March 10, 2007

Thank You, Governor Spitizer, But Here's a Better Idea

By Timothy P. Mulhearn

In anticipation of his budget message Gov. Eliot Spitzer delivered an address to members of the education establishment, titled “A Contract for Excellence.”  Starting his speech with the declaration that “New York spends more on education per capita than all but one state in America, yet offers our children an education that is nowhere near the top”, the Governor declared his intention to implement “the greatest reform agenda ... in our state’s history.”

Perhaps the most striking word in the Governor’s address was “accountability.”  Indeed, the words “accountable” and “accountability” appear in the speech nearly two dozen times.  Mr. Spitzer was clear in his effort to link accountability with consequences and with resources.  These are the key elements of any serious attempt at reform.

Two days after delivering this “A Contract for Excellence” speech, Gov. Spitzer presented his budget message to the legislature and to the people of New York State.  The accompanying press release bore the heading, “Unprecedented Expansion of School Aid Tied to Accountability’, reinforcing the Governor’s earlier message of reform and accountability.

The press release dealt with many of the standard features of state budgets: class size, graduation rates, increases in funding for public schools, and the like.  But this press release pointed to something new in the Governor’s budget.  In his “Contract for Excellence” address, Gov. Spitzer had noted the role played by New York’s nonpublic schools, private and religious, and endorsed the idea that the state should assist parents who choose these alternatives to traditional public schools.  The budget proposed by the Governor includes $25 million for this, in the form of a tuition tax deduction.  As explained later, this proposal would allow parents to deduct up to $1,000 for each child for whom tuition is paid, whether for a nonpublic school or for an out-of-district public school.

Gov. Spitzer’s acknowledgment of the value of New York’s nonpublic schools and his willingness to include something in his budget for the families who use these schools is very much appreciated.  No doubt, the Governor recognizes that the approximately 500,000 students who attend the nonpublic schools represent a significant savings for the Empire State’s taxpayers.

But as commendable as the Spitzer proposal is, two of New York’s legislators are preparing to introduce legislation that can help all New York’s students, whether they attend public or nonpublic schools.  Sen. Serphin Maltese (R-Queens) and Assemblyman Dov Hikind (D-Brooklyn) plan to reintroduce their Educational Tax Incentives Act (ETIA), a measure they have jointly promoted for several years.  This is a progressive and forward-looking approach to the situation.  Because of its potential to help all New York State, a total of 45 legislators – Democrats and Republicans –  had signed on as cosponsors to the 2006 version of ETIA.  These elected officials represent several city districts, as well as suburban and rural regions of the state. 

While ETIA would allow some help for nonpublic school children, public education would be its primary beneficiary.  It would allow principals as well as school boards to solicit donations from individuals and corporations.  In return, the donors could claim a credit on their state income tax returns.  This credit would be for 50% of the donation, with a $140 cap for personal tax returns and a $4,000 cap for taxpayers who file a corporate franchise tax return, as well as for those who have S corporations, limited liability partnerships, and other such business arrangements.  The significance of these donations is that all the money thus raised would come without an increase in the school tax rate.  These dollar amounts were calculated to bring the first-year cost of the bill within the $25 million figure proposed by Gov. Spitzer for helping parents of nonpublic school students.  However, since the credit is for only half of the amount donated, ETIA has the potential to raise $50 million to support education.  Based on the experience of Arizona, where a similar law has been in effect for several years, analysts have projected that $40 million would go to support  public schools.  In other words, public education would gain $15 million more than the state would lose.  New York’s public schools would benefit even more in subsequent years, as the amounts donated are expected to increase.

ETIA addresses two critical areas overlooked in the Governor’s proposal.  By allowing school boards and principals to solicit tax-advantaged donations, ETIA would foster the creation of non-tax-generated revenue streams for public education.  This would relieve New York’s taxpayers of some of the burden of maintaining the public school system, while encouraging school administrators to make their schools attractive places for prospective donors.

The Maltese-Hikind bill would also benefit the local education funds, which have been set up in some communities to raise money and support for the public schools in those communities.  It would allow  supporters of public education to choose where to send their donation:  to these local education funds, to the school districts, or directly to the individual schools they want to help.  There are also provisions to help low-wealth school districts and to reimburse school personnel for out-of-pocket expenses for classroom supplies.

While not wanting to burden principals and other administrators with more paperwork, ETIA includes reporting provisions.  This way, the public could know where their donations have gone, and school leaders could be held accountable, as rightly demanded by Gov. Spitzer.  If they do not spend the money wisely, donors could decide to contribute elsewhere.

The second area overlooked in the Spitzer proposal is that of help for parents who find themselves at the lower end of the economic ladder.  The Governor’s tuition tax deduction helps only those who itemize their deductions on their federal and state tax returns.  However, most low-income families fare better by claiming the standard deduction.  So the people who might need help the most will not get it under Gov. Spitzer’s proposal.  ETIA, on the other hand, encourages donors to support scholarship funds.  These organizations, helping students in religious as well as secular schools, provide financial assistance to families who otherwise might not be able to afford an alternative to public school.

Mr. Spitzer is right in wanting to help New York’s students and their families.  But because the Maltese-Hikind Educational Tax Incentives Act can help students in public and nonpublic schools, as well as New York’s taxpayers, it is a better idea.
 

Timothy Mulhearn is President of Hempstead, LI-based United New Yorkers for Choice in Education, unyce@earthlink.net