Public Money--Without Public Accountability

Equity in Education Tax Credit
October 22, 2001

In a long line of market-based reforms to education, the Ontario government is now offering tax incentives for citizens who wish to explore private educational options. This decision is alarming on a variety of levels. It reinforces the mistaken notion that education is an individual service or commodity, instead of a public investment and a social good. It eliminates the legislated guarantee that all children have the right and the opportunity to attend quality public schools--whether they can afford to leave their communities or not. Or whether or not they have special needs, or are disadvantaged, or require ESL, or are among the one in five children who comes to school hungry.

A parent's individual decision to send his or her child to a private institution must not come at the expense of our community betterment or our collective responsibility to all children. It represents the loss of valuable funding from our public system, compounded by the fact that many private religious schools already issue tax receipts for charitable donations. It also privileges those who already have choices, by virtue of their socioeconomic status, and further entrenches the inequities that already exist for the most disadvantaged among us.

Tax credits have been lauded by voucher proponents in the United States because they carry virtually the same structural results as vouchers without the negative baggage--indeed, voucher initiatives have been soundly defeated in the U.S., largely because of the inadequacies of the "pro" arguments.

During the election campaign even George W., a strong supporter of this method of reform, as well as other aspects of the privatization of education, refused to utter the "v word." Recently, the CATO Institute, a right-wing American think tank, released a report on tax credits in which the focus on tax credits instead of vouchers is made clear. "The tax credit really is a great way to help kids without increasing the potential for government regulation," said Carrie Lips, the author of the CATO Institute report. That's probably the clearest description of tax credit legislation--public money, without any public accountability.

In addition to being shockingly simple to establish, private schools in Ontario are not subject to provincial regulations. They do not have to adhere to the provincial curriculum. They are not required to take standardized tests. Their teachers need not be certified and are presumably also exempt from the school teacher testing which will soon be administered by ETS, an American corporation. Private schools are partly exempt from the Ontario Human Rights Code because they can discriminate in order to serve a certain group of people they represent. All this is not evidence of academic inferiority--but it is demonstrative of a fundamental lack of accountability to the public. How, then, can these schools be justifiably funded out of the public purse?

It is alarming that this government conducted virtually no research into the effects of this legislation, especially given Minister Ecker's and Premier Harris's concern in January 2000 that extending public funding to independent religious schools would drain anywhere from $300 to $700 million from the public system.

It is especially alarming that virtually no research has been done focusing on the jurisdictions where valid systemic comparisons do exist. These are comparisons where funding follows the student and is not allocated directly to schools, as is the case in other provinces. With the passage of this legislation, Ontario is the only province where the government funds private schools that do not follow standard curriculum.

The state of Arizona implemented a much more limited tax credit program for its educational institutions. Overall, the evidence indicates that, while this program was intended to help low-income students and families, students from wealthier families were the primary beneficiaries of this tax credit statute. This has led to increased funding inequities, already a problem and source of contention in Arizona's school system.

The Washington-based People for the American Way released a report last month examining how the 1997 Arizona law has cost taxpayers more than $55 million, money that has gone largely to subsidize education for middle- and upper-income families in both private and public schools. An even more recent report from the National Center for the Study of Privatization of Education looked at tuition tax credits across a number of the American states. It came up with some significant conclusions: tax credits appear to benefit those already in private school or benefit those with relatively high income in public school. There is a strong indication that tax credits may generate greater segregation across schools, and circumscribe government opportunities for redistribution of public services, creating further implications for equity. But above all, "the effect of a tax credit is to switch students from public school to private school."

Ontario's Tax Credit legislation is simply another market-based education reform in a long line of this government's pro-privatization initiatives, but we need look at the original model for this sort of restructuring--and its devastating impact.

In 1989, the government of New Zealand completely overhauled its education system. Geographical enrolment zones were eliminated. Funding was tied to the student. Schools were given more local autonomy. The rationale was simple--the money would follow the student to the best schools, and the poorest schools would be left to fade away.

The results of these market-based reforms in New Zealand were positive for some schools--generally those servicing upper and upper-middle class kids. Those schools found it easier to establish boards of trustees with the useful accounting, legal, managerial and fundraising skills not so easily available to disadvantaged schools. These were the schools with a higher percentage of Maori and Aboriginal students, students living in poverty, students requiring ESL, students with special needs and behavioral problems. Furthermore, while all theoretically had the "choice" to attend another school, transportation costs and school fees provided additional barriers to certain students.

Thus began the downward spiral. As some schools fell behind in the education marketplace, they attracted fewer students, dollars and teachers. This resulted in a less attractive academic program, resulting in even fewer students, and so on. The situation grew to crisis proportions and in 1998 top ministry officials admitted that the educational marketplace would never work for 25% of schools. So disastrous were the results that the ministry actually had to step in and assume direct control of the failing schools.

The market system produces winners, but it also requires losers. A substantial percentage of schools will not survive under this system--this means that the children and communities those schools serve are inevitably de facto casualties. This may be a legitimate marketplace rationalization, but it is no way to administer and ensure a public investment and a human right. To knowingly restructure a public system so that it requires a proportion of those who invest in it, and are entitled to it, to fail for the system to operate correctly is not just, or right, or, frankly, even civilized. And this is the direction in which we are moving in Ontario, while ignoring the consequences that have already been played out in devastating clarity.

It seems that in Ontario the tax credit issue, and the school model it perpetuates, continues to go unexamined. Ernie Hardeman, who is chairing the task force studying the tax credit issue and the conditions that may be attached to it, told Ian Urquhart of the Toronto Star that the report may never even be written. Minister Flaherty has already expressed his concern at even the suggestion of a means test for recipients of the tax credit. "Personally, I'm not inclined to ... discriminate against people on the basis of income. We already do that. We already ask people with higher incomes to pay more income tax." With this logic, perhaps this government would also claim that, far from being a human right, universal healthcare discriminates against the healthy.

Of course, we all benefit from a strong public education system--whether or not we attend it, and whether or not our children are enrolled--because we all benefit from living in a well-educated society. It is a benefit, but a huge responsibility--one that Ontarians have indicated overwhelmingly that they will continue to uphold. This is the only way to ensure that we all have access to an adequately-funded, quality, accessible education system that is bound by the Human Rights Code and accountable to the public--the entire public. It is precisely because of public concern that Minister Flaherty has begun distancing himself from this controversial legislation.

The evidence of the impact of market-based reforms, student-directed tax credits and public funding of private schools is overwhelming and chilling. Perhaps most destructively, it reinforces the mistaken notion that education is a private commodity and that individual benefit can only come at community expense. For the good of our children, our communities, and our future, we cannot afford this legislation in Ontario. We cannot allow our students to become residents of a province that knows the price of everything but the value of nothing.