Governor Cuomo has introduced a program bill that proposes yet another variation on a tax scheme that would provide a tax credit – a dollar-for-dollar cut in tax liability – to individuals and corporations that make donations to “educational scholarship organizations” for children to attend private schools, including schools that provide religious education.
Providing tax credits to education “investors” represents a bold step toward the further privatization of public education in New York State – in effect, underwriting the transfer of tax dollars to private and sectarian schools.
In just the first year after its enactment, the governor’s bill would provide up to $150 million in education tax credits – money that would otherwise be paid to the state’s general revenue fund. The amount available for these tax credits will almost certainly increase in future budgets. Shortfalls in the state’s general revenues would have to be offset by raising taxes, or by distributing budget cuts across program and service areas.
This tax credit scheme would further jeopardize the financial health of public schools. School funding has been cut sharply since the financial crisis in 2008, and the state has failed to fund public schools at levels ordered by the Court of Appeals in litigation initiated by the Campaign for Fiscal Equity more than a decade ago.
What’s more, the state would facilitate the transfer of public money to religious schools, in violation of the constitutional principle that bars the government from endorsing religion.
Lawmakers must soundly reject this proposal.
Education Policy By The 1 Percent
The proposed tax credit would create a special class of education investors with significant influence in shaping education policy.
This tax benefit would be a boon to the state’s most wealthy residents, and to those tuition-based private and parochial schools that are the recipients of these benefactors’ largesse.
This is because the legislation creates a high-value tax credit – as opposed to a tax deduction. A tax deduction lowers taxable income, based upon a percentage of certain expenses incurred by a taxpayer (a mortgage-interest deduction, for example). The proposed tax credit would reduce total taxes owed by up to 75 percent: For example: an individual or corporation donates $1.3 million to a private school; taxes due the state by this donor are cut by $1 million.
New York’s wealthiest hedge fund managers have invested heavily in a campaign to privatize public education.1 The goal of this campaign is to “reform” public education by introducing marketplace competition to the education system. However, this campaign involves providing state support for privately operated schools, including charter schools, that compete with public schools. The education tax credit is intended to further this agenda.
There is little question that the proposed tuition tax credit is intended to serve the purposes of those who have bankrolled the campaign in support of the bill.
Those seeking the credit must make application for a “contribution authorization certificate,” which will be issued on a first-come, first-served basis, in the first two weeks of the calendar year. Once the dollar amount of tax credit applications equals the amount the state has budgeted for such credits, the window closes. The winners in this gambit are individuals or corporations (or the lawyers employed by these individuals and corporations) who have the capacity to negotiate the application process in the first two weeks of January.
The governor’s program bill represents a radical departure from the principle that the funding of public school education is a public duty, a duty that is shared equitably in the service of a collective good – universal public education.
Students Left Behind; Schools Abandoned
Private schools differ from traditional public schools in one respect that is particularly important: private schools select their students. Religious schools and other private schools have the prerogative of rejecting applicants who do not test well, who are special-needs learners, who speak English as a second language, who may be disadvantaged by the many challenges presented in a society whose defining characteristics include poverty and inequality.2
And if this phenomenon is analyzed beyond a single community or county, it becomes apparent that the selectivity of private schools has the effect of excluding a demographic that is not privileged, that is comprised disproportionately of students in families and communities that are the least privileged, and the most vulnerable.
The methodology used by the State of New York to allocate public-education dollars is one of the most regressive in the nation.3 The governor’s tuition tax credit proposal will further widen the educational divide between rich and poor. The evidence of that divide is stark. Consider, for example, Yonkers, the state’s fourth largest city. In the last eight years Yonkers has eliminated 535 public-school staff positions, leaving “one guidance counselor for every 827 students, one social worker for every 2,405 students, and one library media specialist for every 3,307 students."4
Student scholarships funded from the education tax credit are available to families with an income of up to $300,000. And what about low- and middle-income families? The governor’s proposal provides that a family earning up to $60,000 in a year that sends its child to a non-public school qualifies for a $500 tax credit. This will do little to enhance family choice in education, when the average cost of private school (including religious schools) is over $14,000 per year.5
This legislation, as with every education tax credit proposal introduced in Albany, is for the benefit of the economically privileged. Research indicates that the financial advantages of an education tax credit accrue to those families that already enroll their children in private schools.6
An End Run Around The Establishment Clause
The proposed “education investment tax credit” is an attempt at an end run around the constitutional principle that bars the state from endorsing religion. The New York State Constitution incorporates this principle, and prescribes its application, in this provision:
Neither the state nor any subdivision thereof, shall use its property or credit or any public money, or authorize or permit either to be used, directly or indirectly, in aid or maintenance, other than for examination or inspection, of any school or institution of learning wholly or in part under the control or direction of any religious denomination, or in which any denominational tenet or doctrine is taught. . .7
The new privatized education system would direct state tax dollars to religious schools that may fire, or refuse to hire, a teacher of the ‘wrong’ faith; or to a school that instructs its students that a lesbian or gay “lifestyle” is a violation of religious or moral values. That is, the taxpayers of New York would be supporting educational institutions that discriminate based upon religious belief and sexual orientation.
The education tax credit proposes not merely to provide scholarship support to students who attend religious schools, but rather an elaborate legislative maneuver (the “education scholarship and program tax credit”) that has the potential – and, indeed, the objective – of fundamentally altering the policies and rules that direct the state’s funding of education.
The NYCLU urges legislators to categorically reject this legislation.
1 See, for example, Juan Gonzalez, “Hedge fund executives give ’til it hurts to politicians, especially Cuomo, to get more charter schools,” New York Daily News, March 11, 2015; George Joseph, “9 Billionaires Are about to Remake New York’s Public Schools – Here’s Their Story,” The Nation, March 19, 2015.
2 See, e.g., Michael Powell, “Gilded Crusade for Charters Rolls Onward,” New York Times, March 12, 2014.
3 See Bruce D. Baker, David G. Sciarra, and Danielle Farrie, Education Law Ctr., “Is School Funding Fair? A National Report Card” (Spring 2015) at 40 (New York receives 'D' grade in equitable school funding distribution), available at www.schoolfundingfairness.org/National_Report_Card_2015.pdf. See also Fiscal Policy Inst., “The State of New York “IS” Failing Schools: New York Should Address the Major Reason Schools “Fail” - Child Poverty” (Mar. 17, 2014) at 1 (“The state should increase aid by $2.2 billion and distribute it through the foundation formula – which provides aid based on student need – to ensure funds are targeted to high-needs school districts with high child poverty rates.”), available at fiscalpolicy.org/wp-content/uploads/2015/03/Schools-and-poverty-brief-final2-031715.pdf.
4 LoHud, Journal News, “First help Yonkers public schools” (editorial), May 15, 2015.
5 Private School Review, Average Private School Tuition Cost (2015-2016), available at www.privateschoolreview.com/tuition-stats/private-school-cost-by-state.
6 Arizona State University College of Education, Education Policy Research Unit, “The Equity Impact of Arizona’s Education Tax Credit Program: A Review of the First Three Years” (1988-2000).
7 NY Constitution, Art. XI, §3.