(1)Existing law establishes a system of elementary and secondary education in this state. This system consists of the public and private schools that provide instruction in kindergarten and in grades 1 to 12, inclusive. Existing law establishes a system of higher education in this state, consisting of 4 segments: the University of California, under the administration of the Regents of the University of California; the California State University, under the administration of the Trustees of the California State University; the California Community Colleges, under the administration of the Board of Governors of the California Community Colleges; and independent institutions of higher education.

This bill would enact the Education Savings Account Act of 2024 and establish the Education Savings Account (ESA) Trust, to be known as the ESA Trust, as a fund within the State Treasury to be administered by the ESA Trust Board. During the first 4 school years following the operative date of the act, the bill would authorize certain children eligible to be enrolled in kindergarten, or in an elementary or secondary school, in any of grades 1 to 12, inclusive, to establish an ESA, based on parent or guardian income. The bill would remove these income eligibility limits after 4 school years following the operative date of the act, thereby entitling every child eligible to be enrolled in kindergarten, or in an elementary or secondary school, in any of grades 1 to 12, inclusive, to establish an ESA. The bill would specify that every child enrolled in an eligible school shall be entitled, pursuant to this act, to a credit to the childs account for tuition, elementary and secondary eligible education expenses, and undergraduate or graduate eligible education expenses, as defined. Commencing with the first fiscal year following the operative date of the act, the bill would require the Department of Finance to determine, on July 1 of each year, the annual ESA deposit amount for the upcoming school year. The bill would specify the procedure for calculating the ESA deposit amount and would require the Controller to transfer an amount of money from the General Fund to the ESA Trust equal to the ESA deposit amount multiplied by the number of ESAs established, as provided.

The bill would require the ESA Trust Board to be composed of specified members and would vest the ESA Trust Board with certain powers and duties. The bill would establish 2 accounts within the ESA Trust, the ESA Trust Program Account and the ESA Trust Administrative Account, and would continuously appropriate the moneys in the program account to the ESA Trust Board for purposes of the bill, thereby making an appropriation.

The bill would require the Superintendent of Public Instruction to establish a procedure for the parents and legal guardians of eligible students to apply to establish an ESA and submit an executed participation agreement. The bill would authorize the ESA Trust Board to disburse funds from ESAs to eligible schools. The bill would define eligible school as a campus of the California Community Colleges, the California State University, and the University of California, a full-time private school, a private college or university, a public college or university, or a vocational educational or training institution, as specified. The bill would specify the procedures for participating eligible schools to receive funds disbursed by the ESA Trust Board. Once an eligible student graduates from high school or obtains a high school equivalency certification, the bill would impose a $60,000 cap on the balance in any ESA available for an eligible students use for tuition, undergraduate or graduate eligible education expenses, or expenses associated with vocational education. The bill would require the Department of Finance to adjust this limit annually for inflation using the California Consumer Price Index.

(2)The Classroom Instructional Improvement and Accountability Act, an initiative approved by the voters as Proposition 98 at the November 8, 1988, statewide general election, amended the California Constitution to, among other things, set forth a formula for computing the minimum amount of revenues that the state is required to appropriate for the support of school districts and community college districts based on one of 3 tests in any given fiscal year, one of which is based on the percentage of General Fund revenues appropriated for school districts and community college districts, respectively, in the 198687 fiscal year, and two 2 of which are based on, among other things, changes in enrollment.

This bill would require the Legislature to recalculate that minimum education funding guarantee by including eligible students not enrolled in a public elementary or secondary school before the operative date of the act in those minimum funding guarantee calculations based on average daily attendance, as provided. The bill would also require the costs of providing ESA deposit amounts for eligible students to be apportioned between the General Fund and the public school district in which those eligible students reside in the same ratio of General Fund and local property tax revenue that would have been used to educate those eligible students in their public school district.

(3)The Personal Income Tax Law, in modified conformity with federal law, generally defines gross income as income from whatever source derived, except as specifically excluded, and provides various exclusions from gross income for purposes of computing tax liability.

This bill would, for taxable years beginning on or after January 1, 2025, exclude from gross income any amounts received as distribution from an ESA, as defined, as part of a participation agreement.

Existing law requires a bill authorizing a new tax expenditure to contain, among other things, specific goals, purposes, and objectives the tax expenditure will achieve, detailed performance indicators, and data collection requirements.

This bill would include additional information required for any bill authorizing a new tax expenditure.

(4)These provisions would become operative on January 1, 2025, only if Senate Constitutional Amendment ____ 5 of the 202324 Regular Session is approved by the voters at the statewide general election on November 5, 2024.

The Charter Schools Act of 1992 allows one or more persons seeking to establish a charter school within a school district to circulate a petition to that effect. The act provides for the establishment and operation of a charter school, as prescribed. Existing law expresses the Legislatures intent, in enacting the act, to provide opportunities for teachers, parents, pupils, and community members to establish and maintain schools that operate independently from the existing school district structure, as a method to accomplish specified goals.

This bill would make a nonsubstantive change to the latter provision.

SENATE COMMITTEE ON EDUCATION

Senator Josh Newman, Chair

2023 - 2024 Regular

Bill No: SB 292 Hearing Date: January 10, 2024

Subject: Education expenses: Education Savings Account Act of 2024.

NOTE: This bill was previously heard by this Committee on April 19, 2023, and failed passage, but reconsideration was requested and granted.

This bill has been referred to the Committees on Education and Governance and Finance. A "do pass" motion should include referral to the Committee on Governance and Finance.

SUMMARY

This bill would establish the Education Savings Account (ESA) Act of 2024 only if a Senate Constitutional Amendment (SCA 5, Grove) is approved as part of the November 2024 election.

BACKGROUND

Subdivision (b) of Section 8 of Article XVI of the California Constitution requires the state to spend a minimum amount of funding on school districts and community colleges every fiscal year, based on specific calculations built on a percentage of General Fund revenues or prior-year education appropriations, enrollment, and economic growth.

In 2013, the Local Control Funding Formula (LCFF) was enacted. The LCFF establishes per-pupil funding targets, with adjustments for different student grade levels, and includes supplemental funding for local educational agencies (LEA) serving students who are low-income, English learners, or foster youth. The LCFF replaced almost all sources of state funding for LEAs, including most categorical programs, with general purpose funding including few spending restrictions.

ANALYSIS

This bill:

1. Establishes the ESA Act of 2024 and establishes the ESA Trust as a fund within the State Treasury to be administered by the ESA Trust Board.
2. Specifies that during the first four school years following the operative date of the act, certain school-aged children are eligible to establish an ESA, based on their parent’s or guardian’s income. After the first four years, every school-aged child would become ESA-eligible.
3. Specifies that every child enrolled in an eligible school shall be entitled to a credit to the child’s account for tuition, elementary and secondary eligible education expenses, and undergraduate or graduate eligible education expenses.
4. Requires the Department of Finance to annually determine the ESA deposit amount for the upcoming school year and specifies the procedure for calculating the ESA deposit.
5. Requires the Superintendent of Public Instruction to establish a procedure for the parents and legal guardians of eligible students to apply to establish an ESA and submit an executed participation agreement.
6. Authorizes ESA fund disbursements to eligible schools, including a campus of the California Community Colleges, the California State University, and the University of California, a full-time private school, a private college or university, a public college or university, or a vocational educational or training institution, as specified.
7. Imposes a $60,000 cap, adjusted each year for inflation, on the ESA balance for students upon graduating high school or obtaining a high school equivalency certification, available for tuition, undergraduate or graduate eligible education expenses, or expenses associated with vocational education.
8. Requires the Legislature to recalculate minimum education funding guarantee (Proposition 98 Guarantee) by including school-aged children not enrolled in a public school in those minimum funding guarantee calculations based on their average daily attendance (ADA), as provided.
9. Requires the costs of providing ESA deposit amounts to be apportioned between the General Fund and school districts in the same ratio of General Fund and local property tax revenue that would have been used to educate students in their school district.
10. Excludes, for taxable years beginning on or after January 1, 2025, from gross income any amounts received as distribution from an ESA.
11. Becomes operative on January 1, 2025, only if SCA 5 (Grove, 2023) is approved by the voters at the statewide general election on November 5, 2024.

STAFF COMMENTS

1. Need for the bill. According to the author, “California’s government-run schools are failing too many students. Any company that failed 84% of its customers would be run out of business, but in California the legislature rewards failing schools with even more funding. The government focuses more on funding institutions than students, and most parents have no other options. SB 292, The Education Savings Account Act of 2024, will introduce more choice into California’s school system, giving parents and students more educational options. This bill will empower students to enroll in schools better suited for their educational needs. SB 292 puts children first.”
2. Is this a voucher program? Voucher programs generally allow public funds to be used for private school tuition. ESAs are a type of voucher program, but they are structured differently in that, in addition to private school tuition, ESA funds can be used to purchase other educational services, such as tutoring, textbooks, or online course fees. Under this bill, the state would “rebase” the amount funding currently apportioned to local educational agencies as required by the Proposition 98 Guarantee to include private school students and award vouchers to parents who could then use the funding to cover tuition and other services at an eligible public or private school. The policy changes and state and local mechanisms required to implement this bill and its companion constitutional amendment are very complex and would profoundly change how public (and private) education is currently funded. Given that no one knows how many parents and schools would apply for vouchers or move their children from public to private schools, it is difficult to assess the impact of this bill with any meaningful precision.
3. Voucher programs in other states. The first publicly-funded voucher program in the country was started in Milwaukee in 1990—the Milwaukee Parental Choice Program. Currently, there are 25 voucher programs in 14 states, including the District of Columbia. The number of voucher programs has grown steadily since 2010, as has the scope of existing programs.

Almost all states have eligibility requirements for their voucher programs, with the most common being students with a documented disability or meeting household income requirements. Other eligibility requirements include attending a low-performing school or district, living in certain geographic regions, or some combination therein. There are two states, Arizona and Nevada, which have ESA programs that do not include eligibility requirements. Arizona expanded their already existing ESA program to be universal in 2017, which will phase in over a few years and be capped at 30,000 student participants. Nevada created its universal program in 2013, but the program is on hold following a 2015 court decision declaring the funding mechanism unconstitutional and program funding has not been restored.

Since the passage of Proposition 98, the voters of California have had two opportunities to vote for tax-funded school vouchers—Proposition 174 in 1993 and Proposition 38 in 2000. Both propositions received about 30 percent voter support.

1. Many existing school choice options for California parents. There are two main groups of parents in California already exercising alternative school choice—those that send their children to private school and those that access public school options such as charter schools, magnet schools, or cross-town transfer programs. While the author states that this measure would give parents the option of moving their children from their assigned school to any other accredited school that best meets their needs, state law already provides the following public school options:
   1. Charter Schools. There are over 1,000 public charter schools in the state that provide instruction in any combination of grades kindergarten through grade 12. Parents, teachers, or community members may initiate charter petitions, which include the specific goals and operating procedures for the charter school. While most charter schools offer traditional, classroom-based instruction, about 20 percent offer some form of independent study, such as distance learning or home study.
   2. Magnet Schools. Magnet schools are designed by local authorities to attract parents, guardians, and students who are free to choose the school in which they enroll. These programs and schools are established by district governing boards that can make a wide range of choices depending on their local needs and resources. Magnet schools and programs include those that provide unique instruction in the arts, in various sciences, and in career education. Others reflect a district strategy to achieve racial and ethnic balance. When one or more magnets are established at a particular school, students from across the district may select a magnet with available space.
   3. District of Choice (DOC) Program. This program allows a student to transfer to any district that has deemed itself a DOC and agreed to accept a specified number of transfers. DOC may not use a selective admissions process. Transfer students generally do not need the consent of their home districts.
      
   4. Interdistrict Permits. These allow a student to transfer from one district to another district provided both districts consent to the transfer and the student meets any locally determined conditions. Districts receiving these transfer students may require students to meet certain attendance and/or academic standards.
      
   5. Parental employment transfers. These allow a student to transfer into a district if at least one parent is employed within the boundaries of that district and that district has chosen to accept parental employment transfers. Transfer students generally do not need the consent of their home districts.
      
   6. The Open Enrollment Act. This option, for low-performing schools, allows a student attending a school with low performance on state tests to transfer to another school inside or outside the district that has a higher level of performance and space available. Transfer students generally do not need the consent of their home districts.

Beyond the public school options, about 7.5 percent of California students are enrolled in private schools, a proportion that has gradually dropped over the past two decades from about 10 percent. Interestingly, these are the families that would immediately benefit from this bill because, even though they have already chosen to send their kids to private school, they would be eligible for the same voucher as all other parents.

1. How would low-income families be affected? Based on existing research, low-income families may likely participate in a voucher program, especially given recent polls that show growing parental support for school choice in disadvantaged communities. However, among these families, it is the better- educated parents, who express strong commitments to education, that most often take advantage of voucher programs. While this bill includes a four-year phase in based on income, would it be the most disadvantaged children in the state—those from low-income families with minimally educated parents—that would be left behind in struggling public schools with even fewer resources upon full implementation? How does the creation of an unregulated voucher program square with the principles of the LCFF, which targets additional resources to the communities with the highest proportions of English learning, low-income, and foster youth students?
2. Available research on the impact of voucher programs on student achievement is mixed at best. Research on existing voucher programs is relatively limited because prior to 2010, there were a very small number of programs in the country. Additionally, it is difficult to measure the effects of voucher programs on student performance because there are oftentimes other factors, such as class size, school safety issues, or peer effects, that affect academic progress. Finally, the research tends to lack any analysis on the quality of the private schools that students choose to attend. Contrary to popular belief, while many private schools may produce better student outcomes than public schools, the reverse can also be true.

Despite these challenges, existing research on voucher programs shows mixed results. Generally, students attending private school through a voucher program tend to have similar academic outcomes to their peers in traditional public schools, with some studies finding that voucher students performed worse academically than their peers in traditional public schools. However, other research suggests that student performance in voucher programs may improve over time. Specifically, a multi-year study of Milwaukee’s voucher program, the oldest in the country, found that private school-attending students in lower grades tended to have lower academic performance in reading and science than their peers in public schools, while students in upper grades had better academic outcomes in reading and science than their peers. In addition, some students participating in the voucher program were one to two years behind academically when first enrolling in a private school, and study results suggest that attending private school through the voucher program helped these students catch up to their grade level.

Based on the limited research, it appears that children with parents who eagerly pursue vouchers and move their children to private schools can potentially perform better than children who remain in struggling public schools. Would these achievement results continue under a program that is applied statewide? Is this a likely way to raise achievement for students who would remain in urban and suburban public schools?

1. Voucher programs face legal challenges. Several state or local voucher programs across the country have faced legal challenges, often centered on the separation of church and state debate. Specifically, whether sending public funds to sectarian private schools contradicts the Establishment Clause of the U.S. Constitution’s First Amendment and a series of approximately 36 state constitutional amendments prohibiting the states from providing public funds to religious schools—collectively known as the Blaine Amendments. The outcomes of these challenges have been a mix of upholding the programs and finding them unconstitutional.
2. Other policy considerations. When considering the creation of a state-funded ESA system, many more factors must be considered beyond what is described above. The funding impact of this bill is difficult to assess—the Proposition 98 Guarantee would be “rebased” to include private school student ADA but public funding would then be diverted away from traditional public schools to parents that currently enroll their children in private schools. It is unclear whether including private school student attendance in the calculation of the Proposition 98 Guarantee would cover the costs of funding these students’ ESAs. If not, the result would be less per-pupil state aid available to public school districts and charter schools.

Other policy considerations include, but are not limited to, the way in which the rights of students with disabilities would continue to be protected, whether low-income parents would receive a voucher amount that could cover private school tuition (the cost of which would likely rise as a result of this bill), whether private schools should be required to administer state testing for student outcome comparison purposes, what level of accountability private schools would be subjected to by state taxpayers, and whether parents would face admissions discrimination within an unregulated voucher system.

1. This bill would create costs between $4 and $6 billion, paid by cuts to public education or other areas in the state budget. This bill is substantially similar to a recent proposed constitutional and statutory initiative related to funding for students attending private schools (A.G. File No. 21-0011, Amendment #1). In its analysis of that initiative, the Legislative Analyst’s Office states the following:

“This measure would affect the state budget and the budgets of public schools. The magnitude of these effects largely depends on (1) the number of participating students, and (2) how public and private schools respond to the measure.

The 471,000 students who already attend private schools likely would be the first students to register for this program. In addition, some of the 84,000 students currently attending homeschool probably would switch to participating private schools. Since these students currently receive no state funding, their participation represents an additional cost to the state. Participation probably would be less than 100 percent, however, on the lower end, if 308,000 students participated (representing 60 percent of current private school students and 30 percent of homeschool students switching to private schools), the annual state cost at full implementation would be about $4 billion. On the high end, if 462,000 students participated (representing 90 percent of current private school students and 45 percent of homeschool students switching), the annual state cost would be about $6 billion. The state generally would pay for these costs through reductions to funding for public schools (as the measure allows) and/or reductions to other state programs supported by the state General Fund.”

1. Arguments in support of vouchers. Proponents argue that these programs empower parents by providing them with choices about where and how to educate their children, and provide students, particularly at-risk or underserved students, with better education options. They also argue that free-market competition among public and private schools improves overall school quality through competition. Interestingly, some note that arguments in favor of school vouchers shifted over the years, with less discussion about the effects of vouchers on student achievement and more discussion about both the value of choice as a right in itself and the beneficial competitive effect of voucher programs on public schools.
2. Arguments in opposition of vouchers. Opponents argue that voucher programs divert public dollars to private schools, but without the same accountability or special education requirements as public schools. They express concerns that voucher programs divert motivated parents and students from underfunded public schools, leaving behind a larger number of disadvantaged students with fewer resources. Opponents also point out that it may be difficult for lower-income families to benefit from voucher programs, as the amount of money available through a voucher may not always cover the full costs of private school. Some raise concerns about public dollars funding religiously-affiliated private schools as a potential violation of the constitutional separation of church and state, as well as the potential for religious discrimination. Finally, some argue that these programs may potentially benefit only a small number of children without providing the comprehensive reforms needed to strengthen the entire public education system.
3. Related Legislation

SCA 5 (Grove, 2023) proposes to amend Article IX of the State Constitution to: (1) allow the state to disburse funds and other public benefits to educational institutions irrespective of their religious affiliation, and (2) include the ADA of all children who are otherwise eligible to enroll in public kindergarten schools, elementary schools, and secondary schools but have chosen to fund their kindergarten, elementary, or secondary education with an ESA.

SUPPORT

California Policy Center (Sponsor)
Association of Christian Schools International
California Catholic Conference
Californians for Equal Rights Foundation
De La Salle High School
Natomas USD for Freedom
Our Duty
Protection of the Educational Rights for Kids
Silicon Valley Association of Republican Women
Stand Up Sacramento County

28 individuals

OPPOSITION

AFSCME California
American Atheists
California Federation of Teachers
California Labor Federation
California School Boards Association
California School Employees Association
California Teachers Association
SEIU California

-- END --

SENATE COMMITTEE ON EDUCATION

Senator Josh Newman, Chair

2023 - 2024 Regular

Bill No: Hearing Date: April 19, 2023

Subject: .

NOTE: This bill has been referred to the Committees on Education and Governance and Finance. A "do pass" motion should include referral to the Committee on Governance and Finance.

SUMMARY

This bill would establish the Education Savings Account (ESA) Act of 2024 only if a Senate Constitutional Amendment (SCA 5, Grove) is approved as part of the November 2024 election.

BACKGROUND

Subdivision (b) of Section 8 of Article XVI of the California Constitution requires the state to spend a minimum amount of funding on school districts and community colleges every fiscal year, based on specific calculations built on a percentage of General Fund revenues or prior-year education appropriations, enrollment, and economic growth.

In 2013, the Local Control Funding Formula (LCFF) was enacted. The LCFF establishes per-pupil funding targets, with adjustments for different student grade levels, and includes supplemental funding for local educational agencies (LEA) serving students who are low-income, English learners, or foster youth. The LCFF replaced almost all sources of state funding for LEAs, including most categorical programs, with general purpose funding including few spending restrictions.

ANALYSIS

This bill:

1. Establishes the ESA Act of 2024 and establishes the ESA Trust as a fund within the State Treasury to be administered by the ESA Trust Board.
2. Specifies that during the first four school years following the operative date of the act, certain school-aged children are eligible to establish an ESA, based on their parent’s or guardian’s income. After the first four years, every school-aged child would become ESA-eligible.
3. Specifies that every child enrolled in an eligible school shall be entitled to a credit to the child’s account for tuition, elementary and secondary eligible education expenses, and undergraduate or graduate eligible education expenses.
4. Requires the Department of Finance to annually determine the ESA deposit amount for the upcoming school year and specifies the procedure for calculating the ESA deposit.
5. Requires the Superintendent of Public Instruction to establish a procedure for the parents and legal guardians of eligible students to apply to establish an ESA and submit an executed participation agreement.
6. Authorizes ESA fund disbursements to eligible schools, including a campus of the California Community Colleges, the California State University, and the University of California, a full-time private school, a private college or university, a public college or university, or a vocational educational or training institution, as specified.
7. Imposes a $60,000 cap, adjusted each year for inflation, on the ESA balance for students upon graduating high school or obtaining a high school equivalency certification, available for tuition, undergraduate or graduate eligible education expenses, or expenses associated with vocational education.
8. Requires the Legislature to recalculate minimum education funding guarantee (Proposition 98 Guarantee) by including school-aged children not enrolled in a public school in those minimum funding guarantee calculations based on their average daily attendance, as provided.
9. Requires the costs of providing ESA deposit amounts to be apportioned between the General Fund and school districts in the same ratio of General Fund and local property tax revenue that would have been used to educate students in their school district.
10. Excludes, for taxable years beginning on or after January 1, 2025, from gross income any amounts received as distribution from an ESA.
11. Becomes operative on January 1, 2025 only if SCA 5 (Grove, 2023) is approved by the voters at the statewide general election on November 5, 2024.

STAFF COMMENTS

1. Need for the bill. According to the author, “California’s government-run schools are failing too many students. Any company that failed 84% of its customers would be run out of business, but in California the legislature rewards failing schools with even more funding. The government focuses more on funding institutions than students, and most parents have no other options. SB 292, The Education Savings Account Act of 2024, will introduce more choice into California’s school system, giving parents and students more educational options. This bill will empower students to enroll in schools better suited for their educational needs. SB 292 puts children first.”
2. Is this a voucher program? Voucher programs generally allow public funds to be used for private school tuition. ESAs are a type of voucher program, but they are structured differently in that, in addition to private school tuition, ESA funds can be used to purchase other educational services, such as tutoring, textbooks, or online course fees. Under this bill, the state would “rebase” the amount funding currently apportioned to local educational agencies as required by the Proposition 98 Guarantee to include private school students and award vouchers to parents who could then use the funding to cover tuition and other services at an eligible public or private school. The policy changes and state and local mechanisms required to implement this bill and its companion constitutional amendment are very complex and would profoundly change how public (and private) education is currently funded. Given that no one knows how many parents and schools would apply for vouchers or move their children from public to private schools, it is difficult to assess the impact of this bill with any meaningful precision.
3. Voucher programs in other states. The first publicly-funded voucher program in the country was started in Milwaukee in 1990—the Milwaukee Parental Choice Program. Currently, there are 25 voucher programs in 14 states, including the District of Columbia. The number of voucher programs has grown steadily since 2010, as has the scope of existing programs.

Almost all states have eligibility requirements for their voucher programs, with the most common being students with a documented disability or meeting household income requirements. Other eligibility requirements include attending a low-performing school or district, living in certain geographic regions, or some combination therein. There are two states, Arizona and Nevada, which have ESA programs that do not include eligibility requirements. Arizona expanded their already existing ESA program to be universal in 2017, which will phase in over a few years and be capped at 30,000 student participants. Nevada created its universal program in 2013, but the program is on hold following a 2015 court decision declaring the funding mechanism unconstitutional and program funding has not been restored.

Since the passage of Proposition 98, the voters of California have had two opportunities to vote for tax-funded school vouchers—Proposition 174 in 1993 and Proposition 38 in 2000. Both propositions received about 30 percent voter support.

1. Many existing school choice options for California parents. There are two main groups of parents in California already exercising alternative school choice—those that send their children to private school and those that access public school options such as charter schools, magnet schools, or cross-town transfer programs. While the author states that this measure would give parents the option of moving their children from their assigned school to any other accredited school that best meets their needs, state law already provides the following public school options:
   1. Charter Schools. There are over 1,000 public charter schools in the state that provide instruction in any combination of grades kindergarten through grade 12. Parents, teachers, or community members may initiate charter petitions, which include the specific goals and operating procedures for the charter school. While most charter schools offer traditional, classroom-based instruction, about 20 percent offer some form of independent study, such as distance learning or home study.
   2. Magnet Schools. Magnet schools are designed by local authorities to attract parents, guardians, and students who are free to choose the school in which they enroll. These programs and schools are established by district governing boards that can make a wide range of choices depending on their local needs and resources. Magnet schools and programs include those that provide unique instruction in the arts, in various sciences, and in career education. Others reflect a district strategy to achieve racial and ethnic balance. When one or more magnets are established at a particular school, students from across the district may select a magnet with available space.
   3. District of Choice (DOC) Program. This program allows a student to transfer to any district that has deemed itself a DOC and agreed to accept a specified number of transfers. DOC may not use a selective admissions process. Transfer students generally do not need the consent of their home districts.
      
   4. Interdistrict Permits. These allow a student to transfer from one district to another district provided both districts consent to the transfer and the student meets any locally determined conditions. Districts receiving these transfer students may require students to meet certain attendance and/or academic standards.
      
   5. Parental employment transfers. These allow a student to transfer into a district if at least one parent is employed within the boundaries of that district and that district has chosen to accept parental employment transfers. Transfer students generally do not need the consent of their home districts.
      
   6. The Open Enrollment Act. This option, for low-performing schools, allows a student attending a school with low performance on state tests to transfer to another school inside or outside the district that has a higher level of performance and space available. Transfer students generally do not need the consent of their home districts.

Beyond the public school options, about 7.5 percent of California students are enrolled in private schools, a proportion that has gradually dropped over the past two decades from about 10 percent. Interestingly, these are the families that would immediately benefit from this bill because, even though they have already chosen to send their kids to private school, they would be eligible for the same voucher as all other parents.

1. How would low-income families be affected? Based on existing research, low-income families may likely participate in a voucher program, especially given recent polls that show growing parental support for school choice in disadvantaged communities. However, among these families, it is the better- educated parents, who express strong commitments to education, that most often take advantage of voucher programs. While this bill includes a four-year phase in based on income, would it be the most disadvantaged children in the state—those from low-income families with minimally educated parents—that would be left behind in struggling public schools with even fewer resources upon full implementation? How does the creation of an unregulated voucher program square with the principles of the LCFF, which targets additional resources to the communities with the highest proportions of English-learning, low-income, and foster youth students?
2. Available research on the impact of voucher programs on student achievement is mixed at best. Research on existing voucher programs is relatively limited because prior to 2010, there were a very small number of programs in the country. Additionally, it is difficult to measure the effects of voucher programs on student performance because there are oftentimes other factors, such as class size, school safety issues, or peer effects, that affect academic progress. Finally, the research tends to lack any analysis on the quality of the private schools that students choose to attend. Contrary to popular belief, while many private schools may produce better student outcomes than public schools, the reverse can also be true.

Despite these challenges, existing research on voucher programs shows mixed results. Generally, students attending private school through a voucher program tend to have similar academic outcomes to their peers in traditional public schools, with some studies finding that voucher students performed worse academically than their peers in traditional public schools. However, other research suggests that student performance in voucher programs may improve over time. Specifically, a multi-year study of Milwaukee’s voucher program, the oldest in the country, found that private school-attending students in lower grades tended to have lower academic performance in reading and science than their peers in public schools, while students in upper grades had better academic outcomes in reading and science than their peers. In addition, some students participating in the voucher program were one to two years behind academically when first enrolling in a private school, and study results suggest that attending private school through the voucher program helped these students catch up to their grade level.

Based on the limited research, it appears that children with parents who eagerly pursue vouchers and move their children to private schools can potentially perform better than children who remain in struggling public schools. Would these achievement results continue under a program that is applied statewide? Is this a likely way to raise achievement for students who would remain in urban and suburban public schools?

1. Voucher programs face legal challenges. Several state or local voucher programs across the country have faced legal challenges, often centered on the separation of church and state debate. Specifically, whether sending public funds to sectarian private schools contradicts the Establishment Clause of the U.S. Constitution’s First Amendment and a series of approximately 36 state constitutional amendments prohibiting the states from providing public funds to religious schools—collectively known as the Blaine Amendments. The outcomes of these challenges have been a mix of upholding the programs and finding them unconstitutional.
2. Other policy considerations. When considering the creation of a state-funded ESA system, many more factors must be considered beyond what is described above. The funding impact of this bill is difficult to assess—the Proposition 98 Guarantee would be “rebased” to include private school student average daily attendance (ADA) but public funding would then be diverted away from traditional public schools to parents that currently enroll their children in private schools. It is unclear whether including private school student attendance in the calculation of the Proposition 98 Guarantee would cover the costs of funding these students’ ESAs. If not, the result would be less per-pupil state aid available to public school districts and charter schools.

Other policy considerations include, but are not limited to, the way in which the rights of students with disabilities would continue to be protected, whether low-income parents would receive a voucher amount that could cover private school tuition (the cost of which would likely rise as a result of this bill), whether private schools should be required to administer state testing for student outcome comparison purposes, what level of accountability private schools would be subjected to by state taxpayers, and whether parents would face admissions discrimination within an unregulated voucher system.

1. This bill would create costs between $4 and $6 billion, paid by cuts to public education or other areas in the state budget. This bill is substantially similar to a recent proposed constitutional and statutory initiative related to funding for students attending private schools (A.G. File No. 21-0011, Amendment #1). In its analysis of that initiative, the Legislative Analyst’s Office states the following:

“This measure would affect the state budget and the budgets of public schools. The magnitude of these effects largely depends on (1) the number of participating students, and (2) how public and private schools respond to the measure.

The 471,000 students who already attend private schools likely would be the first students to register for this program. In addition, some of the 84,000 students currently attending homeschool probably would switch to participating private schools. Since these students currently receive no state funding, their participation represents an additional cost to the state. Participation probably would be less than 100 percent, however, on the lower end, if 308,000 students participated (representing 60 percent of current private school students and 30 percent of homeschool students switching to private schools), the annual state cost at full implementation would be about $4 billion. On the high end, if 462,000 students participated (representing 90 percent of current private school students and 45 percent of homeschool students switching), the annual state cost would be about $6 billion. The state generally would pay for these costs through reductions to funding for public schools (as the measure allows) and/or reductions to other state programs supported by the state General Fund.”

1. Arguments in support of vouchers. Proponents argue that these programs empower parents by providing them with choices about where and how to educate their children, and provide students, particularly at-risk or underserved students, with better education options. They also argue that free-market competition among public and private schools improves overall school quality through competition. Interestingly, some note that arguments in favor of school vouchers shifted over the years, with less discussion about the effects of vouchers on student achievement and more discussion about both the value of choice as a right in itself and the beneficial competitive effect of voucher programs on public schools.
2. Arguments in opposition of vouchers. Opponents argue that voucher programs divert public dollars to private schools, but without the same accountability or special education requirements as public schools. They express concerns that voucher programs divert motivated parents and students from underfunded public schools, leaving behind a larger number of disadvantaged students with fewer resources. Opponents also point out that it may be difficult for lower-income families to benefit from voucher programs, as the amount of money available through a voucher may not always cover the full costs of private school. Some raise concerns about public dollars funding religiously-affiliated private schools as a potential violation of the constitutional separation of church and state, as well as the potential for religious discrimination. Finally, some argue that these programs may potentially benefit only a small number of children without providing the comprehensive reforms needed to strengthen the entire public education system.
3. Related Legislation

SCA 5 (Grove, 2023) proposes to amend Article IX of the State Constitution to: (1) allow the state to disburse funds and other public benefits to educational institutions irrespective of their religious affiliation, and (2) include the ADA of all children who are otherwise eligible to enroll in public kindergarten schools, elementary schools, and secondary schools but have chosen to fund their kindergarten, elementary, or secondary education with an ESA.

SUPPORT

California Policy Center (sponsor)
Association of Christian Schools International
California Catholic Conference
Californians for Equal Rights Foundation
Natomas USD for Freedom
Our Duty
Protection of the Educational Rights for Kids
Silicon Valley Association of Republican Women
Stand Up Sacramento County

OPPOSITION

California School Boards Association
California School Employees Association
California Teachers Association

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