Will Kiryas Joel Finally Get its Way? Who really benefits from NY’s “Invest in Ed” Tax Credit?

Tuition tax credit programs establish privately governed entities that provide scholarships, typically to “lower income” families, for their children to attend private schools. The idea is to provide tax credits to corporations and individuals who give money to these tuition scholarship entities.

The compelling governmental interest for these policies, as we often hear is that low income kids are trapped in failing urban public schools and that these tuition scholarships will help them attend either outstanding, elite private independent schools, or established catholic schools. Certainly, as I illustrated in a recent blog post, a large share of private schooled children in New York State do attend Catholic schools. And more perhaps might, if provided with tuition scholarships.

But, as I’ve shown in other contexts, the primary beneficiaries of these scholarships – where the money actually lands – isn’t necessarily where we might assume, given the framing of the policy.

Which brings us to Kiryas Joel (and other similar contexts in New York State, like the area served by East Ramapo School District). Years ago, the tiny village of Kiryas Joel, in the town of Monroe sought to establish itself as its own independent public school district – and independent public school district that would, in effect, serve an exclusively, homogeneous religious community. The New York legislature, on their behalf actually passed a districting law, just for them, that would create these boundaries. Why? They just wanted to have a fully publicly subsidized school system where they could serve – the way they saw fit – their specific religious community. To which the high court of this land said – nay nay.

Here’s a quick summary from oyez.org:


Facts of the Case 

In 1989, the New York legislature passed a school districting law that intentionally drew its boundaries in accordance with the boundaries of the Village of Kiryas Joel, a religious enclave of Satmar Hasidim who practice a strict form of Judaism. Shortly before the new district commenced operations, the taxpayers and the association of state school boards embarked on a lawsuit claiming that the statute created a school district that limited access only to residents of Kiryas Joel.


Did the 1989 statute violate the First Amendment’s Establishment?

Yes. In a 6-to-3 decision, the Court held that the statute’s purpose was to exclude all but those who lived in and practiced the village enclave’s extreme form of Judaism. This exclusionary intent failed to respect the Establishment Clause’s requirement that states maintain a neutral position with respect to religion, because it clearly created a school zone which excluded those who were non-religious and/or did not practice Samtar Hasidism. Indeed, the very essence of the Establishment Clause is that government should not demonstrate a preference for one religion over another, or religion over non-religion in general.


But alas, those were different times. Since that time, our high court has determined, for example, that if a tuition voucher program is established by a government entity, and if that voucher program is based on the choices of individual, private actors (parents and students), even if the majority of those students/families take their voucher to religious institutions (as they did in Cleveland), the policy being neutral to those choices, does not violate the establishment clause.

This has led me to ponder, in recent years, what if New York State had simply established a voucher model for the region surrounding Kiryas Joel? Rather than declaring a separate government entity that happened to be homogenously religious? That might work. The kids/families would just so happen to choose, 100%, their village yeshivas. The policy on its face would be “neutral.” Except perhaps that the legislation creating the policy would have chosen this religious community specifically for this “pilot” program. That might again tip the tables against Kiryas Joel (unless perhaps, as in the failed, proposed NJ legislation, the policy just happened to include, but not exclusively, the religious community).

But alas, we need not even worry about that, because our high court a few years back created an immunity shield for policies that indirectly rather than directly allocate those tuition scholarships! You see, if a state instead creates a tax credit for individuals and corporations to give to a scholarship granting entity, rather than directly allocating those same tax dollars, it appears that resident/citizen/taxpayers don’t have a right to bring legal challenges to the policy to begin with. [you see, in a case like Zelman/Cleveland Vouchers, taxpayers can challenge the use of their tax dollars for religious institutions on an objection of conscience basis. But, taxpayers can’t challenge the distribution of someone else’s “untaxed” contributions, even if the fiscal effect is the same]. To summarize:

Arizona Christian School Tuition Organization v. Winn

Facts of the Case

Arizona taxpayers challenged the constitutionality of Arizona’s tuition tax credit in an Arizona federal district court. They alleged the tax credit violated the Establishment Clause of the First Amendment because it funneled money to private religious schools. The district court dismissed the case. On appeal, the U.S. Court of Appeals for the Ninth Circuit reversed, holding that the taxpayers had standing to bring their suit and had alleged a viable Establishment Clause claim.


Do the plaintiffs lack standing because they cannot allege that the Arizona tuition tax credit involves the appropriation or expenditure of state funds?

Yes. The Supreme Court overturned the lower court in an opinion by Justice Anthony Kennedy. The majority held that the challengers to the tax credit in Arizona lack standing under Article III. Justice Elena Kagan filed a dissenting opinion joined by Justices Ruth Bader Ginsburg, Stephen Breyer and Sonia Sotomayor. “State sponsorship of religion sometimes harms individuals only (but this ‘only’ is no small matter) in their capacity as contributing members of our national community,” Kagan wrote for the dissenters.


Which all brings us to the here and now in New York State. There now exist (at least) two versions of a tuition tax credit program being pitched in New York State. The pitch is the same as usual. The faces of that pitch are the same as usual – including Cardinal Dolan of the NY Archdiocese [perhaps on the assumption that this policy will a) help firm up the financial condition of NY’s Catholic Schools while b) providing low income NYC children “trapped” in failing schools the opportunity to attend Catholic schools].

Like previous New Jersey bills, the Assembly version (largely mirrored by the Governor’s budget language version) of the bill places emphasis on providing scholarships to children from families with income below a certain level. As stated in the bill:

Section three of this bill also provides definitions for terms such as “authorized contribution,” “public education entity,” “local education fund,” and “educational scholarship organization.” An “eligible student” who can receive a scholarship must reside in a household with not more than $250,000 in adjusted gross income; however, to ensure the needs of low-income communities are addressed, on educational scholarship organization must provide at least half its scholarships for students from households with income below 150% of the reduced-price lunch income thresholds. http://assembly.state.ny.us/leg/?default_fld=&bn=A02551&term=2015&Summary=Y&Actions=Y&Votes=Y&Memo=Y&Text=Y

The NY Senate version doesn’t worry itself with allocating the scholarships to lower income children, as far as I can tell.

But as I have previously laid out in New Jersey, the casual observer might be surprised to learn where those communities are, in which the largest shares of children already enrolled in private schools qualify by income status for these scholarships (by the 150% of the 185% income threshold for poverty, which is the 277% income threshold).

Let’s take a look first at the Public Use Micro Data Areas in New York State from 2011-2013 by Public Use Micro Data Area.

Table 1 – Private School Enrollments in New York State for Public Use Micro Data Areas with HIGHEST % Low Income Enrolled in Private Schools


Interestingly, but not surprisingly (since I’ve seen this pattern elsewhere), the highest rates of “private school enrollment” among “income qualified families” are in places like Brooklyn, Rockland County and Orange County. These latter two public use microdata areas are home to two very unique New York State school districts: Kiryas Joel Village (Orange County) and East Ramapo. The plight of East Ramapo school district has been covered extensively in the media in recent years and is analogous to that of Lakewood, New Jersey in many respects.

Kiryas Joel is no stranger to media coverage either, with many stories specifically covering the village leadership’s creativity in accessing public subsidies and tax breaks.

Half, to more than half of children in these communities attend private schools, much like Lakewood, NJ. That is, half of children from families claiming low income!  Families that would/will qualify for preferential treatment under the scholarship program.

Now, one might say, this is all private school students. Surely they represent a mix of school types. They aren’t all in one type – one religion – of schools. Well, here are the private school enrollments in 2011-12 for towns in the Rockland area, and in Monroe which is home to Kiryas Joel. These enrollments are from the NCES Private School Universe Survey.

Table 2 – Private School Enrollments (total enrollments)


Well, okay, in fact most of them are in Orthodox schools, which is pretty well understood by anyone familiar with these communities.  In fact, if the Census data and Private School Survey data were precise enough to isolate specifically schools and enrolled children in the village of Kiryas Joel, I believe we’d still find 100%.

So then, what’s the big deal? Well, what we have here, in New York State, is quite similar to what I found in New Jersey- that the immediate big beneficiaries of the tax credit scholarships will likely NOT be low income minority children heading off to Horace Mann, Dalton, Trinity or NYC Catholic schools, but rather, the vast population of already enrolled “low income” families in the state’s burgeoning orthodox communities – those who disproportionately declare themselves as low income, yet already attend private schools.

So, in other words, Kiryas Joel finally gets its way after all these years – the opportunity to have their exclusively religious schools fully, or nearly fully subsidized at public/taxpayer expense, albeit indirectly.

And thanks to more recent supreme court decisions, no one even has legal standing to challenge the policy as designed, if it’s actually adopted.

Is this what “invest in ed” is really all about?

Published by schoolfinance101

Bruce Baker is an Professor in the Graduate School of Education at Rutgers, The State University of New Jersey. From 1997 to 2008 he was a professor at the University of Kansas in Lawrence, KS. He is lead author with Preston Green (Penn State University) and Craig Richards (Teachers College, Columbia University) of Financing Education Systems, a graduate level textbook on school finance policy published by Merrill/Prentice-Hall. Professor Baker has written a multitude of peer reviewed research articles on state school finance policy, teacher labor markets, school leadership labor markets and higher education finance and policy. His recent work has focused on measuring cost variations associated with schooling contexts and student population characteristics, including ways to better design state school finance policies and local district allocation formulas (including Weighted Student Funding) for better meeting the needs of students. Baker, along with Preston Green of Penn State University are co-authors of the chapter on Conceptions of Equity in the recently released Handbook of Research Education Finance and Policy, and co-authors of the chapter on the Politics of Education Finance in the Handbook of Education Politics and Policy and co-authors of the chapter on School Finance in the Handbook of Education Policy of the American Educational Research Association. Professor Baker has also consulted for state legislatures, boards of education and other organizations on education policy and school finance issues and has testified in state school finance litigation in Kansas, Missouri and Arizona. He is a member of the Think Tank Review Panel, a group of academic researchers who conduct technical reviews of publicly released think tank reports on education policy issues.

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