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(4 w '3 I-1 C2 2 0% IKATEC C3/19/El ::IE URSRIED O2/O8/E3 FOR ADDITIONAL INFORMATIOL CALL 287-5700 O I\) |.. 1 O CRS- 1’ IB8lO49 UPDATE-Q2/O8/83 ISSUE SEFINITION The question of expanding Federal assistance to nonpublic elementary and secondary schools and their students has been a perennial’ issue for the Congress. eAlthough the Federal Government already assists such students through a variety of programs open to all school children, advocates of aid to the nonpublic sector press for expanded Federal support, principally through tuition tax credits. The Administration has announced that it will introduce tuition tax credit legislation in the 98th Congress, as well as legislation to permit States and local educational agencies to provide federally financed compensatory education services to disadvantaged children through a voucher program open to private schools.- BACKGROUND AND POLICY ANALYSIS Congress has often considered the question of providing Federal assistance to nonpublic elementary and secondary schools and their students. Although the Federal Government already assists nonpublic school students through a variety of programs open to all school children, advocates of aid to the nonpublic sector are currently pressing for expanded Federal support, principally through tuition tax credits. In late June 1982, President Reagan sent legislation to the Congress proposing enactment of a tuition tax credit for elementary and secondary tuition charges. That proposal was approved by the Senate Finance Committee in an amended form, but received no further (itonsideration. The Administration is planning to introduce new tuition tax -redit legislation in the 98th Congress. Precise details are not yet available. (See issue brief IB8lO75 —- Tuition Tax Credits.) Also, the Administration is preparing amendments to the Chapter l program (Education Consolidation and Improvement Act) that would offer States and local educational agencies the option of providing federally financed compensatory education services to disadvantaged students through a voucher program open to private schools. As with the tax credit proposal, this is still in the planning stages. (For additional details on the voucher proposal, see issue brief IB8ll42 -- Education for Disadvantaged Children: Federal Aid, by Wayne Riddle.) This brief explores the issue of Federal funding for nonpublic elementary and secondary schools through a description of the nonpublic sector, a consideration of the issues raised by the efforts to secure Federal aid, -a brief analysis of the current mechanisms providing Federal support{ as well as proposals for expanding that support, such as tuition tax credits. It ShO1.1ld be noted that this report considers Federal ‘aid t0 nonpublic lementary and secondary SChOOlS and students only. Federal aid ‘CO private 0 e n profit institutions of postseccndary education and their students raises L): *4 ferent and perhaps ‘\ . Q. ~ ‘H 14. 'f ess controversia questions and is provided in a much o ‘ ‘ n ’ tary and secondary level. 1: r fashion (D U . _ (1 ‘:3 (rt ¢'—r* '\o-’. D W m - % 5 ~verview of the Nonpublic Sector ndary schools not only have characteristics (N The private elementary and s 4- dis among themselves. This section eco inguishing them from their public counterparts, but they vary markedly. e plores three topics -- enrollment trends,’ lcRs— 2 IB8l049 UPDATE-02/O8/83 finances, and the characteristics of enrolled students. Approximately ll% of the elementary and secondary school children in this country are enrolled in private schools. This’ group of some 5 million children is largely found in sectarian schools (84%). Over three-quarters of the sectarian school students are enrolled in Roman Catholic institutions. The downward trend in nonpublic enrollment, evident in summary statistics for many years (nonpublic enrollment peaked at 6.3 million in the mid 1960s), is largely a function of major losses in the Catholic sector. These offset gains among other nonpublic school groups. The Catholic sector's losses have abated appreciably since the early l970s, helping to stabilize overall nonpublic enrollment. Between l970 and 1980, the enrollment loss for nonpublic schools was approximately 2%. In contrast, the loss experienced by public institutions over that same period was approximately 11%. It must be noted that reliable, detailed statistics on some groups of nonpublic schools and students are not generally available. This is particularly true for the fundamentalist religious schools which, according to various sources, are experiencing significant growth in numbers of schools and students. Efforts to gather national data for this group of schools have been thwarted by school leaders‘ sensitivity to any governmental involvement or direction. The Bureau of the Census found that in 1979 the median tuition level was $380 for private elementary schools and $955 for private high schools. These tuition levels vary in conjunction with many factors other than level of education, including region of the country, race of the attending student, and school size. Median tuition levels mask wide variations in the charges ctually faced by individual families. For example, the National Association 3f Independent Schools reported in l978 that girls‘ day schools which are members of the Association had tuition levels which ranged up to $3,650, although in at least one case the tuition charged was less than $500. Private schools, on a percentage basis, serve fewer minority students than the public sector. Enrollment in private elementary schools, according to data gathered in 1979 by the Bureau of the Census, is 8% black. Enrollment is 7% lack in private secondary schools. Comparable percentages for public schools are more than twice as high for each level. Census data on family income of school students _reveals that private school enrollment tends to come more from families with higher income levels than is true for the public sector. Slightly more than half of the private elementary school enrollment comes from families with income below $25,000; a little less than a tenth of the private elementary enrollment is from families with income below $10,000. In contrast, figures for the public elementary sector show that three-quarters of its enrollment comes from families with less than $25,000 in income; and that more than a quarter ‘of r~i its students‘ families have less than $10,000 in income. At the secondary school level, slightly more than two-fifths of the private secondary enrollment comes from fimilies with income below $25,000; while less than a ierth of t‘: s:u‘e“ts core from families "ith income under $lt,COC. In the public st:o“dary sector, two-trirds of the students have families Wlt” less than $25,300 in income; nearly a fifth are from families with less than $l0,000 income. Specific Issues of Contention ( CRS- 3 IB8lO49 ‘UPDATE-02/O8/83 In this section, several issues are explored which have arisen in the debate over Federal support tor nonpublic. schools and students. The liscussion of each of these topics highlights positions taken by proponents and opponents of Federal support. F Diversity Proponents of Federal support have argued that this country's tradition of educational diversity should be preserved and enhanced through Federal support of the private sector. Some contend that nonpublic schools public purpose by providing an alternative to the public school system. The existence of this alternative allows parents to exercise more control over their children's education; as a result, it constitutes a competitive force which may move public schools. to modify and improve their programs and services in response t0 children's academic needs. Opponents of such aid say that it is not in the public interest to support the educational separateness exemplified by nonpublic elementary‘ and secondary schools. Underpinning the public school movement, which came to dominate elementary and secondary education beginning in the mid-l800s, is the belief that a single, common system of schooling is the most appropriate way to educate this nation's children and inculcate American values. In the face of immigration, industrialization, urbanization and growth in population, public school supporters have believed that the education. of children should not be left to chance under a diverse, undirected system of private education. status of the Public School System Proponents Of Federal funding for nonpublic education characterize‘ the public sector as bein in serious straits. Declining test scores, the graduation of functionally illiterate students, and incidents of violence are often cited as evidence of the inability of the public schools to teach academic skills and to instill socially acceptable values. Enabling parents to finance alternative education through the nonpublic sector, is seen as necessary to ensure that, at a minimum, some children receive a quality elementary and secondary education. i Others, though, have argued that ,if Federal support for nonpublic schooling grows, it is likely to have a seriously negative ‘impact on the public school system. Parents will be encouraged to take their children out of the public schools, and community support for the public schools would be diminished by the degree to which parents reduce their commitment to the quality or even the continuation of the public system. It is posited that the children most likely to leave the public schools are those of moderate to high socioeconomic backgrounds, leaving the public schools with ad student body composed primarily of disadvantaged children. A related criticism is directed to the fact that nonpublic school ca- select their students while piblic schools are ;?pected to educate any, student entering their doors, inclading handicapped children whose education may impose especially high costs. (e-und;ng Equity Proponents of Fede aid for the nonpublic sector argue that H 9: parents of serve a, CRS- 4 IB8lO49 UPDATE-O2/O8/83 nonpublic school children suffer the burden of "double taxation." That is, parents must pay taxes to support the public school system when their ‘hildren no longer utilize its services, while they also meet private tuition charges. Equity would be served, they assert, if they were provided~ some relief from this "double burden." The opposing argument is that parents place their children in private schools as a matter of choice and with the understanding that their tax burden supporting the public schools will not be modified. In addition, it is noted that individuals without school-age children are required to pay taxes that finance public education because it is a public good, benefitting all citizens. Accountability An issue related to those discussed above is that of accountability,~ that is, the process of insuring that any Federal support is used for its intended purposes and that the federally subsidized services are of a certain level of quality. This is an issue over which proponents of Federal support divide. For some, the very essence of the nonpublic sector is a degree of immunity from governmental interference and direction. If Federal support carries with it governmental monitoring or influence, some schools in the nonpublic sector would reject the support. Indeed, some private school officials Ahave expressed opposition to any Federal support, with or without accountability requirements. Opponents of Federal support for the nonpublic sector argue that any such *upport would have to carry with it some guarantee that‘ funds were used properly, that students were.receiving a proper education, and that basic Federal policies, such as nondiscrimination on the basis of race, were dhered to. Indeed, some argue that support for the nonpublic sector might ‘preclude achievement of the Federal goal of educational desegregation by subsidizing families fleeing the public school system in opposition to such desegregation. I The tension between efforts to end racial discrimination and the desire of private institutions to remain as free as possible from public direction and control is exemplified in the on-going debate over revenue procedures of the Internal Revenue Service concerning the tax-exempt status of certain private schools. These procedures have implemented an Internal Revenue Service policy established in l97l that private schools discriminating on the basis of race should not enjoy tax exempt status or the benefit of charitable deductions under the Internal Revenue Code. Debate has centered on several issues, including the precise methods used to determine if an institution iscriminates, who has the burden of proof and when, what legal authority 'sts for promulgating these procedures, and the impact they will have on he autonomy of religious elementary and secondary schools. On Jan. 8, 1982, the Treasury Department announced that the Internal ReVen-e Service would no longer deny tax exemptions to :a:;ally-discriminatory private schools because the Internal Revenue Service was believed not to have the statutory authority to do so. Cohcurrently, the Justice Department asked the Supreme Court to have two pending cases declared “oot (gob Jones University v. United States and Goldsboro Chri tian Schools, (ghc. v. %United States). In these cases, a Federal appellate court upheld the IRS's authority to deny tax exemptions to schools which practice racial discrimination. The Reagan Administration subsequently proposed legislation CRS- 5 IB8lO49 UPDATE-O2/O8/83 yto deny exemptions to racially-discriminatory schools. On Feb. 18, 1982, the United States Court pof Appeals for the rDistrict of Columbia issued a (fiflemporary«injunction prohibiting the IRS from granting tax exemptions to such schools. The Justice Department then changed its position and asked the Supreme Court to hear the two pending cases. The Court heard arguments in the cases on Oct. 12, 1982. (See "Legal pcontext of the controversy Concerning the Tax-Exempt Status of Private Schools that Discriminate on. the Basis-of Race" by CRS Legislative Attorney David M. Ackerman.) Constitutionality A primary objection raised to the provision of Federal aid to nonpublic nelementary and secondary schools and their students is that, because most of these schools are sectarian, such aid violates them First Amendment to the Constitution, prohibiting governmental action to establish religion .or to prohibit the free exercise of religion. The Supreme Court has gradually evolved three guidelines for determining the constitutionality of legislation ‘authorizing aid for" private elementary and secondary schools and their students: ~ ‘ -- it must have a secular purpose; -4 it must have a primary effect neither advancing nor inhibiting religion; and . -- it must not result in Government being excessively (:_ entangled with religion. The CO11I‘t has fOU.I1d that it D012 sufficient fO‘I.' ‘constitutional purposes that public aid be provided to the nonpublic elementary and secondary student rrather than to his or her school (the "child benefit" theory). The secular fuse of that assistance must also be assured. As a result, the determination of precisely what forms of aid are constitutional is not always easily made. The Court has found some types of aid constitutional, including subsidy of the following activities -- secular teaching and auxiliary services provided to nonpublic school children away from their schools, bus transportation to and from school, school lunches, and health services (therapeutic services .must be offered off school grounds). T T Forms of aid found unconstitutional by the Supreme Court include State programs of salary supplements to teachers of secular subjects in private schools, State support of private school students‘ transportation for field ‘trips, State subsidy of teacher—prepared tests in private schools, and programs of State income tax relief for elementary’ and secondary education expenses. Lower court decisions holding State tuition tax credit and tax deduction programs to be unconstitutional have been affirmed by the Supreme Court. Proponents of expanded public aid to nonpublic schools, ‘particularly in the form of Federal tuition tax credits, have argued that since the Supreme Court has changed its position on other issues in the past, it could do so (‘ice again. Some criticize the Court's position on public aid to sectarian schools by arguing that public funding for one system of schooling and not for other, alternative systems impedes the free exercise of religion. Finally, some note that the constitutionality of a Federal tuition tax credi' ( __1. lCRS- 6 IB8lO49 UPDATE-O2/O8/83 has not been considered by the Court. Current and Proposed Federal Support As stated earlier, the Federal Government already provides assistance to inonpublic school students. In this section, these current iactivities, as well as certain proposals for expanding Federal aid, are described. (See the References section below for several CR8 papers considering in detail Federal support for nonpublic education-) Current Federal Support Most major programs of Federal aid to elementary and secondary education require that their educational services be provided on an equitable basis to children attending nonpublic schools. Normally, the definition of equitable participation depends on the needs intended to be met under the program. If a program is intended to meet the needs of educationally disadvantaged children, then it is required that services be provided to nonpublic school children to an extent commensurate with the proportion of educationally disadvantaged school children in a local school district who attend nonpublic schools. Control of the fundsp remains with the local public education agency, although under some of the largest Federal aid programs the Secretary of Education may arrange directly for the provision of services to nonpublic school pupils through a so—called "by-pass" mechanism (this is authorized to be done in cases where the local agency has .failed to, or is unable to, provide services to nonpublic school children). In addition, when~ services o nonpublic school children are required, appropriate representatives of the .onpublic sector must be consulted throughout the development of funding proposals by local educational agencies: Under the provisions of these programs, services may be provided to nonpublic SChOOl pupils through various delivery mechanisms, such as: -- sending public school teachers into private school classrooms sending children to public school part-time (dual enrollment); using educational television or radio; using mobile classroom units; or lending instructional materials and mobile equipment. The precise levels of current Federal support for school children are not known. During a congressional debate tuition tax credit proposals, Secretary of Health, Education Califano estimated that between $100 million to $250 million in being spent fo services to nonpublic students. These ‘ u ' seriously flawed. counts pupils served re not he admin: grams, it is difiicult to the precise to nonpublic pupils. detailed treatme t of these ee the CRS paper entitled the Comparison of Federal Expenditures ‘c and Private Elementary and Secondary Education by Jim Stedman.) to in services nonpublic 1978 over and welfare Federal aid res have been public versus trati most 4-: 5 P CpOrL.iOT1 0.1. P c [U U! ;..' r‘ .- & S (L: Q» U‘ —\ ? P‘ :3. any ,.. :1 L1. '0 (D () 235 U‘ rt L<‘ E? :3 ‘<1 A j V -\ J. ,.. 1 K.» hnfi O SChOOl &_,l. J .1 c pro aid s s S. W W I‘ 1'1 ;m(1 H m m ‘"5 (V C): P~m ‘US Wrou S W9! e b U‘d:~6+r;m [.0 *4 should be noted that the education block grant contained in the Omnibus C ycRs- 7 IB8lO49 UPDATE-O2/O8/83 the to participation of those described nonpublic above. A or local students’ programs Budget Reconciliation Act of l98l requires school children under provisions similar ‘by-pass" mechanism would be available in the event a State educational agency was unable, to provide for nonpublic school assistance. (For further information on consolidation of education see IB7902l.) ‘ Proposed Federal Support sector with 97th by tuition credit The most popular proposal for expanding Federal aid to the private is a Federal income tax credit for the tuition and fees associated nonpublic school attendance. Several bills were introduced in the Congress to enact tuition tax credits, including the credit proposed President Reagan. Generally structured to meet some portion of the and fee charges up to a specified maximum credit, tuition tax proposals have been advocated since before enactment of landmark Federal education legislation in l965. In l978, there was serious consideration in the Congress of tuition tax credits for all levels of education.) A competing package of amendments to open the major existing postsecondary student aid programs (Basic Educational Opportunity Grants and Guaranteed Student Loans) to middle-income students was enacted as the Middle Income Student Assistance Act (P.L. 95-566). those Issues that have been raised about tuition tax credits include discussed earlier in this brief as well as the following: the cost of the proposals (ranging up to some $5 billion in foregone Federal revenue if all levels of education are covered and a credit maximum is set at $500 per student); the extension of benefits to low-income families through "refundability" (should those with no income taxes owed, or less than the tuition tax credit they could be eligible for, receive a direct payment from the Federal Treasury?); the appropriateness of benefits for high-income families (should credits phase out as a family's income grows?); (would the requirements less than with the 4 administrative requirements associated with tax credits be existing aid programs?) and I the impact OI1 the individual institutions (Will t1.litiOI1S be raised t0 capture as much Of the credit 518 possible'?). '2 Other proposals for Federal aid for private educatio= include educational vouchers, strengthening the existing mechanisms for serving nonpublic students, and extending the current coverage’ of postsecondary student aid programs to include elementary and secondary tuition and fees. ’ Educational vouchers would place the funding decisions for elementary and econdary education in the hands of parents. In its purest form, all (elementary and secondary education funding (Federal, State and local) would be provided in the form of) vouchers used by parents to buy educational D-d 4‘-1 cRs— 8 IB8lO49 UPDATE-O2/G8/83 services at any eligible institution, including private schools. The institutions, in turn, would redeem the vouchers provided by enrolled tudents for funds. At the Federal level, establishment of such a comprehensive voucher raises potential problems for administration and for maintaining the constitutionally implied preeminence of the States in providing education, and would likely involve a significant reallocation of revenue collection and disbursement responsibilities among Federal, state, and local governments (the Federal Government currently provides only about 8% of elementary and secondary education expenditures). A Federal voucher that merely supplemented existing State and local funding has been suggested. For example, this voucher could be targeted to meet the extra costs associated with educating disadvantaged children by being placed in the hands of those children's parents. Efforts to strengthen the existing mechanisms would seek to ensure that all eligible nonpublic school students receive the services to which they are entitled. At present, the nonpublic sector must be aggressive in securing these benefits, overcoming at times local resistance to inclusion of nonpublic children. Many proponents of nonpublic education have argued that, as a result, nonpublic school pupils receive less than their "fair share" of federally assisted educational services, in spite of the requirements in current authorizing legislation. Finally, expansion of one or more postsecondary student aid programs to cover elementary and secondary tuition and fees has been considered in the past. Recently, during Senate floor debate on the tEducation Amendments of l980, an amendment was defeated that would have expanded Pell Grants (formerly Basic Educational Opportunity Grants) to meet a portion of F”lementary and secondary tuition and fees. ADDITIONAL REFERENCE SOURCES Cremin, Lawrence'A.’ Traditions of American education. Madison, University of Wisconsin, March l976- Everhart, Robert B. from universalism to usurpation: An essay on the antecedents to compulsory school attendance legislation. Review of educational research, Summer l977. . ‘ Kraushaar, Otto F. American nonpublic schools: Patterns of diversity. Baltimore, The John Hopkins University Press, l972. A» National Association of Independent Schools. NAIS member school tuition fees, faculty salaries, and administrative salaries, 1978-79. NAIS statistics, September l978.» National Catholic Educational Association. Catholic high schools ard their finances 1980 {by} Frank ". B:edewig. l9SC Lational Catholic Educational Association. How to service students with Federal education program benefits [by] Bruno V. Manno. Produced under contract with the Department of Education o date. National Catholic Educational Association. A sta U.S. catholic schools l980-81. February l98 O Thoma ( UOSO Ana1ysis of the constitutionality of S. CRS- 9 IB8lO49 UPDATE-O2/O8/83 s, Norman. tPublic subventions to nonpublic education: Values, the courts, and educational policy. Detroit college of law review, v. 1976, Issue 2 2 %O Private October Series Department of Commerce. Bureau of the Census. school enrollment, tuition and enrollment trends: 1979. Current Population Reports. Special Studies. P-23, no. 121, September 1982. Office of the Assistant Secretary for Planning and Evaluation. Tuition tax credits for elementary and secondary education: some new evidence on who would benefit [by]iMartha J. Jacobs. Technical Analysis Paper Number 7. September 1979. Congressional Research Service. 550 of the 97th the compatibility of tax credits for tuition secondary, vocational, the religion clauses of Washington, Library of Congress. Congress: and fees incurred at elementary, and post—secondary schools with the First Amendment [by] David M. Ackerman. May 11, 1981. CRS paper. under the religion M. Ackerman. 2142 David Analysis of constitutionality of S. clauses of the First Amendment [by] Washington, Feb. 2, 1978. CRS paper. Comparison and analysis of alternative proposals for Federal student assistance [by] John Karr and James Stedman. Washington, Apr. 3, 1978. CRS report no. 78-87E. ‘The comparison of Federal expenditures for public and private elementary and secondary education [by] Jim Stedman. Washington, June 9, 1982. CRS paper. forms of public subsidy and secondary schools [ Constitutionality Of various as the costs of sectarian elementary by] David M. Ackerman. Washington, May 11, 1978., CRS paper. ' Federal Education program assistance to private elementary and secondary school students [by] Jim Stedman. Washington, June 9, 1982. CRS paper. Federal tax expenditures for private elementary and seccndary education [by] Bob Lyxe. Washington, February 25, ‘1 CC’? _.a\/‘ac CRS paper. ' ‘ I. P fl . 1 Tuition tax credits [by] Robert F.,Lyke. [Washington] 1981. 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