The Opportunity Scholarship Act otherwise known as New Jersey Senate bill S1872 would create a statewide voucher program for certain public, private and religious school students. Should this bill become law, its vouchers would weaken New Jersey's already financially troubled educational system by diverting scarce state financial resources from our public schools to private and religious schools.

The voucher plan contained in S1872 is advertised as providing perhaps the best way to improve educational quality by creating a competitive model especially for urban school districts. But a voucher plan is merely an alternative funding vehicle for schools rather than a means for improving schools. A voucher by itself does not contribute to helping our schools and students achieve because it provides no operational, curricular, programmatic, or facility improvement.

The Opportunity Scholarship Act would establish a five year pilot program. The pilot program would provide scholarship donation tax credits that would be used to fund school vouchers for tuition assistance. This taxpayer funded voucher plan would enable children from low-income families to transfer from underperforming public schools to the public, private or religious school of their choice. The voucher plan would allow corporations to contribute to state run scholarship organizations or funds. These state run scholarship organizations or funds would then distribute the monies to private and religious schools or to out-of-district public schools in certain cases. The state treasury, however, would refund each corporate donor's contribution in the form of dollar for dollar tax credits which would result in the taxpayer subsidizing 100% of the voucher program. S1872 significantly increases the number of eligible students and the kinds of schools eligible for vouchers. It is estimated that this bill would enable more than 280,000 students to qualify for vouchers especially after its first few years. Students, however, would qualify for vouchers if they were merely residing in a school district with a chronically failing school and not just attending a failing school. Furthermore, students who are currently attending charter, private, and religious schools are also eligible for vouchers.

To finance the vouchers, S1872 would transfer $360 million of state funds to the pilot program that could otherwise have been allocated to public schools statewide. These funds would shift from our state's public schools to many private and religious schools. S1872 would allocate $90 million of the scholarship's funds strictly to students who are already attending private and religious schools. Moreover, this amount can increase by the amount of the $270 million allocated for current public school students residing in a school district with at least one failing school that goes unused.

The major adverse impact of the voucher plan is the caps it places on the annual amount for which the state or the voucher student's parents could be compelled to pay to the voucher student's chosen public, private or religious school. These caps are $6,000 for kindergarten through eighth grade students and $9,000 for high school students. This would result in voucher payments not only falling short of average tuition charges at the overwhelming majority of public, private and religious schools as well as much further below average per pupil costs but also forcing many participating public, private and religious schools to close.

Many Catholic schools are already financially distressed while some are failing due to their challenges in making revenues meet or exceed expenses despite rather Spartan budgets. Moreover, the amount by which the per pupil cost exceeds the cap would be transferred to the local taxpayers in the host public school district who would be forced to make up the difference by paying higher property taxes!

The urban school districts from which most voucher students are expected to transfer would also suffer because they would lose state enrollment-based aid as well as experience a possible degradation of test scores which would lead to No Child Left Behind penalties.

Vouchers will create overcrowding, congestion, and financial burdens for those school districts receiving voucher students if these districts are unable to refuse voucher students especially for capacity reasons. These burdens will deteriorate the quality of education and the level of student achievement in receiving districts which could easily result in many host district taxpayers leaving the host community.

S1872 does not address what discretion if any host school districts might have in being able to determine whether or not to accept voucher students. If a host school district is unable to prevent voucher students from enrolling even if it lacked the capacity then it could be forced to expand, acquire or construct additional facilities to accommodate the voucher students. Even if some of these facility additions were temporary such as acquiring trailers or redesigning cafeterias into classrooms, the host district would be bear the full expense!

Furthermore, because the state will make voucher students essentially the "free agents" of the statewide school system, these free agents could depart before the beginning of the following school year leaving the host district with significant unused or under utilized facilities along with the incremental expense! There is no guarantee that enrollment increases due to voucher pupils would be equally distributed among schools or by grade level within a receiving school or district.

Expensive intra-district busing may be a likely outcome. Also, as a result of potential state requirements for the host district to provide inter-district as well as intra-district transportation, vouchers would impose significant transportation costs on districts which do not own or operate a fleet of buses.

S1872 provides no deadline by which voucher students must enroll in the new school of their choice whether public, private or religious. Without a deadline by which voucher students must register with their new school or district, it will become absurdly difficult for a school business administrator to determine the true enrollment level, especially the number of special education pupils, upon which the budget is built.

In addition, the Opportunity Scholarship Act provides no requirement for voucher students to remain in their new school or district for any length of time. Because voucher students could leave for another school or district at any time during the school year, this will add significant complexity to the proper management of a school or district's finances and operations.

A major unanswered question is whether the parents of voucher students would be able to vote on the operating budget and in the election for the board of education members of the host public school district once their children attend its public schools. Would the parents of voucher students also be able to serve on the board of education of the host public school district once their children attend its public schools? The extent to which the parents of voucher students can participate in the democratic process of the host district remains an open question.

Our state and federal governments have consistently under funded but over mandated education especially special education and Title 1 while increasing accountability standards on public schools. Limited state and federal funds should be invested, therefore, in public schools rather than private and religious schools that are not subject to the same accountability standards.

Furthermore, the school voucher proposal contradicts the "thorough and efficient" education provision of our state constitution protecting all of New Jersey's children. S1872 would violate the "thorough and efficient" clause because it will undermine many urban schools and overcrowd many suburban schools while forcing many participating private, religious as well as public schools to lose money on each voucher because the voucher does not cover the per pupil cost for these schools.

Our public schools are already reeling from approximately $1.5 billion in state aid reductions plus the under funding of the most recent state funding formulas, the Comprehensive Education Improvement and Financing Act of 1996 (CEIFA) and the New Jersey School Funding Reform Act (SFRA) of 2008. Although the state's flawed approach to education funding is exemplified by the new funding formula contained in SFRA, it is manifested in its predecessor, CEIFA.

Dr. Reock studied the financial impact on school districts of the state's failure not only to not fully enact CEIFA but also to freeze most CEIFA funding beginning with the 2002-03 school year (Reock, 2007.) Based on his study (Sciarra, 2008), Dr. Reock found that "the state aid freeze caused massive under-funding of many school districts throughout the state, especially poor non-Abbott districts, and contributed to the property tax problem in the state."

Instead of fully funding CEIFA's school funding formula as required by law, the state froze financial aid to schools at their 2001-02 school year levels regardless of any increases in enrollment, rising costs as well as state and federal under funded mandates. The shortfall was hardest on those non-Abbott districts that were most dependent upon state aid. During the 2005-06 school year the statewide shortfall amounted to $846 million which translated into per pupil shortfalls of $1,627 in non-Abbott DFG A and B districts, $758 in DFG C through H districts, $386 DFG I and J districts, and $188 in Abbott districts. The CEIFA funding shortfall caused serious imbalances between local school districts. During the 2005-06 school year, Abbott districts received approximately 58% of all state financial aid while educating only 23% of New Jersey's K to 12 student enrollment. This meant non-Abbott districts were educating 77% of New Jersey's K to 12 students with only 42% of state aid. This imbalance has continued to widen under SFRA with Abbott aid increasing to approximately 60% of all state aid or $4.64 billion.

As part of his statement in support of the plaintiffs' opposition to SFRA, Dr. Reock concluded (Sciarra, 2008) that "the State's failure to fund CEIFA for the past six years directly resulted in an enormous shortfall of funding in districts across New Jersey." He went further to state, "By 2007-08, the sixth year of the CEIFA "freeze," the total under-funding of state aid had reached $1.326 billion annually, despite the introduction of several new, smaller aid programs." The result was a state-driven increase in local property taxes within non-Abbott districts to make up for the shortfall.

Our public schools were founded just as was our nation on the separation of church and state. The school voucher proposal would violate the provision of the United States Constitution which prohibits legislation that favors one or more religions or religious groups. In addition, private schools might possibly accept voucher students selectively such as through arbitrary methods. Moreover, private schools unlike their public cousins can fail students. What would be the process for dealing with those voucher students who flunked out or were otherwise dismissed from private schools?

The built in advantages enjoyed by private over public schools are perhaps best summarized by Larry Cuban (2004,) our public "schools are unable to control the quality of their raw material, they are dependent upon the vagaries of politics for a reliable revenue stream, and they are constantly mauled by a howling hoard of disparate, competing customer groups that would send the best CEO screaming into the night."

The benefits taxpayers derive from their local school district quality and property taxes are capitalized in their property values. The greater is the quality of the local school district, the greater is the taxpayer's property value because the demand for quality education leads to a higher market price. As a result, taxpayers strive to protect and improve their property values by constantly evaluating the quality of their school district so as to maximize their property values and avoid the risks inherent with vouchers.

Vouchers create burdens for those school districts receiving voucher students which will level down the quality of education. When a school district's quality deteriorates or is expected to decline, taxpayers will usually vote with their feet. By voting with their feet, taxpayers in districts receiving voucher students are quite likely to choose another public school district that best meets their needs and one that will contribute to their property values rather than one subject to the incremental burdens of voucher students.

Contrary to a voucher plan's assertion that it will somehow create a "true" competitive model, a taxpayer's choice of municipalities and, therefore, school districts, already reflects a home owner's optimal asset allocation decision. Thus, the current model of school choice for the provision of education through taxpayers' selection of their local public school districts that does not involve vouchers results in a competitive marketplace that aligns taxpayer preferences with the quality of public education better than a voucher plan could ever hope to accomplish.

The provision of education through local public school districts in which all of students who live within the district attend its local public schools enables community members to get to know and understand one another. The public benefit of having children attend their local schools rather than schools in remote districts accrues, therefore, to students and parents alike.

This "network of acquaintances" is defined by Fischel (2002) as "community-specific social capital." Community-specific social capital (Fischel, 2002) "facilitates collective action" and builds public support for the public funding of public education which "reduces the transaction costs of the provision of true local public goods such as education."

But vouchers would disperse students from their home towns and thereby reduce the communal capital of the local school district. Parents of school children cease to be true stakeholders in their children's education when a system of state funded school vouchers replaces traditional local property taxes as the primary method of funding public education. Because when parents are responsible for paying for the majority of their children's education whether it is in a public, private or religious school, they are more involved with their children's schools. Parental involvement is also one of the major factors leading to improved student achievement and learning. Moreover, parents are much more likely to hold the school system accountable for how it acquires and allocates its financial and human resources as well as for the quality of education it provides when they rather than the state are paying for their children's education.

If the question is how to improve the quality of education statewide, then the answer is not found within the Opportunity Scholarship Act. We should oppose the passage of S1872 because it will adversely impact our students and schools statewide while exposing homeowners to the risks associated with vouchers.

Taxpayers resemble investors because they want their major asset, their home, to appreciate in value. Home owners have a vested interest in the success of their local schools because they strive to offset risks such as those posed by vouchers to their property's value which can not be easily diversified.

References

Cuban, L. (2004). The Blackboard and the Bottom Line: Why Schools Can't Be Businesses, Cambridge, Massachusetts and London, England: Harvard University Press.

Fischel, W. A., (2002). An Economic Case against Vouchers: Why Local Public Schools Are a Local Public Good, Dartmouth Economics Department Working Paper: Dartmouth College.

Reock, E. C. Jr., (2007) Paper, Estimated Financial Impact of the 'Freeze' of State Aid on New Jersey School Districts, 2002-03 to 2005-06, Institute on Education Law and Policy, Rutgers University, Newark, http://ielp.rutgers.edu/docs/CEIFA_Reock_Final.pdf.

Sciarra, D. G., (2008) Certification of Dr. Ernest C. Reock, Jr. for the Supreme Court of New Jersey in support of the Plaintiffs' opposition to the School Funding Reform Act of 2008, Education Law Center, Newark New Jersey, http://www.edlawcenter.org/ELCPublic/elcnews_080521_ReockCertification.pdf