[Congressional Record Volume 148, Number 47 (Wednesday, April 24, 2002)]
[House]
[Pages H1610-H1617]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
EDUCATION TAX CREDITS
The SPEAKER pro tempore. Under the Speaker's announced policy of
January 3, 2001, the gentleman from Colorado (Mr. Schaffer) is
recognized for 60 minutes.
Mr. SCHAFFER. Mr. Speaker, I yield to the gentleman from Michigan
(Mr. Hoekstra) to complete his statement.
Samuel Adams: The Character of Conviction
Mr. HOEKSTRA. Mr. Speaker, the story of Samuel Adams begs the
question: Where did Adams find the strength of his character and the
source of his conviction? Adams gave the answer a few years later when
Hutchinson's successor, Governor Thomas Gage, not having learned from
previous attempts, offered Adams anything that he desired so long as he
ended his opposition to the British Crown.
Samuel Adams responded: ``Go tell Governor Gage that my peace has
long since been made with the King of kings, and that it is the advice
of Samuel Adams to him, no longer to insult the feelings of an already
exasperated people.''
Adams' vigilance for the cause of freedom and his fellow Americans
rested firmly on the peace he found not
[[Page H1611]]
within himself or any person, or even within the cause of freedom
itself. Rather, it came in character firmly grounded in an eternal
security found in knowing the King of kings, the God of ages.
It was his faith that served as his source of strength to stand for
his cause, even when tempted with trappings of power and wealth.
Where do we find our peace? Where do we find our comfort? In the past
few months, we have been reminded that the blessings of wealth and
power cannot alone provide enduring peace, or lasting comfort. These
come from a deeper, more permanent source. I believe, like Samuel
Adams, that it comes from a Nation of good citizens, who embrace virtue
and exercise their convictions, no matter what the cost.
Samuel Adams could have sold his character for peace and prosperity,
but he did not. Adams knew that his reputation was more costly than
gold, more influential than political position. And in his poverty of
possessions, not spirit, he left us the richest of American legacies, a
vigilance for freedom, a reputation of character, and a foundation of
faith.
Mr. Speaker, I thank the gentleman from Colorado (Mr. Schaffer) for
yielding, and look forward to spending the next hour talking about a
very important subject, the topic of education.
Mr. SCHAFFER. Mr. Speaker, I would like to discuss a topic that is
first and foremost on the minds of Americans when asked about their
concerns for the country and their political objectives for the Nation,
and certainly their expectations with respect to the actions of this
Congress. That is perfectly understandable and explainable,
particularly when we consider that most families in America regard as
their most treasured possessions and objects of responsibility raising
their children. And even those who are not engaged in that directly
certainly are indirectly, and view that as one of the most propound
legacies for our country.
{time} 1700
Before we really get started in the discussion, I would like to
invite any of our colleagues who may be monitoring today's proceedings
here on the floor in this Special Order if they would like to
participate in a discussion on school choice as it relates to education
tax credits, I would like to extend that invitation. I appreciate the
gentleman from Michigan being here as well.
The exciting proposal that has come out of the White House most
recently with respect to education involves really trying to help
create more of a market approach to American schooling than we have
known on a national basis for quite some time. That announcement from
our President in support of an educational tax credit is really one
that is consistent with various States. As we look around the country
in the State legislatures and observe some of the activity that is
taking place in State houses today, we see that the proposals around
and about education tax credits are appearing quite frequently.
Here is how a tax credit works essentially and how it helps education
and why the President has given his commitment to an education tax
credit and why it is becoming a high priority here in this House. An
education tax credit is a way to allow American individuals to invest
their own money, private money, into the business of American education
and promoting it. In fact, through a tax credit, effectively reducing
the tax burden on the American people by encouraging an equivalent
contribution to a school or an education pursuit, what we can achieve
nationwide is a massive cash infusion into the American education
system, an infusion that is not discriminatory, an infusion of cash
that does not favor one kind of institution over another institution,
does not pit school building against school building or administrator
against administrator or principal against principal, but does what,
frankly, we should be doing all along with respect to education and,
that is, focusing on the fairness in the relationship between children,
so that all children, regardless of the academic setting that they find
themselves in, are the beneficiaries of a massive cash infusion in
American education. That is what this proposal is really all about.
And so while we have legislation that is still in the works, still on
the drafting table, it is important enough to begin talking now about
the concept of education tax credits, how these credits work, how they
can help American children, how we can learn from the States that have
passed education tax credits already, how we can learn from States that
have engaged in this debate already and have drawn people together
across partisan lines and begin discussing this in a way that I hope
will result in Members from both parties here on the House floor
working on this final draft of the legislation and aim it toward
successful passage here in the House.
Our ultimate goal, of course, is to get a positive bill involving
education tax credits to the President's desk. We feel very confident
and optimistic about this. Again, I say that based on the experience of
States where we see some of the most liberal Democrats joining with
some of the most conservative Republicans, joining together for the
distinct objective of trying to help America's schoolchildren.
Mr. HOEKSTRA. If the gentleman will yield, as we have gone around the
country, the gentleman and I have been to a number of these places
together. Whether it is Arizona, Minnesota, Pennsylvania, Florida,
there has been a lot of excitement around the concept of tax credits.
The gentleman is absolutely right. Number one, this is a focus on the
children, making sure that every child in America has the opportunity
to get a quality education, that they can go to a safe and drug-free
school. And that one of the ways of doing this, and this is especially
true when we introduce the concept of a tax credit at the Federal
level, it does become a massive infusion of new money into our
educational system.
But the difference between the money that is currently coming out of
Washington and going to our local schools and the money that would be
generated by a tax credit, the majority of the money that comes from
Washington today that goes to your local school says, In exchange for
this check, you will do this. As a matter of fact, in exchange for this
check, you will not only do this but you will report back to us on a
regular basis that you have actually done exactly what we have asked
you to do.
What happens with a Federal tax credit is that people in a local
community can write a check to their local public school, their local
public or their private or parochial school, and that money then goes
into that school's fund either for a designated cause which has been
designated by the school saying, hey, we are going to do a fund-raiser
for a new fine arts center, or we are going to do it for increasing and
improving our technology or something else, but then the people within
the local community can decide whether they want to make that
additional investment into their local public school. And so what we
have seen, I think, in the States that we have talked about, each of
whom has crafted their proposal in a slightly different way, but it has
generated more excitement and more enthusiasm for all kinds of
education and it has created a new stream of money going into the
schools, with the most important thing being that it provides the local
school the opportunity of raising funds for some specific needs that
maybe only that school has.
So this makes it very different than any of the other funding streams
that currently come from Washington or that currently come from their
State level. The gentleman is also absolutely right. As we take a look
at how this has happened in the States, they have been bipartisan
arrangements, so it has not been a group of Republicans or a group of
Democrats who have pushed all the way through the process at the
expense of the other party. It has been Republicans and Democrats
coming together, suburbanites coming together with the folks living in
our cities and saying this is a good way to go, this is a good way to
structure an additional investment in education. I think we are all
looking forward to putting that same kind of process together here that
will lead us to a bill that this President can sign.
Mr. SCHAFFER. This focus you mention on local control and local
priorities really is the most attractive feature, I think, in an
education tax credit proposal.
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Mr. HOEKSTRA. I think there are two features that make it especially
attractive to our local schools. Number one, when we do this in
Washington, it clearly is a new stream of money. It is not a diversion
of money that would have been coming from Washington for education,
anyway. It is a new stream of funds which I think can get to be a
relatively significant amount of money into our local schools. The
second thing is that it is nondesignated. It can be crafted and used in
such a way to meet the needs of a local school district.
Mr. SCHAFFER. Honoring local priorities is something we have talked
about a long time together and others in the House certainly have. That
is what this tax credit proposal allows. As you mentioned, what we do
right now in funding schools is really ludicrous in many ways. We have
spent $125 billion on the Federal portion of the K-12 education program
over the last 25 years. Those are rather steep increases that we have
seen over the last few years. Some of these funds are perfectly
legitimate and well spent, there is no question about that. But many of
them are not, frankly. We know that.
What essentially happens, if a taxpayer were to follow their
education investment dollar, here is what they would see, that is, that
the Federal Government taxes the hard-working taxpayer, those dollars
are withheld from their wages, they come here to Washington, D.C., we
meet in committee rooms around here on Capitol Hill and decide how to
divvy up those dollars on education programs. Washington evaluates
education spending almost on a State-by-State basis, sometimes on a
program-by-program basis, but the reality is we have a bunch of people
here in Washington who are trying as hard as they can to distribute
other people's money back to the States on a basis that is fair to the
States, and after it is filtered through the Treasury Department and
the Department of Education and Congress earmarks those funds and ties
all kinds of strings and red tape to them, those funds end up going
then primarily back to all 50 States and to the State governments who
distribute those dollars further. Each level of government, by the way,
takes its cut out of your education dollar.
So that by the time these funds actually reach a child, there is just
a fraction left. What we are trying to do is get around that. An
education tax credit really bypasses this whole bureaucratic and
political structure and allows the taxpayer, the donor, to invest in
programs that seem to make sense in the local community. That is a
refreshing and a very promising approach to school finance and one that
I think is the reason there is so much excitement and support for a tax
credit.
Mr. HOEKSTRA. I think the other reason that there is a high level of
excitement is, and the gentleman and I have gone through this a number
of times over the last few years, you said when they watch what happens
to their money here in Washington. We know that for quite a long time,
when the money went to the Department of Education, we could not track
it; that for 3 to 5 years, the Department of Education could not get a
clean audit. We are excited by the work that, again, we did on a
bipartisan basis during the Clinton administration to put pressure on
the Department of Education to work towards getting to a clean audit.
We are excited by the work that Secretary Paige and his staff are
doing. It appears that many of these problems have been worked out.
But we have to recognize that for quite a while we had a laundry list
of scandals within the Department of Education and failed audits. That
again was one of the things, a lot of my local officials were saying,
Just give us this money directly. This is what tax credits allow us to
do. I think we also need to scale this. I am not sure exactly how we go
after this, but the Department of Education spends about $40 billion
here and K-12 may make up a little bit more than half of that, $24, $25
billion per year. Our tax credit that we are talking about here is less
than 10 percent of that. So this is not massive, something that says,
this is the amount of money that is being driven by Washington and now
we are going to match that by an amount that is being driven by local
tax credits. We are talking about probably less than 10 percent of what
is being driven by Washington actually entrusting a citizen in the
local community to make a donation to their schools.
Mr. SCHAFFER. I would point out just to emphasize this point, that
the tax credit proposal, since it is a change in Tax Code, rather than
the education budget, really has no impact at all on the funds that
have been proposed by this Congress and by the President with respect
to education. I know some have expressed or at least raised questions
about whether a tax credit takes funds from the rest of the government
school budget. The answer is clearly no. It is a separate funding
stream certainly for the same purpose of trying to improve education,
but one does not have any effect on the other from the standpoint of
the budget and how much money there is.
Mr. HOEKSTRA. Absolutely. It becomes a supplemental stream to the
money that is already coming through Washington. We have significantly
increased funding in K-12 education over the last 4 to 5 years and with
the President's new Leave No Child Behind plan, those funding increases
are going to continue. There will continue to be significant increases
in education investment through the Department of Education. This now
provides for those individuals in those communities that believe that
they have some special needs or their schools have a special challenge
or their schools have done a phenomenal job and they are saying, hey,
we really want to put a little more money into these schools. It allows
them a vehicle and a mechanism to do that, and they get a dollar-for-
dollar impact. You put a dollar in, and it does not come with a
mandate, and you do not lose anything of going through the bureaucracy
of a Lansing, Michigan, or of a Washington, D.C. That dollar goes into
that school.
The decision as to how that dollar will be spent will be made
locally, and it will benefit all of the children in that school. It is
really a refreshing complement to the education funding that we already
have in place. For a State like Michigan that has spent so much time
and effort on leveling the funding so that across the State there is
equal funding, this now provides an additional mechanism to now
complement that because as we increase and level the funding in the
State of Michigan, we also then attach a lot of mandates as it came
back. School districts are struggling. They do not get enough
unattached dollars, dollars that they have some discretion in how they
are going to spend it for their local schools and to help their kids.
Mr. SCHAFFER. Talking about education spending within the context of
freedom and liberty is very important for us, because we have not been
able to do that too much in recent years. There are really strings and
red tape and all kinds of parameters that are placed on Federal funds.
This gives us a chance to get away from that.
Americans are really expecting and hoping that the Congress begins to
talk about new and innovative ways and creative ways to improve schools
across America.
{time} 1715
What most Americans are dealing with right now, if they have children
in school, are these mandatory tests. Almost every State is dealing
with them right now. Mandatory tests that have been required by State
legislatures, through State laws, and also the new mandatory
requirements for testing that have come from the Federal level. That
serves to achieve the accountability objectives that the President had
outlined and that the Congress had focused on in the legislation we
passed last year, and the outcome of that still remains to be seen. But
what a tax credit really allows us to do is start speaking to the
flexibility side, the decision-making side of locally elected school
board members, superintendents, of principals and teachers, in
identifying priorities in their own schools that they would go to the
community for assistance on and would be made easier through a tax
credit that we are proposing.
The other innovative side of a tax credit proposal is something that
we are seeing in several States, and that is the creation of education
investment organizations, little investment funds that provide direct
assistance, usually to some of the neediest children and
[[Page H1613]]
communities. We are seeing that starting in Arizona now, which has I
think 3 years of experience with their education tax credit; in the
State of Pennsylvania; in the State of Florida. The proposals that we
are seeing throughout the country are all around existing education
investment organizations. In Arizona, they are called student tuition
organizations. But what they exist to do is to raise funds from a
community so that they can give scholarships to low-income children and
the neediest children in communities to attend the school of their
choice. It is providing just a remarkable relief valve for those who
find themselves trapped in schools that are just not meeting the needs
of children. Some of these schools are failing schools.
We have just received testimony from all across the country as we are
reading newspaper articles about these opportunities, the testimony
that is taking place in State legislatures, and we have also had some
testimony right here in Congress during a hearing that we conducted
just a week ago, and both of us were there. I wonder if the gentleman
would comment on the 10-year-old boy that we met with; Joshua Holloway
was his name. The whole panel of all of these experienced lobbyists
were up there, but this kid, this 10-year-old from Denver, Colorado, he
clearly exceeded the rest of them in effectiveness in reaching out to
the committee and letting America know why these tax credits are so
important.
Mr. HOEKSTRA. Mr. Speaker, what Joshua had to say was awesome. I
mean, here we have a 10-year-old kid who is looking up at three rows of
chairs and a row of Congress people up at the top, and very eloquently
goes through his testimony and very eloquently answers the questions.
His mom had passed away, so his grandfather was there with him at the
hearing, talking about his mom's dream and his mom's vision that he
attend a particular school, and that this school was providing him with
all of the necessary training and skills to be successful in life. And
I think it was one of her last requests to his grandfather to say, make
sure that Joshua and, was it his brother or sister?
Mr. SCHAFFER. His brother.
Mr. HOEKSTRA. His brother. That they both have the opportunity to
attend a particular school. And Joshua's grandfather saying, if it was
not for the scholarships or these types of things, he would not be able
to fulfill this wish and give Joshua and his brother the skills, put
them in a school where they could get the skills that they would need
to be successful, and that anything that would complement the current
funding stream in education that would allow individuals to steer some
money to the local public school or to steer it to an education
investment fund, that that would be okay, and that would be really good
for certain kids who maybe had specific needs or one school just was
not working out for them, so that they could use that investment fund
to perhaps transfer to another public school or to transfer to some
other school. These things have been set up in a number of different
ways around the country. Or, that they could be used to provide
specific tutoring. But there are a number of different kinds of
opportunities that these education investment funds could be set up for
to help kids be successful.
I think that is where, when we talk about education, the important
thing that we always have to keep the focus on is the kids. And the
criteria that we as policymakers have to really embrace is we need to
put together a system that enables every child to get a good education.
We cannot afford, not from a monetary standpoint, but from a moral
standpoint, we cannot leave a child behind. We have to reach out and do
everything that we can to make sure that every child has the
opportunity to go to a high-quality school where they can get the
learning that they need.
Part of that is kids can only learn in safe schools. We cannot have
kids going to schools where they are afraid to walk to their locker,
where they are afraid to walk to their next class. The only fear that a
kid should have while they are going to school is the fear of the next
exam. That is the only fear that they should have: What is that teacher
going to do to me now with the next exam, and am I ready? But other
than that, it has to be a safe and drug-free school for every single
one of our children.
Mr. SCHAFFER. Mr. Speaker, Americans want to help. I think most
taxpayers are inclined to agree that investing in America's education
system is a good idea and, if given the chance, they typically make the
choice to do that. There are some tax hurdles in the way and we are
trying to knock some of those down.
Mr. HOEKSTRA. Mr. Speaker, I think it is exactly what the people have
found in the State of Arizona, where the numbers clearly indicate that
there is an eager group of people who are willing to, and have a
desire, and are willing not to be taxed, but to say, if I can steer
that money to our local public schools without any strings attached to
assist that public school, I will write the check. And there are others
who are saying, I really want to go out and help some special kids, so
I will steer my funds to an education investment fund. With that kind
of flexibility, a State like Arizona is finding that they do not have
to go to the legislature and raise taxes to get more money into
education for all of our kids, or for all of their kids. They provide
the tax credit and then people willingly go out, pay their taxes, and
then willingly go out and voluntarily contribute an extra certain
amount to their public schools and other funds.
Mr. SCHAFFER. Mr. Speaker, the tax burden on Americans is really
unchanged through this tax credit proposal. I know the gentleman and I
as conservatives tend to be of the opinion that we ought to lower the
tax burden, and we certainly should. This is really a different
argument, though, about what happens after the effective tax rate is
established.
The question is, do taxpayers wish to continue just sending bags of
cash back to Washington so that all of the politicians that we work
with here have the opportunity, and just hope, these taxpayers may just
hope that we will spend it in a way they want. That is kind of a gamble
to take and a little bit of a risk. There are 435 of us and we do not
agree on every topic every day, let alone how to spend money on
education. So that is the one option, is to continue paying high
amounts of taxes as Americans do today and shovel those dollars here to
Washington.
Or, the tax burden would be the same, but what we are suggesting
through this proposed legislation is to allow taxpayers to take a
certain portion of their Federal tax liability, their Federal tax bill,
and self-direct that anywhere in the education industry they want. It
might be for a scholarship fund that allows a low-income child to
attend a school of his or her choice, really rescue that child from a
failing school in some cases, or maybe invest in the priority that has
been established by a local school board or superintendent.
I want to get back to Joshua here. First, I am very proud of him. He
is from the State of Colorado, and he testified in committee, and it
was just awesome.
Mr. HOEKSTRA. He not only testified, he not only read his statement,
he also took questions and answered questions.
Mr. SCHAFFER. He sure did. He sure did. His testimony was only one
page long, so I will not ask that it be submitted, but I will just read
a couple of the most moving lines that he read to the committee.
He says, ``My name is Joshua Holloway. I was born in Denver. My
favorite subject is football,'' and he amended that later. He said that
he wanted to be a lawyer, too, but football was just a hobby. He said,
``I am 10 years old. My mother passed away last year. I have a brother
who is 6. His name is Jeremiah. We go to church every Sunday. Before I
go to school I read the Bible. I live with my grandfather. Sometimes my
cousins come over and we play outside and play video games.''
He says, ``Before my mom passed away, she told my grandfather to
bring us to Watch Care.''
Watch Care Academy is a school I am somewhat familiar with that is in
the metro area of Denver, and he goes on. This was just so compelling
and I think really makes the case, almost single-handedly, as to why we
need an education tax credit proposal. He says, ``My grandpa could not
afford to pay for me and my brother. So Mrs. Perry,'' who is the
principal, told him about
[[Page H1614]]
the Ace scholarships. Ace is the name of one of these education
investment organizations that provides scholarships for these low-
income kids. So they applied to this organization.
He says, ``My grandpa applied and we were awarded Ace scholarships.
Jeremiah and I say thank you, Ace.'' He said, ``It is with your help
that my grandpa is able to bring us to this fantastic school. I know my
mom is happy and thanks you also. When I grow up, I want to be a lawyer
and then a football player,'' he says.
He says, ``Thank you for helping all of the children who are getting
such a good education through your program. I want to win,'' he told
the committee. He says, ``This will help my grandpa with the money for
Jeremiah and me.''
I just cannot state it anymore clearly than Joshua did. These
scholarship organizations exist to help poor children achieve the
education that they deserve, and what we want to do is make it easier
for Americans to contribute to these kinds of organizations, and these
exist all over the country. These scholarship organizations or these
education investment organizations, they exist in all 50 States and, in
fact, in the States that have established a State income tax credit for
education like we are proposing on the Federal level, we have seen
these kinds of organizations flourish.
So just imagine Joshua's testimony multiplied by thousands of
children who I believe probably have equally compelling stories and
dreams for their academic future, and they have these financial burdens
that are being lifted through these organizations. We can make them
even more powerful and more effective and rely on the ingenuity of
private initiative in order to provide more, just to rescue more kids
like Joshua and Jeremiah in Colorado.
Mr. HOEKSTRA. We have to make sure we always come back to the point
that this is a balanced approach, that this is available for public
schools and it is also available for education investment funds.
Mr. Speaker, I could talk about my home district where we have a lot
of good schools, but what has happened with our superintendents, the
money rather that being raised locally through the property tax is now
raised statewide through a sales tax. It is a very positive thing. It
has lowered our property taxes and it has created a consistent funding
stream across the State.
Again, we have kind of taken out the differences between schools. But
what the situation reduced many of our superintendents to do is to kind
of become almost beggars to Lansing, to go to Lansing and make their
case with their State reps and their State senators that they deserve
more or they need money for this or they need money for that; or in
this district they have a very specific need, and over here they have
another specific need. They kind of feel like they have lost control
and their life now gets to be managing the rules and regulations that
come from Washington and the rules and regulations that come from
Lansing.
With a State tax credit, or if we did a Federal tax credit, it now
allows them to supplement the income that they are getting from the
State and get that money to go to some perhaps very targeted and
specific needs that they may have identified. It is really exciting,
because then the community who wants to embrace their schools because
of the great job that they have done can now write that extra check to
their local public school and build that public school.
{time} 1730
In the States where they have adopted this, it is exactly what
communities are doing. Communities are embracing their schools with the
Ace program, they are embracing kids. So what this does is it gets to
be, as I would say, a win-win. It increases the funding in education,
but it makes, at least for this pot of educational expenditures, it
makes it available to all of our kids. That I think is an exciting
proposition.
We know that the idea is ripening here in Washington. As the
gentleman and I did the survey of all the different types of tax credit
legislation that has been introduced here in Washington in regard to
education, there are a whole series of different ideas that are
flourishing or are being proposed by both sides of the aisle.
I think what the gentleman and I and others are doing is to try to
come up with a consensus piece of education tax credits that can be
embraced by a diversity of Members here on the floor of the House to
address some of the needs that we have identified in education. Will it
be the total solution to everything? No. The President and this
Congress has passed H.R. 1. That is a step forward. There will be
increased funding as a result of H.R. 1, the No Child Left Behind Act.
That is part of the puzzle. There is more testing.
The gentleman and I are not necessarily assured that that is part of
the solution, but we hope it is. We hope that as it is implemented
through the States, that it becomes a part of the solution package.
I really believe that as we lay these different things out, increased
funding, the changes in the rules and regulations as a result of H.R.
1, the new testing protocol, then really the tax credits really fit
with the President's vision, because what he really talked about was
having accountability and more flexibility.
This tax credit component really now provides an additional
opportunity for investment, but different than some of the other items
that have been talked about for education funding, it does not take
from one pot and say, okay, we thought we were going to give them this
much, but they are going to get a little bit less and we are going to
move it over here and give it to somebody else.
This pot, this educational investment area, is going to stay the
same. It is probably going to grow, and it is probably going to grow
significantly. And then over here there is going to be another one, but
this one is going to be much more flexible as to where it is going to
be used and who contributes, who does not.
When we put that whole package together, it actually gets to be a
fairly comprehensive package of reforms that can be kind of exciting.
Mr. SCHAFFER. Madam Speaker, the management model that the gentleman
described, that has become emblematic of public schools, is something
that really needs to be changed. This tax credit proposal perhaps in a
small way can really help achieve that.
Here is what I am talking about, specifically. The gentleman used
really great language to describe what happens in schools, in schools
today. That is, the administrators, the financial officers, and the
business managers of America's schools have become proficient beggars
to other governments.
There is a whole inside language that exists in American education
today, and we see this on the Committee on Education and the Workforce
here, as Members who serve on that committee. But also certainly we see
that throughout the country. There is this inside language and all this
technology that is only understood by the people who are on the inside
of public school finance.
We have school board members who become very, very proficient at
using the right words to appeal to other politicians at the State level
and in State governments. They have their own code language that
corresponds to requirements and rules that exist here in Washington.
This works very nice within this little bureaucratic bubble, but it
really alienates and abandons the rest of the community, in many cases,
and certainly it alienates the children.
An education tax credit that provides an opportunity for the
community to invest in real priorities of local schools begins to shift
the focus, even if slightly, back toward the community. So now these
school board members throughout the country have to become more
proficient at appealing to me as a parent and to my child as a
customer, and to the rest of the community, including corporate donors,
in terms that make practical sense to those who are on the front line
of American society and see the immediate impact of good schools.
Mr. HOEKSTRA. Madam Speaker, what we have is the evolution of our
public schools, and they were called public because they reflected the
community. The public schools evolved into government schools, okay,
like the gentleman said, with the local school board now having to
appeal to the State legislature for funds, and the State legislature
appealing to the Federal Government, so they become kind of government
schools.
[[Page H1615]]
What we have done is we have seen the breakdown in that critical link
between superintendents and school boards and their local community. We
have weakened that. It is not through any fault of the principals or
the superintendents or the school boards. As a matter of fact, they
want to focus on the parents. They want to focus on the kids.
But because of where the funding stream has gone, and the mandates
and the directives, they have found that more and more of their time
and attention has been pulled away from the children, has been pulled
away from parents, has been pulled away from the community, and has
been directed to the people in the State capital or the State board of
education or the Department of Education.
This really now kind of moves it back a little bit more in balance.
It says, keep that strong link with your community, the thing that has
made you so successful, the thing that has always led people to say,
there may be some problems with public education, but we have a good
public school in our community. Now all my money goes to Lansing, but
if I had an opportunity through a Federal tax credit, I will write
another check to my local public school because I know the principal, I
know the teacher, I know the school board, and these folks are doing a
good job.
In other parts of the State or the country, they may say, we know
that does not work for everybody, that some kids are not going to be
successful there, so we are going to contribute to this education
investment fund.
Mr. SCHAFFER. Madam Speaker, I think it can actually be even more
profound than having an improved understanding of the management of the
school or the academic objectives of school leaders. I think it comes
down to people who really become part of the fan club for Joshua
Holloway and other people like him, who really become Joshua's biggest
supporter and promoter.
Joshua has real impact. When he testified in Congress, he had a
pretty remarkable impact. But that is always true back in the State of
Colorado, where people have read about Joshua, and they see this and
they get inspired by it.
They think, here are schools, academic institutions, competing now to
help Joshua, this 10-year-old poor child whose mother passed away last
year. That is what we want to achieve. We want the American education
system to fall all over itself trying to help Joshua succeed in life.
And to the extent that occurs, I have to tell the gentleman, I think
people are going to be very willing to open up their checkbooks and
make the investment in little Joshua, and I think they will do it
before they will trust people here in Washington to spend the money on
Joshua. It is just a better bet. The tax credit really removes all the
political decision-making from it, and it really leaves that decision
to local communities.
In the end, Joshua is going to succeed if we can accomplish this
objective for him.
Mr. HOEKSTRA. Madam Speaker, if the gentleman will yield further, I
will give this example. It was a year and a half or 2 years ago in my
local community. There is a school, Lincoln School. This is a
landlocked community, so they are suffering from a problem that, again,
the technocrats call ``declining enrollment.'' There are just not as
many kids around.
This was a critical school in a critical part of the community.
Because the enrollment was going down in the entire school district,
the folks in Lansing said, sorry, this is the amount of money that you
are going to get. Deal with it. Deal with it. And there was nothing
that the local school board could do. They had to make some choices.
One of the choices that was not even on the table was, can we go to
the community and can we appeal to them and say, we know that this is
not the most efficient and effective decision if you are running the
school as a business, all right? And maybe we really do not need that
school. We can move some kids here and there, and that is a better and
more effective and more efficient way to run it.
But they could not even go back and say, having that school there was
right for the kids. It is not the most efficient, but it is the right
thing to do. We do not want to take those kids out of their
neighborhoods, and we want to leave that school open until maybe it
gives us a little bit of time to deal with some other issues, or
whatever.
They could not go and say, we are going to have a fundraising effort.
Take your education tax credits and go to some of the corporations and
say, hey, we need to raise X amount of dollars, and then the community
could have had a say as to whether Lincoln School was going to stay
open to help those kids because the community believed that that was
the best educational investment that the community could make at that
time, even though the green eyeshades people, the accountants, were
saying, sorry, you have to cut.
Those are the kinds of decisions that we want to empower communities
to make. We want to get cheerleaders, cheerleaders for our public
schools to go out and say, this is what we need. We want to get
cheerleaders for the education investment funds. We want to get
cheerleaders saying that our educational system is so good, but we can
make it better, and we want you to help. We want you to contribute to
it. When you contribute to it, every dollar is going to find its way
into a classroom and is going to help a Joshua or is going to help a
child at Lincoln School, and is going to make a real difference.
Mr. SCHAFFER. Talking about funding schools from the standpoint of
tax freedom, as opposed to just spending more money, I think makes
eminent sense. That is the kind of discussion we have really needed
here in Washington for a long, long time.
I am really proud of those States. I have mentioned there are a
handful of States. There may be some who are curious about what States
have already implemented tax credits with respect to their State taxes.
Those States are Arizona, Minnesota, Iowa, Illinois, Florida, and
Pennsylvania.
Mr. HOEKSTRA. Madam Speaker, I cannot believe Pennsylvania would have
done it.
Mr. SCHAFFER. What is also important is that there are nine States
that have no income tax, so they are really looking to the Federal
Government to provide this kind of assistance and education funding
through tax freedom in those States.
I might also add, these others that have already moved forward on tax
credits on the State level, they are ahead of the curve. They are
already, from an infrastructure standpoint, already equipped to really
squeeze the greatest amount of buying power out of a Federal tax
credit.
I think those six States that I mentioned already, they perhaps have
the most to gain up front from an education tax credit that we can pass
here. That is probably the reason why the Members of Congress from
these States are some of the most enthusiastic supporters that we have
seen so far, even at this stage of the discussions.
Mr. HOEKSTRA. The reason I made the comment about Pennsylvania was
only because Madam Speaker tonight is from the great State of
Pennsylvania, and the next time we have this discussion on where we are
going with Federal tax credits, perhaps she can join us and talk about
the success or the rationale for how the Pennsylvania legislature moved
to embrace tax credits, and I believe do it in a bipartisan way, move
forward and get that done, and how that would then complement what we
would be doing here in Washington.
Mr. SCHAFFER. In the hearing we conducted last week on this topic, we
had one opponent who was opposed to Joshua and his academic dreams.
There was a group called Citizens for the American Way, and it was
their representative.
Mr. HOEKSTRA. People for the American Way.
Mr. SCHAFFER. The lobbyist for that outfit was not particularly
cogent when he was talking about the issue. But one of the tactics that
he deployed in the committee was try to mislabel the education tax
credit as a voucher.
The reality is, this is very, very different than a voucher proposal.
It shares really nothing, nothing in common, except it has to deal with
education. But the finance mechanism of this is nothing like a voucher
at all. We have seen voucher proposals.
[[Page H1616]]
Mr. HOEKSTRA. I was going to say, we need to get that clear. In the
State of Arizona, more than half of the money is going to public
schools, and it is not following one student who may decide to go to
another public school, so it is not even following that. That money is
being given by parents to invest in that school, or a limited number of
programs and ideas that the State has identified that that tax credit
can be used for. So it is the farthest thing from the V word.
More than half the money in Arizona is going to local public schools
because of the connection between the schools and their parents and
their community at large saying, invest in our school. We have these
kinds of needs, and people ante up and are saying, you are doing the
job. You need these extra funds and we are going to help you out and
support you.
Mr. SCHAFFER. A voucher entails government collecting cash from
taxpayers and giving those same dollars back to taxpayers in the form
of a voucher, a check that can only be spent at certain institutions,
based on the rules that would be defined by the government when it
issues and creates this voucher legislation.
{time} 1745
We have seen that in some States, and some communities have fully put
voucher legislation in place. And I guess when compared to what we have
today in most places, which is a government-owned, unionized monopoly
where there is no choice, a voucher represents a greater degree of
choice, but it still involves government making decisions for Americans
and for taxpayers. It also involves government money being appropriated
as an expenditure in the voucher program.
The tax credit thing is nothing like that. This is not an
appropriation, it is an academic investment, a massive cash infusion in
American schools through tax freedom rather than through spending. So
that is the key distinction between a tax credit proposal and a voucher
proposal. I think this is an important distinction to make. I probably
cannot make it often enough because there are some who do not support
the idea of tax freedom and do not support the idea of Joshua being
rescued; who tried to malign this whole discussion about Joshua's
future by calling it a voucher, which it clearly is not.
Mr. HOEKSTRA. I think the gentleman becomes very, very clear when he
says government money. I think that came up at the hearing. What
exactly is government money? Government money is only that money we
have claimed and taken from the American people. Once it gets to
Washington, it is still the people's money, but they have entrusted it
to us. But that is probably the clearest definition of what government
money is when people have paid the taxes to us. That is exactly what a
voucher is. A voucher becomes government money, and we just
redistribute it.
What we were talking about here is the people's money in its pure
sense. Those folks have the opportunity to choose as to whether they
are going to write that check for an educational purpose or whether
they are going to go use it for something else.
Mr. SCHAFFER. It becomes an investment.
Mr. HOEKSTRA. It becomes an investment. Whether they want to invest
it in education or whether they want to put it in a savings account,
whether they want to go out and buy a personal watercraft, whatever. It
becomes personal money that they have the discretion as to where it is
going to go.
Also with government money, one can make the argument more
effectively, well, if it is government money, then you are taking it
from this pot and giving it to this pot. This is not. This is private
money where people are making the decision as to whether they are going
to invest more in education or whether they are going to spend it
somewhere else, but it is the freedom for them to choose what they are
going to do.
And what we have seen in the States that have done this, people
choose to a certain extent to invest more money into education
voluntarily, and that is a great direction to take.
Mr. SCHAFFER. These proposals have been studied. I am holding in my
hand a study of the Arizona scholarship program that exists there. This
study was done by Carrie Lips and Jennifer Jacoby. It is only a few
months old. And what this study has found is that from 1998 to 2000,
the time frame that was studied in this report, the Arizona tax credits
generated $32 million for children in Arizona, providing almost 19,000
scholarships for children in the State, and that is through about 30
different organizations that just sprung up after the Arizona
legislation passed. But most of those scholarships, in fact, 80 percent
of those scholarships were selected on the basis of financial need.
So think of that; $32 million invested, a massive cash infusion in
the Arizona school system within the State that provided assistance to
19,000 individuals in the State of Arizona. This is money that would
not have occurred otherwise. It is money that did not come out of the
Arizona school finance act.
In fact, that point was clarified at the hearing we had last week,
too. These are new dollars. They do not replace, they are not taken
from the Arizona school funds, just as our proposal would not take
dollars out of the national education budget. But because this tax
mechanism exists in another place in the law, it actually creates new
money for American education. If we can do it for the country, which
generates $32 million over a very short time period for 19,000
individuals, and magnify that on a national basis, we are talking about
billions of dollars, really a massive cash infusion in America's
education system.
Mr. HOEKSTRA. For two purposes.
Mr. SCHAFFER. And it is a remarkable goal. Hopefully, we can achieve
it.
Mr. HOEKSTRA. For two purposes; again, for education investment funds
and for investments in traditional public schools.
Mr. SCHAFFER. It does not discriminate. These investments will not be
encumbered by the judgment of politicians or these internal political
battles that take place between school buildings and school sites. It,
rather, leaves the decisions to taxpayers to invest in children like
Joshua, and without any regard to the kind of academic setting that
Joshua might choose. It focuses on children rather than agencies and
institutions, and from that standpoint really drops the discriminatory
nature that we see in the Federal funding that we have today where
politicians decide which States are going to win, which States are
going to lose, which States are behaving the way the bureaucrats in
Washington want them to behave, which States are charting their own
course.
These kinds of discriminatory features really define how money gets
back to our neighborhoods in America through Federal spending, and this
tax credit gets rid of all that baloney, and, frankly, starts
suggesting that Joshua is more important than the guy who hands out the
grant down the street from here.
Mr. HOEKSTRA. Right. I think in fairness now to what is going on with
H.R. 1, we are hoping that the results of H.R. 1 will be less focused
on process and more focused on results, and so we will have much less
of a process debate.
But this gets to be, again, it gets to be a wonderful commitment to
the pieces that we are already putting in place in many ways. And this
is why the President supports the concept of a tax credit and why he
had it in the budget that he proposed that he wants to invest more
money in education and he wants more flexibility and he wants children
to have a range of options for education, recognizing that perhaps one
size does not fit all of our kids. And when the focus continues to be
on our kids, that is exactly where it needs to be.
So often we talk in the aggregate. But, again, you and I have been in
schools around the country. We have been in inner-city New York,
Detroit, Cleveland, Kentucky, Columbus, Cincinnati, Los Angeles,
Phoenix.
Mr. SCHAFFER. Tampa.
Mr. HOEKSTRA. Tampa. We were down in Tampa. And we talked to a lot of
parents and we talked to a lot of kids. And so we have seen hundreds
and we have seen thousands of Joshuas around the country, and not
everyone has an Ace scholarship, but what we see is thousands of
Joshuas, many of them who are succeeding in traditional public schools,
some who are succeeding in charter schools, and some
[[Page H1617]]
who are succeeding in private or parochial, and others who are
succeeding as home schoolers. So there is not one model that does fits
all.
The important thing is that every child be given an opportunity. This
does not even come close to equating funding for one to the other. This
really is, it will be the only pot of money that becomes available for
all of our kids and does not discriminate against any of them.
Mr. SCHAFFER. Let me go back to the Arizona model because it has been
studied heavily and it is probably the example of a State that has
helped the greatest number of children through an education tax credit.
It is useful and instructive for us to consider the Arizona model with
respect to trying to project the potential impact for the company.
The analysis suggests that in Arizona, the tax credit is revenue-
neutral when it comes to the existing expenditures for schools. That is
critical, because I think that argument is one we are going to have to
make in Washington here, too, for some that have some concerns about
that.
But listen to this. It is estimated that by 2015 the scholarship
credit in Arizona will be raising $58 million per year, funding 35- to
61,000 scholarships annually, and helping send 11,000 to 37,000
students who otherwise would have to attend a government-defined school
to attend the school of their choice. Sixty-one thousand scholarships;
37,000 students would be helped. And Arizona is not the largest State
in the Union by any means.
So when we start talking about what can happen if we provide some
leadership at the Federal level, establishing a basis for the Federal
tax credit and seeing it carried out, seeing the State initiatives
duplicated in more and more States, it becomes very, very exciting
because it really does begin to create an education, an academic
marketplace where there is no discrimination between schools and where
children become the primary objective. I am so thrilled that we are
seeing that kind of enthusiasm starting to build now.
Again, the bill has not been introduced yet, but the discussions we
have had so far have been very, very positive, Republicans and
Democrats. And I am very, very hopeful once this bill gets introduced
in its final form, I have the drafts here, that we will see it come to
the floor quickly. And we have the commitments to make that happen from
the leadership and support from the President.
Mr. HOEKSTRA. Does that analysis also take into account or talk about
how much money they are projecting will be invested into the public
schools, not into the investment scholarship funds?
Mr. SCHAFFER. It does, but I do not have the summary in front of me.
Mr. HOEKSTRA. Was that number 59 million?
Mr. SCHAFFER. $58 million.
Mr. HOEKSTRA. $58 million. I think, going along the trend, you might
be able to extrapolate that roughly the same if not more money will be
flowing into traditional public schools. So that talks about the
strength of this idea, $160 million flowing voluntarily into the school
systems that otherwise would not be there. And that is why this is a
powerful idea; people having the freedom to invest more money into
education that otherwise would not.
Mr. SCHAFFER. I appreciate the gentleman joining me on the floor
tonight, and I think my time has expired.
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