and continues with in-school,ater-school, social-service,health and community-build-ing programs.Successul charters, likethose run by the HCZ, di-er dramatically in type andapproach. Accordingly, it isdicult to identiy a singleor combination o variablesin any one charter that, i replicated, would producethe same results across thepublic school system. As aresult, a number o promisingstrategies have simply becomeone-o success stories. Thisinability to deliver replicableinnovation has locked thecharter movement in a per-petual cycle o experimen-tation which, in turn, hasled to policy inertia. A newpolicy approach is needed;specically, one that can scalesuccess without sacricinginnovation.
A Model that Works: The Low Income Housing Tax Credit
Such a policy approachalready exists in the aordablehousing eld. Passed as parto the Tax Reorm Act o 1986,the Low Income Housing TaxCredit (LIHTC) is a dollar-or-dollar investment tax credit (onedollar o tax credits reduces onedollar o tax liability) designedto und the construction andrehabilitation o aordable,multiamily rental housing.The credit, which acts as a “cou-pon” or uture taxes owed, isallocated to state authorities ona per capita basis and awardedto aordable housing developersaccording to a scoring systemthat takes project viability andsocial impact into account. I awarded a tax credit allocation,developers sell the credits toinvestors (mostly corporations)in exchange or project equity.The credits are sold at marketvalue based on a range o ac-tors, including credit recapturerisk. Recapture occurs when aproject alls out o complianceat any point in the rst 15 yearso its operation, resulting in asignicant nancial loss to itsinvestors. Compliance is tieddirectly to project completion,nancial viability and ongoingrent aordability.The LIHTC program isinstructive because it demon-strates how the ederal govern-ment can successully bring itssubstantial nancial resourcesto bear on a decentralized,locally based system o serviceproviders. A similar policytool could be used to grow anetwork o high-achieving,high-poverty charter schoolscapable o meeting the indi-vidual needs o a diverse set o disadvantaged students.
Charter School Tax Credit
A charter school tax creditwould unction much like theLIHTC. Credits would beallocated to the states, which,in turn, would award themto high-perorming charterschools. Upon receivingthe credits, schools wouldsell them to private inves-tors and use the proceeds tound wrap-around servicesor intensive classroom-basedinitiatives. The price paid orthe credits would be based onthe investor’s level o con-dence that those services andinitiatives will deliver theacademic results necessary tostay in program complianceand avoid credit recapture.Compliance requirementswould be specic, measurablegoals demonstrating low-incomestudent achievement. Thesestandards would have the dualbenet o allowing the govern-ment to monitor improvementwhile also allowing the schoolto evaluate its own programsand adjust them as needed. A charter school tax creditwould also ensure that everydollar spent on the programis tied directly to a positive,measurable education out-come. This is a signicantimprovement over the statusquo—investing in schools onthe basis o past perormanceor uture promise, with norecourse should those assess-ments prove to be wrong.This is particularly importantduring periods o scal aus-terity. In commenting aboutthe LIHTC in 1992, the
Los Angeles Times
argued that thetax credit “orms the corner-stone o the numerous public/ private partnerships that areincreasingly the salvation o cash-short cities and states.”Today, as in 1992, budgetdecits are leading to socialprogram cuts. As policymak-ers seek to balance their bud-gets going orward, a charterschool tax credit programcould oer a scally responsi-ble method o unding humancapital development becauseunding would only fow toschools that work. A charter school tax creditprogram would also raise privatecapital to directly support
Harlem Children’s Zone
continued rom Page 1
Dropouts cost the government, onaverage, $292,000 in lost tax reve-nue, public assistance and incarcer-ation expense, and earn $700,000less than they would with a diploma.
A new policy approach isneeded; specically, one thatcan scale success withoutsacricing innovation.