Fears Versus Fact: School Choice Basics

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This is the "School Choice Basics" segment from Fears versus facts about school choice: An overview of issues surrounding the effects of competition on public education

By John Garen, Ph.D.

View and download the PDF version of this report.

School Choice Basics


Charter schools represent an important form of choice in 40 states and the District of Columbia.

State policies vary regarding the latitude granted to charter schools, and thus, the extent of meaningful choice parents and families have.[1] While nearly all charter-school laws require substantial reporting and accountability, those states enabling a consequential amount of choice and competition operate with less restrictions regarding: the number of charters allowed; who can sponsor and operate them; who can teach in the schools, the kinds of students they can enroll; and the amount of public money accompanying each student enrolled.

A key feature of charter schools is that the money follows the student, so charters must attract and retain satisfied parents and students in order to survive. This is strong motivation to provide a quality educational product. Thus, aside from standard reporting requirements, having fewer restrictions on charter-school operations offers more opportunity for schools to find the best way to teach. At this point, Kentucky offers no charter-school options, although House Bill 578 introduced during the 2008 Kentucky legislative session proposed their authorization.[2]

A basic voucher program awards each family a dollar amount for tuition at a private school or credited to the revenue of a public school, whichever the family chooses. Allowing use of the voucher money at any school means, as with charters, the money follows the student. Participating schools survive only by retaining a sufficient number of students via satisfied parents. Also, parents can top off voucher funds with their own money if they want to send students to schools that cost more than the amount covered by a voucher.

For example, a school that charges $8,000 annual tuition becomes affordable – even to families of modest means – if they get a voucher for $6,000. This system mirrors the widely known government food stamps program, only with education.

Use of vouchers or voucher-like systems is growing but still limited. There are 21 voucher-style programs in 15 states or municipalities.[3]. Most have limitations, including significant restrictions on which schools can use them; which families/students are eligible; the amount of the voucher; and whether a family can top it off. These restrictions impose limits on the choices available to parents and consequently on competition among schools.

One type of voucher program awards a dollar amount in the form of a tax credit, so families are reimbursed for education expenses “indirectly” through tax credits. The tax credit offsets other taxes owed. This approach functions much like a voucher and pays for expenditures on education at any school, private or public. However, this type of tax-credit program remains quite unusual, and typically the tax credit is capped at low amounts.

Another version of tax credits involves individuals or corporations receiving tax credits for donations to organizations awarding scholarships to participating private schools. However, the individual or corporation cannot designate the donation go to a particular student. Thus, the money someone spends does not go for the education of a designated student, nor does it enable families who donate the money to move their children from one school to another with the funds to follow.

This version of an educational tax credit supports the activities of scholarship organizations, which typically award scholarships to students from low-income families. The tax credits also contribute to the overall viability of the private sector in education. However, they do not promote school choice and competition as much as direct tax credits or vouchers.

Kentucky offers no voucher programs. House Bill 397, introduced during the 2007 and 2008 legislative session, proposed vouchers for special-needs students. House Bill 160, also introduced during the 2008 session, proposed tax credits for certain individual-education expenses and for donations to scholarship organizations.

More from Fears Versus Facts About School Choice

You can read more from Fears versus facts about school choice: An overview of issues surrounding the effects of competition on public education in the pages below.


  1. Center for Education Reform
  2. The exception is the Gatton Academy of Math and Sciences, serving 120 students at Western Kentucky University.
  3. Enlow, Robert, “Grading School Choice,” Friedman Foundation, February 2008