a new conversation

Denver-based private school scholarship provider to expand to Houston, Wyoming

The largest provider of scholarships subsidizing private school tuition for low-income Colorado students is launching an expansion just as the role of private schools in U.S. K-12 education is being thrust into the spotlight in the early days of Donald Trump’s presidency.

Denver-based ACE Scholarships operates in Colorado and three other states now and is set to grow with a new national team and looming expansions this fall into two other markets.

The nonprofit was created in 2000 by oil and gas businessman Alex Cranberg, a conservative school choice proponent who has spent his own wealth to influence Colorado politics in the past. ACE expanded to Montana, Louisiana and Kansas beginning in 2012.

The latest expansion — starting in Wyoming and Houston — is funded by a $1.5 million gift from Stand Together, a nonprofit backed by billionaire libertarian businessman Charles Koch.

“We’re very enthusiastic about families who are able to go to the school that’s right for them,” Norton Rainey, ACE’s president and chief executive officer, said in an interview. “It’s totally about opportunity. It’s about leveling the playing field.”

This year, ACE provided 4,000 scholarships in Colorado, Montana, Louisiana and Kansas. About half of the recipients live in Colorado. The only requirement to be eligible is that the family’s income qualify it for government subsidized lunches at public schools.

Scholarships are capped at $3,000, which doesn’t come close to covering the full cost of participating schools’ tuition, with average more than $8,000. Families usually contribute more than $2,000 each year, ACE said. The schools will often waive a portion of tuition, as well.

Research is mixed on the success of private schools. One recent study from the University of Notre Dame found students using vouchers to attend private schools did worse in math after leaving public schools.

To track how their scholarship recipients are doing, ACE says it hired an independent statistician to compare the results from standardized tests given by private schools to the state’s.

According to ACE, Colorado high school students who have won an ACE scholarship averaged a 20.9 ACT composite score in 2014-15. That’s compared to 17.3 to their peers in metro Denver school districts. And 87 percent of students in the class of 2015 who started at a private school their freshman year graduated within four years. The metro area average was 77.2 percent.

President Trump during the campaign promised to spend up to $20 billion in federal tax dollars to incentives states to allow use of taxpayer money on private school tuition. His pick for education secretary, Michigan billionaire Betsy DeVos, supports private school vouchers.

Voucher opponents say they siphon off much needed funds from public schools trying to improve. And in numerous states, including Colorado, vouchers have been deemed unconstitutional given the religious nature of many private schools.

Rainey said he believed public and private schools could and should co-exist.

“We do want to see healthy public schools,” he said. “And if a public school is doing better than a private school and the private school goes out of business — fine with me.”

Q and A

Former Success Academy lawyer hoping to start own charter network wants to ‘take it to the next level’

As the former top lawyer for Success Academy, Emily Kim had a hand in almost every aspect of New York City’s largest and most controversial charter-school network — from negotiating lunch times for schools in shared buildings to defending Success in court.

After spending six years with Success, Kim is setting off to launch her own charter network with locations in Manhattan’s District 6, which includes Inwood and Washington Heights, and the Bronx’s District 12, which includes the south and central Bronx. Called Zeta Charter Schools, she hopes to open in 2018.

PHOTO: Photo courtesy of Emily Kim
Emily Kim

Kim is still a big believer in Success — two of her children go there, and she praised its lightening-rod leader, Eva Moskowitz, as “brilliant” — but she thinks she has something different to offer.

“I chose the best schools possible for my own children,” she said during a recent interview with Chalkbeat near her home on the Upper West Side, “but I’m still going to innovate and take it to the next level.”

The school’s co-founders — Jessica Stein and Meghan Mackay — also have ties to Success, as do several board members listed in the school’s charter application. (One of the board members, Jenny Sedlis, is a Success co-founder and director of the pro-charter advocacy group, StudentsFirstNY.)

But Kim’s vision also seems tailored to avoid some of the usual critiques of charter schools, including that they rely on harsh discipline policies. By contrast, her plan for Zeta calls for limiting the use of suspensions. She also wants her schools to be diverse, though she admits that will be difficult in residentially segregated areas like the Bronx.

A mother of three, Kim has taught in classrooms in New York City, Long Island and even West Africa. She worked on special education issues in Philadelphia district schools before heading to law school at Temple and Columbia. While working as a corporate litigator, she took on a case pro-bono for Success — and was soon offered a job as the network’s first general counsel.

Below are edited highlights from our interview with Kim earlier this month where she described how her experience as an Asian-American growing up in Iowa shaped her views on school segregation, why she believes high-stakes tests are important, and what role she sees for charter schools like hers.

Kim talked about sending her son to Success:

My child was 4 years old when all of this kind of unfolded. The first school I visited was Eva’s school, Harlem 4.

… I was so astounded by what I saw — which is the energy of the teachers. Just the level of dedication, commitment, the joy and energy of their teachers — I was blown away.

Then Eva gave a talk at the end. She was clearly a hard-driving, almost in a sense, from my perspective then, a business person. So I thought, “That’s the type of person who should be running schools.”

What’s your role going to be as you launch your own charter schools?

I’ll be the CEO. I want to take all of the great things that I saw at Success and at other schools and — like in any other enterprise — I want to take the best of the best, and I want to implement it.

And then I want to work on implementing some of the ideas that I have as well.

What’s your goal for your schools?

The number one goal is to just create additional education opportunities. As a parent, I feel this very strongly: No parent should have to send their child to a school that is not a good school.

… Our schools are going to prepare kids for the tests, and the reason is that tests are access to power. And whether you like it or not, if you want to go to college — to a good college — if you want to go to law school like I did, you take the SATs. You take the LSAT. You have to do a good job.

How are you going to measure your schools’ success?

Academic outcomes are first and foremost because truly, if I can’t hit the academic outcomes, there’s no point. I’m wasting everybody’s time and I don’t want to do that. That’s number one.

… We’re looking at going backward from very rigorous high school and college curricula, and working backwards from there. So that’s our vision when we’re establishing our schools. What do kids need to be successful in college?

And it’s not just the testing outcomes, but it’s also the soft skills that kids need in order to get there. Kids need to be able to self-regulate, and that’s got to start in elementary school, in order to be successful in middle school.

On what her schools will look like:

One of the most important elements of our school design is going to be technology.

We’re still in early days, but I’m visiting many schools across the nation that are doing things that are very exciting in technology. I’m also going to be looking in the private sector to understand what are the skills that kids need to actually be innovators. I’d love if one of our students were able to invent an app that made a difference in the world.

Many New York City schools, district and charter alike, are highly segregated by race and class. Kim spoke about the city’s segregation:

In New York City, with the exception of Success Academy and other high-performing schools, you can go to the playground and look at the skin of the children who are playing there or look around the neighborhood and the socioeconomic status of the neighborhood, and you’ll know the quality of the school. It’s a terrible, terrible situation. And that’s 60 years after Brown v. Board of Education.

And how her own background informs her views on the issue:

I grew up in Iowa. I was one of the very few students who looked like me. My dad was a math professor. There were very few African Americans, few Hispanics, and very few Asians. That was hard in a lot of ways in that I grew up with a lot of teasing and whatnot. But I also was forced to navigate a world that I didn’t understand from my own experience.

… I have the perspective that it shouldn’t [just] be the case that minorities are integrating into the larger majority population. The majority population also has to integrate themselves in the minority enclaves. As long as we have this idea that it has to go one way only, that’s perpetuating the problem.

Have the city’s charter schools done enough when it comes to integration?

… It’s just so challenging for charters because honestly, opponents of charters use the segregation idea as another weapon against charters in terms of why they’re not serving the greater good — because they’re segregated.

Well, they’re segregated because they went into areas that were low income. Unfortunately, those kids weren’t getting a good education.

So what should the mission of charter schools be?

Charter schools were largely, originally intended to bring options to children who didn’t have them — so that would be low-income [students]. That’s not really my vision of charter schools. I think that charter schools are places where innovation can happen.

… I would love for what we learn through our [research-and-development] approach to be implemented at district schools. I’m very interested in district reform. I think there are a lot of challenges to district reform, but we’d love to come up with solutions that can be applied in other contexts.

Kim explained her decision to leave Success and start her own schools:

Staying with Success surely would have been a very rich experience, but I also thought I wanted to build something and I had some ideas.

… It was a really hard decision. But I’m really glad I did and every day I’ve made that decision, I feel like I’ve made the right decision.

I guess it will be answered once I have the schools up and running. If they’re doing well, then I’ll have my answer.

choice history

The rise of tax credits: How Arizona created an alternative to school vouchers — and why they’re spreading

PHOTO: U.S. Department of Education

With its recent adoption of a tax credit scholarship program, Illinois became the 18th state to adopt an innocuously named — but highly controversial — policy that critics have described as a “backdoor voucher.”

In some sense, the description is apt. But by injecting a middle layer into the government’s support of private school tuition, tax credits help avoid some of the legal and political obstacles that have dogged efforts by advocates, like Education Secretary Betsy DeVos, to promote school choice through vouchers.

Perhaps as a result, more students now use tax incentive programs than vouchers to attend private schools in the U.S. A federal tax credit is also seen as the Trump administration’s favored approach for promoting school choice at the federal level, though its immediate progress looks increasingly unlikely.

The 20-year history of this approach offers insights into why it has taken hold: resistance to legal challenge; limited government oversight, appealing to among free-market advocates of school choice; and a more politically palatable branding than vouchers.

This is far better than vouchers — it is easier to pass and easier to uphold,” Trent Franks, a conservative activist and now a U.S. congressman, said in 1999 after Arizona’s state supreme court upheld its tuition tax credit program. “I think this is the direction the country will go in.”

He proved largely right.

The number of students participating in private school choice programs over time, including tax credits (green) and vouchers (orange). (EdChoice)

Arizona’s pioneering approach

The first tax credit program was passed in Arizona in 1997. Arizona’s constitution, like most other states’, bars public dollars from going to religiously affiliated schools. Proponents knew any plan to promote private school choice would likely end up in court.

So they landed upon an ingenious approach that would make the initiative more likely to survive legal challenge. Instead of issuing vouchers for private school tuition — like Milwaukee had done since 1990 — the state would outsource that role to nonprofits. Those groups would get their money from donations, encouraged by generous tax credits.

It worked like this: An individual could donate up to $500 to a nonprofit, then get a tax cut for the exact amount they donated. The nonprofit would take the donated money and use it to offer tuition stipends — essentially vouchers — to families who met certain conditions. That system allows the state to promote the tuition subsidy, losing $500 in revenue for each maxed out donation, without paying for it directly.

Arizona’s program has since grown, and the state has created a number of other tax credit programs. (This approach is distinct from programs that give individual families tax breaks for educational spending on their own children; Illinois has had such an initiative since 2000, while Minnesota has had one since 1955.)

Arizona’s and of Milwaukee’s policies look similar. In both places, students can receive a subsidy to attend a private school, and it comes at the expense of state revenue. But crucially, in Arizona, the government never had the money to begin with.

“The point was in part to ensure that these were not government-run programs,” Lisa Graham Keegan, who was Arizona’s school superintendent when the tax credit program passed, told Chalkbeat. “Those scholarships are completely separate, both for legal reasons and for philosophical reasons.”

Tax credits: the legal survivors

Private school choice across the country have been inundated with legal challenges, but tax credits have proven remarkably resilient.

Although voucher programs have continued to grow and were upheld by the U.S. Supreme Court in 2002, they have also faced legal challenges in state courts. Colorado’s top court, for example, struck down a voucher program in 2015. (The case is currently being reconsidered in light of a recent Supreme Court decision.)

But tax credits have never ultimately lost in state or federal court, prevailing in Arizona, Alabama, Florida, Georgia, New Hampshire, and the U.S. Supreme Court.

Tax credits “grew up as a result of saying we need a different vehicle than vouchers in states that have legal issues,” said Robert Enlow, the president of EdChoice, an Indianapolis-based group that backs both vouchers and tax credits. (EdChoice is a funder of Chalkbeat.)

Often, cases have been thrown out before substantive arguments can be made, amounting to a win for the programs: Some courts have ruled that private organizations or individuals do not have legal standing to challenge tax credits, since they aren’t government expenditures.

That was the decision in the 2010 Supreme Court case Arizona Christian School Tuition Organization v. Winn, in which the majority said equating government spending and tax credits was “incorrect.”

“When Arizona taxpayers choose to contribute to [scholarship organizations], they spend their own money, not money the State has collected,” Justice Anthony Kennedy wrote.

Light regulatory touch proves a blessing and a downside

To Arizona conservatives skeptical of both regulation and the education establishment, the system had an additional benefit.

“The point was in part to ensure that these were not government-run programs,” said Graham Keegan, and additionally that “these don’t become government dollars.”

Nationwide, tax credit scholarship programs appear less regulated than voucher programs, some of which require private school students to take state tests or for schools to undergo financial audits.

Free-market oriented supporters “see ‘neovouchers’ as much less likely to be regulated and have restrictions — the government strings attached — than a traditional voucher law,” said Kevin Welner, a University of Colorado professor who wrote a book on the rise of tax credit programs and is generally critical of them.

A 1998 essay published by the Mackinac Center, a conservative Michigan think tank, made this case explicitly: “Tuition tax credits also create very different effects than vouchers. … Vouchers are more likely to be viewed as a rationale for regulating the entity that receives the subsidy.”

This has played out in practice. One analysis compared several voucher programs to a number of tax credit programs and found that, in almost all cases, vouchers were more regulated. Most tax credit systems had few, if any, financial reporting or disclosure requirements. (Notably, Florida’s program, the largest in the country, was the most regulated tax credit initiative.)

Many tax credit programs do not require participating students to take state exams, and if they do, the tests are rarely comparable to the assessments taken in public school. This means that while voucher programs have been widely studied, there is little research on the effect of receiving a tax credit scholarship.

Supporters of this approach argue that such requirements discourage private schools from participating.

Limited oversight, however, has proven something of a political liability, insofar as it has allowed for financial malfeasance. National media have drawn attention to how one prominent politician and advocate for Arizona’s program was also able to profit personally from it, for example.

“I think [limited regulation] is a feature that has some bugs,” said Enlow of EdChoice. “We need to have transparency. The programs, like Florida, which are very transparent and very open to data collection, I think are very important.” He declined to name any tax credit programs that, in his view, lacked sufficient transparency.

The use of the tax code has also raised another concern: Under some tax credit systems, “donors” can actually earn a profit by taking advantage of both state and federal tax breaks.

Selling tax credits

How exactly to brand tax credit programs has been the subject of fierce debates. Opponents have called them “neovouchers” and “voucher schemes,” while supporters sometimes portray them as entirely distinct from vouchers.

Tax credits tend to poll better than vouchers, and Welner thinks that may be because it’s less clear to most people what they are.

“People’s eyes get bleary and they tune out when people start talking about tax credits,” he said. “That helps to avoid a situation where they respond to it the same way they respond to a voucher proposal.”

Tax credits are essentially a tax cut, which can be a selling point for some, especially conservatives. Advocates sometimes also downplay the costs of tax credits to the government.

“Is it foregone revenue? Sure, but it doesn’t mean it’s the state’s revenue,” said Enlow.

The distinctions between vouchers and tax credits, though, may ultimately matter less to lawmakers in states where they are being debated. In Illinois, critics connected tax credits to vouchers, and Democrats were largely opposed to the tax credit initiative that ultimately passed.

“In my experience the arguments have been the same whether it’s a tax credit bill or a voucher bill when you’re talking with legislators,” Enlow said. “There’s some nuances, but it’s still the same.”

Correction: An earlier version of this piece misstated the name of a free-market Michigan think tank, which is the Mackinac Center.