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Reason Foundation

Rebuilding After a Disaster

School Funding Vouchers or Tax Credits

Lisa Snell
November 30, 1999

On September 15th, President Bush proposed $1.9 billion in funding for displaced students. According the White House fact sheet from the President's Katrina Recovery speech, "This funding would be used to reimburse school districts for the unexpected costs associated with educating additional children for the 2005-06 school year, such as teacher salaries, transportation, materials and equipment, special services for children with disabilities, supplemental educational services, and counseling. To ensure that displaced families have maximum flexibility to meet the education needs of their children, the President's proposal would provide compensation to displaced families for enrollment in private, including parochial, schools."

President Bush's proposal would allow the money to follow the child into any school. This model follows the federal funding model for college students. According to Clint Bolick, writing in a September 15th Washington Times editorial, the 73,000 college students displaced by the storm can use their federal aid anywhere, at public, private or religious schools.

Following President Bush's lead and using the college system as a model, the funding for each displaced K-12 student in Mississippi should follow that child into any public, private, or charter school.

Mississippi Gov. Haley Barbour possesses broad emergency powers. State per-pupil funding was already appropriated for education before the hurricane struck. The governor should use his emergency authority to ensure that the funds will follow the children to whatever schools�public, private or charter�that can quickly enroll children. The Mississippi per-pupil spending average should follow each child into the school of his or her parents' choice. There are three strategies the governor could employ to offer displaced Mississippi children more permanent choices and school placements.

First, the state of Mississippi could move from an enrollment system based on residential address to a true public school choice open enrollment system with a weighted student formula funding mechanism. Mississippi could adopt the decentralized school management system that was pioneered in Edmonton, Canada by superintendent Mike Strembitsky in 1976. Strembitsky developed the weighted student formula (WSF), also known as student-based budgeting, in which each student receives an allocation—weighted according to his or her specific needs—that follows the student all the way to the school. Families are free to choose any public school, and principals have a great deal of discretion over their school budget, which is an aggregation of all the individual student allocations. In the Seattle system, for example, students are assigned "weights" for supplementary funds for categories such as poverty, limited English proficiency, and special education.

A crucial component of decentralized management is to adopt a user-friendly method of school choice, in which parents may choose to send their child to any school within the state without seeking permission from the central office. Decentralized management is a growing trend in the United States. To date the WSF has been implemented in Cincinnati, Houston, St. Paul, San Francisco, Seattle and Oakland. In 2006 it is being implemented statewide in Hawaii and pilot programs are underway in Boston, Chicago, and New York City. A weighted student formula would allow any Mississippi school to accept students and to be paid based on the individual characteristics of students.

Secondly, Mississippi could create a corporate tax credit scholarship to offer scholarships to displaced students who want to attend or remain in a school of their choice. This program could be modeled after the Florida corporate tax credit program. In Florida the corporations that donate to Scholarship Funding Organizations (SFOs) are entitled to a tax credit on the Florida corporate income tax (Florida has no personal income tax) equal to the amount of their donations, up to $5 million per corporation per year. SFOs use this money to fund scholarships to allow low-income students (those participating in the federal free and reduced lunch program) to attend private schools (religious or non-religious), or to fund transportation to another public school. The private-school scholarship is equal to $3,500 or the total tuition and fees of the private school, whichever is less; the funding for transportation to attend another public school is equal to $500.

The third option is that the governor of Mississippi could create a statewide voucher program modeled after the Ohio statewide voucher program. Gov. Robert Taft (R) recently signed into law a new program providing scholarships for students in low-performing schools. Beginning in fiscal year 2007, up to 14,000 students will be awarded scholarships ranging from $4,250 to $5,000 to attend private schools. Mississippi's governor could create a similar type of voucher program for displaced students. Allowing $5,000 to follow each Mississippi child into the school of their choice.

Lisa Snell is director of education and child welfare at Reason Foundation.


Lisa Snell is Director of Education


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