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Testimony before the Assembly Budget Committee on A-2810, the Opportunity Scholarship Act (OSA)

NJOSA Myths

3/16/10
Derrell Bradford
Executive Director
Excellent Education for Everyone (E3)

Chairman Greenwald and Members of the Committee:

I want to thank you for the opportunity to speak today on the Opportunity Scholarship Act (A-2810), a pilot program designed to increase educational opportunities for low-income students enrolled in chronically underperforming schools in as many as 13 pilot districts. I would also like to thank Assemblymen Schaer, Bucco, Chiusano, O’Scanlon, and Webber for their sponsorship, and Chairman Greenwald and Assemblyman Coutinho for their respective support of the OSA.

As you all know, this legislation has received a great deal of attention, and subsequently there is a great deal of misinformation in the public about it. This testimony addresses some of the common myths about bill’s reason for being, its proposed implementation, and, most importantly as this is a budget committee, its cost.

Myth: The legislation will cost the state of New Jersey $1 billion, or more.

Truth: The OSA has zero cost to the state and will return over $354 million to school districts for 30,000 students they no longer have to educate.

The Office of Legislative Services recently released a Legislative Fiscal Estimate for the OSA, Senate bill S-1872. Though the size of the program differs between the Assembly and Senate versions of the bill the funding mechanisms remain the same, so the estimate’s conclusions apply to A-2810 as well.

OLS found a net change in revenue to the state of zero dollars over all five years of the program, as every dollar of tax credits allowed to fund the program is offset by an expenditure decrease from the General or Property Tax Relief Fund.

The OLS Fiscal statement also shows that the OSA pilot will return $354.1 million dollars to the 13 pilot districts for as many as 30,000 students they no longer have to educate. This figure assumes estimated scholarships of $8,000 for K-8 and $11,000 for high schools. To the extent that the actual costs at participating private schools are lower (as they will be in many cases) there will be an increase in the amount of funding returned to the pilot districts for students who participate in the program.

Additionally, the $1 billion sound bite used to confuse the true economics of the program is disingenuous at best and requires members of the committee to add the projected tax credits given, in all five years of the program, together. As the OLS estimate shows, at 40,000 scholarships, the program requires $35.7 million in tax credits in Year I, and $366.4 million in Year V. As members of the Assembly have also expressed a desire to reduce the size of the program created in the Senate bill, these numbers stand to decrease more.

Lastly, in the state of Florida where a majority of the members of that legislature’s Black Caucus voted in support of their Step Up for Students tax credit scholarship program, the Office of Program Policy Analysis & Government Accountability found that, in fiscal year 2007-2008, taxpayers saved $1.49 in state education funding for every dollar lost in corporate tax revenue to fund the program. As these savings amplify themselves over time, the Florida program is also instructive. Fully 68% of its participants are elementary school students.

We are grateful that OLS has finally affirmed our longtime position that the OSA costs the state “nothing.” And, with this issue settled, we look forward to taking the next step toward the program’s passage.

Myth: The program’s administrative fee is too high.

Truth: Program and administration fees are lower than all but one state, are reasonable given the required efforts, and are regulated by the Commissioner of Education.

The proposed 5% administrative fee for the OSA’s Scholarship Organizations (SOs) is the second lowest by percentage in the country. Only Florida’s, at 3%, is lower. All other states are between 10% and 20%. Additionally, and as described in the previous section, estimates of $50 million dollars to run the program require members to conflate all administrative costs for the duration of the pilot into a lump sum (Year I: $1.785 MM, Year V: $18.32 MM) and to adopt the size of the Senate’s program at 40,000 scholarships.

It is worth noting (see Attachment I) that the role of the SO is an expansive and highly involved one. SO duties will include activities such as marketing and managing grassroots outreach around the program, conducting lotteries to ensure fair and transparent admission policies, fundraising and recruitment of businesses who wish to participate in the program, and the management of the application process for thousands of students (including income and residency verification).

The SO will also be responsible for consolidating and reporting assessment data for OSA participants so a study of the pilot can be executed and the legislature can consider OSA renewal. This is, arguably, the SOs’ most important function.

The OSA also includes language that would allow the Commissioner of Education an opportunity to approve and/or reject administrative expenses he/she believed to be unreasonable.

Myth: The OSA pilot is in large measure meant to subsidize families who have already chosen private schools.

Truth: We should not penalize parents who have made great sacrifices to ensure their children attend good schools.

OSA supporters believe that there are two kinds of low-income students who will participate in this program. One student is currently enrolled in a chronically failing public school as identified under the Act. The other is a student trying desperately to stay in a nonpublic school that is currently working for them.

However, and even with the 25% provision fully subscribed, the OSA represents a windfall for its 13 pilot districts. They will experience class sizes reductions that will decrease student teacher ratios while seeing significant increases in per-pupil funding over the life of the pilot as noted earlier ($354.1 MM).

To address concerns about this provision, sponsors of the legislation have created a variety of proposals that will allow all or some of this provision for low-income families who have supported this legislation for many years and who have made great sacrifices to expand educational opportunity for their children.

To the extent that the percentage is reduced or phased in, those changes will increase the amount of dollars returned to traditional district schools for students leaving to participate in the program.

Myth: This program will cherry pick the best students.

Truth: The OSA is means tested for children in failing schools/districts so only children in the greatest need are eligible.

The OSA purposefully targets the state’s lowest performing public schools. There are 2,485 public schools in New Jersey, and low-income students attending 180 of them (7.2% of the state’s total according to the latest census of Chronically Failing Schools done by OLS) are eligible. Some of these schools have not met state-defined progress targets for ten years consecutively. This universe of schools desperately needs reform as much as the students within them need a lifeline.

And the state’s most troubled districts feature the overwhelming majority of schools and students who are eligible to participate in the OSA. In Camden, for instance, OLS estimates that 88.1% of students attend schools where OSA eligibility would be triggered. In Newark and Trenton, 72.7% of students are eligible.

Schools that participate in the OSA are allowed to give students a diagnostic assessment for placement, but are not allowed to discriminate based on academic or athletic ability. And there is a minimum two-year commitment on the part of participating schools to newly enrolled students.

Myth: Suburban districts must participate.

Truth: participation by suburban schools is voluntary, as is participation by businesses, parents, and students.

It has come to our attention that some OSA detractors are misleading non-pilot districts, asserting that they will be forced to participate in the program and accept students from outside of their districts or that the OSA will effect their districts financially. The language in the OSA is very clear on this. A non-pilot district that wishes to participate in the program because it has available space in its public schools must affirmatively declare its desire to do so:

3.(1)(3) 1in the case of a public school, has been designated by the board of education as a school that will accept students who participate in the pilot program established pursuant to P.L. , c. (C. ) (pending before the Legislature as this bill);

The voluntary nature of the OSA cannot be stressed enough. No corporation eligible to pay the Corporate Business Tax is required to participate in the program. No public or private school is required to declare eligibility, and, most importantly, no family or student will be forced to take a scholarship. If parents and communities do not want the OSA, they will demonstrate it, soundly, during the pilot. But if those families want expanded opportunities and businesses feel this program is a thoughtful way to support those opportunities, we will certainly see that as also.

Again, Florida and other school choice programs across the country are instructive, as, in every year these programs have existed, demand has increased and the size of these programs have grown. In 2003-2003, 11,550 students participated in Florida’s tax credit scholarship program (40% of students were African American and 25% were Hispanic). In 2007-2008, that number grew to 21,493.

Myth: Special needs students will be excluded from the OSA.

Truth: Parents of special needs students must be educated about the level of services available at the non-public school.

Perhaps most noxious among the misrepresentations of the OSA (and despite the fact that there are currently 36,923 children with special needs enrolled in New Jersey non-public schools) are assertions that “special needs students need not apply,” and that students must waive their rights to special education services to participate in the program. This is not the intent of the sponsors of the legislation or of the broad coalition that supports the OSA. The OSA merely requires a conference about the level of services available at a school with a prospective parent before a school choice is made.

To eliminate any confusion around this provision, the Arc of New Jersey drafted amendment language that clarifies the provision. This language was not introduced in the Assembly Commerce and Economic Development committee on February 3rd. But we believe the legislation’s sponsors have every intention of introducing it when the bill is next heard.

Myth: The OSA has no testing or accountability.

Truth: The OSA has substantial testing requirements and, more importantly, is accountable to parents.

Contrary to claims that the OSA is unaccountable, the legislation requires that every child participating in the program take the same grade-level appropriate state assessment they would have taken had they stayed in their traditional district schools. There is also a growth provision that would test new students—even those currently enrolled in nonpublic schools—twice in the first year so a baseline can be established and their growth measured. And, of course, this program implements the “dollars follow the child” underpinnings of the School Funding and Reform Act. When schools lose students, they will also lose the scholarship funds those students represent.

The Commissioner of Education can, at his/her discretion, approve or ban the participation of any school from the program. The Commissioner’s oversight of the approval of participating schools is a key control meant to ensure the quality of schools in the program—assuring that children attend schools that are better than the ones they leave—and thwarting the creation of so-called “fly by night” private schools. The OSA has embraced this level of accountability and oversight—much of it suggested by legislators in the democratic party who support the effort—at the outset to ensure the program’s educational goals are met, and the state’s political and financial investments are well made.

Myth: School choice programs don’t work.

Truth: They do, and are growing in scope as a result.

Attachment II details the positive academic gains for public and private school students who have participated in choice programs nationally. As one would suspect there is great disagreement over what the research “says,” but all research indicates that, at the worst children who participate in school choice programs do no worse than their public school counterparts, and often they perform better.

Dr. Patrick Wolf, a lead researcher on the School Choice Demonstration Project, in a meta-analysis of private school choice programs nationally found that learning gains for all or some participating subgroups in these programs are equal to about an extra month of learning per year.

In Milwaukee, research by John Robert Warren from the University of Minnesota showed that students participating in the Milwaukee Parental Choice Program between 2002 and 2006 were far more likely (as much as 28 percentage points) to graduate than students enrolled in Milwaukee Public Schools.

Most notably, however, the D.C. Opportunity Scholarship Program showed reading gains of 19 months for students who participated in the program the longest. This universe of students—low-income, living in the District of Columbia, and overwhelmingly minority—closely mirrors the student populations of the OSA pilot districts.

Additionally, there are six studies on choice programs in Florida, and five in Milwaukee, that all offer positive reform effects for the traditional public schools many students leave to participate in choice programs.

In closing, I want to thank the committee for its time and for the opportunity to further the dialogue about this bill and, in some cases, set the record straight. There has been a great deal of emotion and excitement and debate about this proposal, as there should be—our children’s futures are at stake. And it cannot be denied that the passage or failure of this bill will affect the lives of generations of our youth.

To many this legislation, as groundbreaking as it may be, is too late, too little…not the revolution in education for their children they desire. Some interested parties may fear a revolution….but this legislation is not a revolution as structured. It is a measured, cautious experiment, with assessments and options built in at each point along the way.

I hope today I have helped the committee in two ways. I hope I have addressed the financial misinformation that has been put out into the public by various powerful interests, and that those untruths no longer inhibit your support. And I hope I have given you a feel for the desperation many have felt, and feel, as they await the passage of this bill.

Derrell Bradford
Executive Director
E3
Member
New Jersey School Choice Alliance

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3 Comments

  1. brenda mc weeney March 16, 2011

    I am a taxpayer and have no children but I feel that all families should have the right to choose the school they feel their child will thrive. My questiion is how come private schools can educate a child for a lot lless than our public school system. We all have equal rights and one of those rights should be to have a child in a school that the parents select.

  2. Carmen November 29, 2011

    Simple answer as to why Private Schools can educate better with less cost, Unions! When you remove accountability and install tenure, then you get sub par results and high cost.

  3. R J Schundler October 11, 2012

    All students are not the same, nor do they have the same needs. Given those facts, and the fact that both a healthy economy and a healthy republic needs educated people. Every students should be free to go to a school that will meet their needs. This is the only way we will be able to complete in the real world … in the end it is the quality of the educations system that makes an economy strong.

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