[Congressional Record (Bound Edition), Volume 148 (2002), Part 4]
[House]
[Pages 5567-5574]
[From the U.S. 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 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

[[Page 5568]]

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.
  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

[[Page 5569]]

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 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.

[[Page 5570]]

  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 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

[[Page 5571]]

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.
  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

[[Page 5572]]

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.
  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

[[Page 5573]]

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 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

[[Page 5574]]

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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