EDUCATION NOTEBOOK: 
Arizona: America's School Choice Laboratory

June 30, 2006

"It is one of the happy incidents of the federal system," wrote Supreme Court Justice Louis Brandeis, "that a single courageous state may, if its citizens choose, serve as a laboratory and try novel social and economic experiments without risk to the rest of the country." State lawmakers can experiment with new ways of tackling policy problems, and observers learn what works and what doesn't. Thus the states are our 'laboratories of democracy.'

Arizona cemented its position as America's school choice laboratory last week. State lawmakers created three new school choice laws to award thousands of disadvantaged children scholarships to attend private school. The new programs continue a 12-year trend of expanded parental choice in education in the Grand Canyon State.

In 1994, Arizona lawmakers created one of the nation's first charter school laws. Since then, nearly 500 charter schools have opened across the state, and now about 97,000 Arizona students are attending public charter schools. That's almost 10 percent of the state's public school students-the highest percentage of any state in the country.

Arizona's experience with charter schools has been very positive. Parents whose children attend charter schools are consistently pleased with their children's education, surveys show. And strong enrollment also is clear proof of parents' satisfaction-not a single charter school would exist without parents actively deciding to enroll their children there. Perhaps most importantly, elementary school students in charter schools have made academic gains faster than their peers in traditional public schools.

The benefits of Arizona's charter schools aren't restricted to the students attending them. Research suggests that competition from charter schools causes public schools to improve their performance. Harvard University economist Caroline Hoxby found that public schools that were exposed to charter school competition increased their students' academic performance relative to public schools that did not face competition.

Charter schools were just the beginning of Arizona's sweeping school choice reforms. In 1997, Arizona lawmakers created a first-in-the-nation scholarship tax credit program for private education. Taxpayers can receive a dollar-for-dollar tax credit worth up to $500 for donations to fund private school scholarships.

Between 1998 and 2005, participation in Arizona's scholarship tax credit program has skyrocketed. The Arizona Department of Revenue reports that 69,000 taxpayers made scholarship donations in 2005 worth more than $42 million-an increase of 32 percent over 2004 contributions. Last year, 22,500 students received tuition scholarships funded through the tax credit program to attend private school. With so much more money already raised this year, thousands more students could receive scholarships in the fall.

Since 2002, Republican state lawmakers have sought to expand the scholarship tax credit to allow businesses to participate, but Governor Janet Napolitano, a Democrat, opposed private school choice programs. She twice vetoed legislation creating corporate tax credits for donations to fund scholarships for low-income children.

In March, Gov. Napolitano finally relented and allowed a corporate scholarship tax credit to become law without her signature. The program, capped at $5 million in tax credits, will help thousands of low-income public school students transfer into private school over the next five years.

For school choice supporters, this was just the beginning. Last week, Republican lawmakers scored three additional victories for school choice in state budget negotiations. First, Gov. Napolitano agreed to significantly increase the corporate scholarship tax credit program by allowing $10 million in scholarship donations this year and annual increases until the cap hits $21 million in 2010.

In addition, Gov. Napolitano agreed to sign into law two new school voucher programs for disadvantaged student groups. The first is an opportunity scholarship program for children with special needs, which is modeled on programs in Florida and Utah. The second is a first-in-the-nation school voucher program for foster children. Together, these new programs will provide $5 million to help 1,000 children attend private school next year.

By next year, nearly 30,000 Arizona children will use scholarships to attend private schools, joining the 95,000 students who are attending a charter school of their parents' choice. A generation of children is growing up in a state where school choice has become a fact of life.

All these programs open the door to more comprehensive reform that seemed forever out of reach just a few years ago. In 2005, for example, the Arizona state Senate passed universal school vouchers with little hope that they would ever become law. While universal vouchers are still a distant goal, no state is closer to implementing Milton Friedman's vision of universal school choice than Arizona-America's school choice laboratory.

Dan Lips is Education Analyst at the Heritage Foundation, www.Heritage.org.