receiving a low grade seemed to provide some reform impetus to "D" schools as well. Their students improved by 5 percent of a standard deviation relative to students in "C" schools.

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Existing School Choice Programs Continue to Expand in 2005

Building on the success of the 10-year-old Cleveland Scholarship and Tutoring Program, the Ohio House of Representatives on April 12^th approved legislation to create a new statewide scholarship program.

The expanded school choice program would allow as many as 18,000 children in 30 school districts the state deems to be on "academic watch" or "academic emergency" to receive scholarships to attend the school of their parents' choosing.

Under the new rules, the state would provide $4,000 to private elementary schools for each voucher participant, $4,500 to middle schools, and $5,000 to high schools. The scholarship amount will increase annually with the Consumer Price Index. Currently, students in 34 "academic watch" school districts and several charter schools across the state qualify for the program.

In addition, the Cleveland scholarship program would be expanded to provide vouchers for high school juniors and seniors, and its funding would increase to $20.5 million by 2007. Approximately 5,000 Cleveland students received vouchers to attend 45 private schools in the 2003-04 academic year. The U.S. Supreme Court ruled the program—one of the first of its kind in the nation—constitutional in 2002.

Clint Bolick, president and general counsel of the Phoenix-based Alliance for School Choice, which lobbies for school choice programs nationwide, praised Ohio State Rep. Dixie Allen (D-Dayton) for proposing the program-expansion bill.

The success of the Cleveland school choice program in opening doors of opportunity to disadvantaged schoolchildren has provided inspiration for a major expansion of school choice in Ohio," he said in a statement released April 13^th.

The House voucher proposal dramatically increases Gov. Bob Taft's (R) proposal to increase funding for the state's voucher program by $9 million and offer vouchers to approximately 2,600 children. To qualify for Taft's proposed program, children from kindergarten through eighth grade would have to attend a school that failed to meet state test standards in reading and math for three years. Under Taft's plan, students at 70 Ohio elementary and middle schools would be eligible for scholarships based on state test scores.

The House version also differs from Taft's plan in terms of the financial impact on public schools. Taft's voucher proposal would have subsidized tuition out of a new $9 million state account, not out of local school district funds. The House version calls for money to be deducted from local district coffers.

Rep. Dixie Allen of Dayton, the only Democrat to vote for the budget with the voucher proposal, told the Beacon Journal on April 18^th that there is a need for more parental choice in Dayton. Allen said, "there is a privately funded voucher program in Dayton now. Last year, 600 children received vouchers, and there was a waiting list of more than 1,100."

The Senate version of the state budget, released May 24^th, maintains the statewide voucher program passed by the House on April 12^th. The Senate kept the concept, but scaled the voucher plan back to 10,000 students in low-performing schools.

On May 10^th Pennsylvania parents celebrated the fourth anniversary of the state's landmark Educational Improvement Tax Credit Program (EITC). Signed into law in 2001 by former Pennsylvania Gov. Tom Ridge (R), the EITC provides tax credits ranging from 75 percent to 90 percent to companies contributing to nonprofit scholarship, educational improvement, and pre-kindergarten scholarship organizations. Nearly $27 million is allocated annually for scholarships, a little more than $13 million for innovative programs in public schools, and $5 million for pre-K scholarships.

In the 2004-05 school year, the EITC program helped fund more than 25,000 scholarships and countless educational improvement programs in Pennsylvania's public schools. To date, more than 2,200 Pennsylvania businesses have participated in the EITC program, contributing more than $140 million to create private school scholarships and to help establish innovative public school programs.

In its first two years, the EITC was capped at $30 million—$20 million for scholarships and $10 million for public school improvement programs. In response to overwhelming demand, however, in 2003 the Pennsylvania General Assembly increased funding by $10 million, doubled the maximum tax credit from $100,000 to $200,000, and created a similar program for pre-K scholarships.

Thanks to the EITC, Pennsylvania currently has more than 165 scholarship, 230 educational improvement, and 50 pre-K scholarship organizations. The cap on the scholarship portion of the EITC program was reached in 70 days last year; the educational improvement portion was reached in one day. A new round of funding will begin on July 1^st.

The REACH Alliance plans to lobby for expanding the EITC program this year in order to allow more businesses to participate. During the 2004-05 school year, more than 100 businesses that wished to participate in the EITC program were unable to do so because the tax cap had already been reached. If the program is expanded, more businesses will be able to participate, creating more opportunities for children to receive scholarships and for additional innovative educational programs to be provided in the state's public schools.

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Federal Update

In addition, Pres. George W. Bush's 2005-06 budget calls for expanding the federal school choice plan: The $50 million "Choice Incentive Fund" would allow cities to receive federal funds to pay for tuition vouchers at private and religious schools. The federal school choice proposal would support school choice pilot projects similar to the Washington D.C. scholarship program.

Increasing numbers of students and parents in the District of Columbia are taking advantage of the nation's first federally funded scholarship program, according to an independent evaluation released April 5^th by the U.S. Department of Education.

In 2004-05, more than 1,000 students enrolled in 58 private schools through the D.C. Opportunity Scholarship Program, created by the D.C. School Choice Incentive Act of 2003. Applications are up for 2005-06, with about two students applying for each available scholarship; approximately 85 percent of the applicants currently attend public schools.

The landmark legislation, resulting from cooperation between the Bush administration and D.C. Mayor Anthony Williams, was passed in January 2004. The Washington Scholarship Fund (WSF) was charged with implementing the program in just a few short months.

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