Susan Pendergrass (00:00) Thank you so much for joining us on the Show Me Institute podcast, Shaka Mitchell of AFC, but I think you wear a lot of hats. We'll just, we'll do that hat for now. You know, there's been a lot of changes afoot in the last few years, certainly since the pandemic regarding basically how kids end up at the school they end up in, in terms of like parents getting to pick more than be assigned. And I know that you've been on the front lines of this a lot through work with charter schools and Missouri, you know, we're sort of creeping into it. We have a scholarship program now that's growing and finally the legislature like in so many other states have decided to put some public funding towards it and now it's it with the lawsuit. Are you following this at all? What's going on with Missouri's scholarship program? Shaka Mitchell (00:45) Yeah, thanks Susan. Thanks for having me on. sure am following it. And, you know, I've been encouraged in recent years with the steps that Missouri has taken to expand school choice. I mean, as you know, there had been a charter school law for years, but it was really limited. It was really narrow in scope and limited to students. believe in Kansas city and St. Louis, which is a lot of students, but there are a lot of students that, were unable to access those schools. And so then you had the most scholars program, which I. I bet we'll talk about and yeah, so following that's on the, on the one hand, there's some encouraging things coming out of Missouri in recent years. then, per usual, are lawsuits, because you know, in the, in the words of, famous 20th century philosopher, Taylor Swift, haters can hate. And so that's what they do. Susan Pendergrass (01:30) That's right. Well, let's just go back to this charter school thing for a minute because you know now for the first time a charter school, first of all, charter schools could be open anywhere in the state, but the school board has to be the sponsor. And as you know, that happens all over the country, but in Missouri, no school board would ever apparently consider opening a charter school. And I don't really understand why or sponsoring them, just sponsoring, just authorizing, not running them. But so now you can have them in one other county and the school board doesn't have to be the sponsor. And there is such strong resistance to the idea of charter schools. Do you find that surprising in 2025? Shaka Mitchell (02:06) I guess yes and no because I've worked in charter schools. I've worked with a few charter networks and have lots of friends who are still operating schools or working in kind of that space. indeed at American Federation for Children, we're pretty much school type agnostic. So we support just parents' ability to choose. So yeah, I guess I've seen both sides of it. I mean, in some ways it's unsurprising that that school districts that in many places have just become jobs programs for adults. in some ways it's unsurprising that they don't want to disrupt the status quo because they've got a pretty good thing going. Budgets continue to increase. Meanwhile, enrollments decrease. So you've got fewer students per classroom, even though budgets are going up in real numbers per pupil dollars are going up in real numbers. so they've They've got it pretty good as far as, you know, like job security goes. I think what you're getting to though is a surprising piece, which is that like great educators want to do right by kids. And I do think that public school districts have a lot of great educators. And frankly, I would say that they too are kind of trapped within that system. increasingly we're seeing them have ways to get out, whether it's starting their own schools or even moving to other States, doing things online. seeing a lot of innovation in that space. you know, I guess this is like the, the, the yin and the yang of, the, relationship with innovation and with choice. And unfortunately you see both sides of it, mostly the negative side from public school districts. Susan Pendergrass (03:42) Yeah. And so what I think is so tragic for Missouri is that we have just shut the door on this idea of teachers and as entrepreneurs. And I know we have lots of entrepreneurial teachers out there. And some of the strongest charter school networks were started by teachers who were like, I have a great idea. I've been in the classroom. I know what I think could work. I need to do this outside of the tight regulations and all the stuff from the school district. And so we have just cut off this teacher as entrepreneur option, which I think is tragic. Shaka Mitchell (04:10) Yeah, it's super tragic. And one of my colleagues, Patrick graph, Dr. Patrick graph at AFC has done some work on teacher spending accounts. So similar to an ESA, right? A teacher spending account. And I think it's a great idea, this idea that you often hear from teachers that their classrooms are under resource, that they're having to ask parents, every parent knows it's, it's almost back to school season. And we're about to get a list of classroom supplies, right? Susan Pendergrass (04:20) Yeah. yeah. Shaka Mitchell (04:36) And every time I get that list, honestly, I think this feels like an inefficiency. Why haven't we budgeted for enough, you know, whatever bottles of glue or crayons and markers and stuff. We feel like we should be able to do that. Patrick's idea is what if teachers had accounts that they could just, you know, choose what they need for their classroom and surprise, surprise, teachers love the idea and legislators love the idea. And unfortunately, when you say, Susan Pendergrass (04:45) No books. Shaka Mitchell (05:05) Cool. It works for teachers. Now let's do it for parents. Then all of a it's like hair on fire. And that's when you see kind of the education status quo really rise up and say, no, we can't have that much innovation. It's pretty unfair, I think. Susan Pendergrass (05:19) Yeah, so the public funding in Missouri for most scholars, sort of by definition, the students who are getting the scholarships right now are largely low income and students with disabilities in mostly Kansas City and St. Louis. That's where the program started. Initially, they were limited to that and it's expanded a little, not much because there isn't, we have to fundraise to give the scholarships out. Tax credit fundraise and the organizations have to ask for donations. Shaka Mitchell (05:40) Right. Right. Susan Pendergrass (05:44) the lawsuit is basically saying those kids have to go back to their schools. know what mean? Like, it's like we can't publicly fund any money to go to a private institution on behalf of a student. And that is just like saying, no, you have to go back to the school that didn't work for you. And I don't understand, I guess, you know, the teachers unions brought the lawsuit. Teachers unions often take this like, PR risk of being on just the wrong side of things, which is to say, here are these children who have a scholarship to a private school and we want to take it away from them. I just, don't see how they can sit well with that. Shaka Mitchell (06:20) Yeah, well, um, you know, I had the great fortune of meeting a parent, um, in Missouri. Um, her name is Becky, um, Becky Ucello and her daughter, um, was able to attend a private school, uh, you know, school of choice. Well, here's the thing about Becky. She was a public school teacher. And so this idea that a private choice program, um, is antithetical to people who want. the best for public school students is a complete myth. mean, of course, Becky wants what's best for her students that she teaches. And she also, know, Paramount wants what's best for her own daughter. Her daughter has exceptional needs. And so a typical like conventional district school wasn't working for her. And who among us doesn't want to find the best option for our children? I think the unions get this wrong. Every time it's why they get defeated in court nearly every time. I expect the same in Missouri. you know, Missouri's got some good, state and frankly, federal case law that says that parents have the ability to choose the best option for their school and some great case law saying that. That funds that are given out, in a non-discriminatory fashion. can be used at even religious institutions, right? Because the parent is the one making the choice. It's not the government. Susan Pendergrass (07:47) Yeah, and so they, in addition to that lawsuit, there's a potential initiative petition in Missouri that would say they want to add to the constitution that you cannot spend public funds at a private institution on behalf of a student. And we have several higher ed programs, you know, for like overaged under, under credentialed people. And they can take like, sort of like a Pell Grant, but you can take it to any school, right? Public or private. We have Bright Flights, which is for high achieving students. You can take it to any college. And so I just think that they, but they may, maybe don't even realize they're gonna cut off those programs too in this effort to just close the door on kids. And it is often, even when open, public school open enrollment has come up in Missouri, it is our lowest performing districts with the most challenges like Ferguson, Florissant. Hazelwood, some of these districts like, okay, if you pass that program, we can't be part of it because we can't let our kids leave. We cannot allow our kids out the door. Shaka Mitchell (08:41) Yeah, it's, it's, it's totally short-sighted. you know, as you're alluding to, mean, you talk about an instance of like cutting off your nose to spite your face, because that is what will happen. Nearly every district outsources even the education of some of the students that live within the district to private providers. Like in the case of, you know, students with special needs. So that initiative petition would potentially cut things like that off. it's really absurd not to mention it. think something that, the opponents don't contemplate is, we spend money on quote private things all the time. It's not like districts create the computers, right? They don't create the textbooks. don't fabricate the desks. mean, it's just absurd. This sort of whole thing is a bit of a fiction. Susan Pendergrass (09:33) mean, Cisco trucks in every school, right? mean, okay, so Cisco's not coming for the lunchroom and Pearson's not coming with their, yeah, it's like there's private corporations throughout public education and it is not this sacred ground that where only public money is spent only in public ways. And I think we certainly, AFC has been on the front end of this too. We've made so much progress nationally on this issue and now potentially. Shaka Mitchell (09:35) That's right. Susan Pendergrass (09:58) And I would love for you to explain this to our listeners a little bit better, but potentially scholarship programs could get dramatically expanded through federal tax credits. What is that program and how will that work? Shaka Mitchell (10:09) Sure. Yeah. So you're referring to, this federal scholarship tax credit program that that passed as part of, know, the, the one big bill and that happened earlier this summer. And this is the first time that a federal, K-12 tax credit program has been passed. And so a few things that I think are really important first, this is a tax program. So it's not coming out of the department of education. So I get this question all the time. They're like, are you But aren't you worried about either local control or adding to federal bloat? And yes, I think about both of those things and I'm not worried about it in this case, because this is not something coming out of the department of education. It's a tax credit program. So the way that it works is that federal taxpayers from any state, so any federal taxpayer would be able to direct up to $1,700 of their tax liability. to a scholarship granting organization. You already have a bunch of them in Missouri, as you mentioned. And so, if I'm a federal taxpayer, I say if I am, unfortunately, for better or worse, so it turns out I am. So I could put $1,700, I could say, all right, you know what, instead of sending it to the federal government, frankly, I'm going to direct it to this scholarship granting organization. Susan Pendergrass (11:18) Turns out, you are. Shaka Mitchell (11:34) in Kansas City and I actually have a my brother and sister-in-law live in Kansas City so that that might be a place where I really wanted to go because I've got a Link there and then the scholarship granting organization Can award scholarships to families? and most families in the country would be covered, but there is an income eligibility piece and And that organization can award scholarships and it can make a decision as to how much the scholarship is. And then families can use it for a range of educational expenses. So just like they could an ESA. so we're pretty excited about the potential for what this can do. Susan Pendergrass (12:09) Yeah, I've heard opponents called a federal voucher, but it's not a voucher at all, right? So I think of like, when you get to the end of your tax return and it says, do want to give a dollar to political? Yeah. Presidential campaigns. Yeah. I'm always like, I can't believe you asked, but it's be more like, do you want to give $1,700 to a scholarship organization? Maybe to the Archdiocese of St. Louis, maybe, you know, whatever it is, there's a, I know in Missouri, we have a Hebrew scholarship organization. We have a. Shaka Mitchell (12:18) the presidential campaign, something or other. Yeah. Which I always say, no, who wants to do that? But anyhow, Right. Correct. Susan Pendergrass (12:37) couple of Catholic scholars, and then we have some just sectarian, non-sectarian scholarship organizations. So you could just pick the one, but this is sort of like that, do you wanna give a dollar to presidential campaigns, but you can just, instead of sending it in with your tax return, you can give it to a scholarship granting organization. What's the total, do you know the total dollar amount of tax credits that'll be available? Shaka Mitchell (12:59) It is an unlimited amount, which is pretty exciting. unlimited within that $1,700 cap per taxpayer. So I don't know how many taxpayers there are in the country. You call it 100 million or something. ⁓ Yeah. Susan Pendergrass (13:06) Okay. Okay, so initially they had talked about having a pot of tax credits and then they would be distributed to states. At one point it was based on Title I distribution. At one point it was going to be evenly distributed. So it ended up being unlimited, but then they limited the amount you could give. Shaka Mitchell (13:21) Right. So it, correct, correct. And Susan, I don't know if you were aware of this, but at the federal level, things got pretty political. so, yeah. So yeah, you're totally right. The details of this thing kind of changed over time. At one point, there was a cap, total like national, call it $10 billion cap, and then that was in flux. Susan Pendergrass (13:34) Is that right? Do tell. Shaka Mitchell (13:49) But they ended up saying this is gonna be unlimited where the limitation is gonna be is per individual taxpayer. you know, I think that's, it's not ideal, I'll say that. But boy, there are a lot of taxpayers, right? And so if this, just like you say, I think the example you give is really good. I mean, I do my taxes with TurboTax. And so, Susan Pendergrass (14:02) Yeah, that's what I'm saying. Shaka Mitchell (14:10) Yeah, this was just kind of a checkbox, right? And it's a dropdown and it's all the, all the scholarship granting organizations. And I just pick one. I pick one in the, in the state where I want and I say, okay, cool. Direct the money there. there are a lot of taxpayers, so this could raise a whole lot of money, for students around the country. Now I will say one caveat is that, states have to opt in to the program. Yeah. So it means that the, the governor or other. Susan Pendergrass (14:32) So what does that mean? Shaka Mitchell (14:38) decision maker that normally, ops into tax programs. So that may differ a little bit state to state. We're learning more about that. Yeah. Yeah. But I would say, you know, mostly pay attention to the governors though. North Carolina's legislature last week just voted to participate. so we'll see, we'll see how that goes. Susan Pendergrass (14:45) full squishing to be honest, but yes. Where's Missouri? I don't know if we even have talked about it. Shaka Mitchell (14:59) Yeah, probably not. Now there's still some time. It doesn't go into effect until 2027. And so we've got some time, but yeah, but governor should definitely be thinking about this already. And I know that many are in fact, I've spoken with some offices around the country and they're thinking, all right, what do we need to do to be ready? A state like Missouri is actually, I think set up pretty well in that you have some, yeah, you've got some muscle memory already. Susan Pendergrass (15:20) Yeah, we have this scholarship granting organization. What about kids that live in blue states? What's going to happen? Like will Oregon opt in? Will California opt in? Shaka Mitchell (15:27) Yeah, this is going to, this is the question. Yeah, this is the question. I think all eyes are on States like that States like Pennsylvania, California, New York, Connecticut, right? Because here's the deal. Every taxpayer can contribute to a scholarship granting organization. Well, there are a lot of taxpayers in Illinois. There are a lot of taxpayers in California, right? So imagine if a bunch of taxpayers in Illinois say, yeah. Of course I would like to, I've already got to pay these taxes. Why wouldn't I direct some of the money to scholarship, you know, scholarships for, lower income families? Well, I guess we'll just have to give the money to an organization based in Missouri. That would be, in my mind, that would be crazy for a governor to, basically export a bunch of scholarships to students in another state. We'll see. Susan Pendergrass (16:13) Yeah. What do think they're gonna do? Shaka Mitchell (16:25) It's it's hard to hard to read the tea leaves on this but I will say I've seen a couple public statements from Governor Shapiro in Pennsylvania the governor in Maryland, I believe where where governors are are basically Democratic governors Have said things like we're researching we're investigating. So I think they're having to take a hard look at this I think this is not a this is Susan Pendergrass (16:39) What's more? Shaka Mitchell (16:52) it's not really a partisan issue, right? It's like, tech. Susan Pendergrass (16:55) It's an interesting political move though to make school choice nationwide. Shaka Mitchell (16:59) Will to make it nationwide and, and by the way, though, to, link it to the tax code, I think is really interesting because again, taxpayer, there are Republican taxpayers, there are democratic taxpayers or independent taxpayers. Right. And so when you're paying your taxes, I don't know that you're thinking in these like hyper partisan terms. And so, if you've got tax liability, you have tax liability. It is what it is. So why not? why not put money to a scholarship organization? And like I said, you are California, are you really about to let, I don't know, call it 25 million taxpayers send $1,700 a piece? I can't do math that quickly, but are you gonna let them send that out to, yeah, to Arizona, New Mexico, Nevada? Wow, that's a lot of money lost. Susan Pendergrass (17:45) Big, it's a big number. ⁓ It'll be interesting to see too what happens on the supply side, like with the number of private schools and other vendors, because I think, you know, some states have done Arizona, similarly, you can already get $7,000 to go anywhere you want. And they've seen a really interesting sort of growth in and expansion of types of vendors and parents have been able to like really put together. super cool tailored education programs for their kids because the suppliers kind of show up. And I know that like there's a lot of monthly subscription boxes, like history in a box. And they're like really coming up with this cool stuff to meet parents where they are with the kind of stuff they want. And it'll be really interesting to see what happens with the supply of private schools and sort of hybrid school vendors as that program grows because The fact that it's unlimited in size is really surprising to me. Shaka Mitchell (18:43) Yeah, it's a pretty amazing thing. because, though the federal tax credit program, those scholarships could stack on top of existing programs. Right? So they could, they could meet gaps where there are gaps in a state's program, for instance. you know, you could meet that gap, right? So if you're in a state that already has a tax credit program, K-12 program or K-12, let's say it's a voucher or an ESA, whatever it is. Susan Pendergrass (18:53) ⁓ yeah. Shaka Mitchell (19:07) And let's say that amount is $6,000. Well, $6,000 is pretty good, but it's not, it's not going to meet a hundred percent of say, tuition. may not meet a hundred percent of your needs, right? It's going to vary by family and situation. So what if you could get a $3,000 scholarship from the federal tax program on top of that, and you could really, um, sort of cover that last mile of expenses. That's a. Susan Pendergrass (19:34) Mm-hmm. Shaka Mitchell (19:35) That's a big deal. Be really impactful for a lot of families. Susan Pendergrass (19:38) Do think there'll be a lawsuit? Shaka Mitchell (19:39) well, given the prior conversation around, around the haters, I mean, it's easy to file a lawsuit. Do I think that it's under, threat of under judicial threat? No, absolutely not. it's very hard to challenge parts of the tax code. ⁓ yeah, it's, it's not even clear as to who would have standing to do that. And so, Susan Pendergrass (19:43) Yes. Yeah. Shaka Mitchell (20:07) In some ways I would say, listen, if the teachers unions want to spend, if they want to go ahead and dip into their, you know, $400 million a year annual revenue and they want to, and they want to spend a lot of money on a lawsuit. some ways I would say, do it. Do it. I mean, or you could just set it on fire, whatever. Susan Pendergrass (20:27) Well, I think one of the things working against them, you know better than I do, working at AFC is growth in the number of families that are getting these scholarships and how happy they are with them, right? Like parents satisfaction is extremely high with these programs. so, and I know there's always been surveys like, yes, parents want open enrollment, they want charter schools, they want ESAs, but now you have more and more families experiencing it. And they, I mean, they love it, right? Shaka Mitchell (20:53) Yeah, the number, the number is growing certainly nationally, but again, um, think about when most scholars program passed. So what's that 20, 2020, 2019, 2020 in there. Yeah. And so the, the explosion of a parent choice of education freedom that we've seen since 2019 is really hard to overstate. And so not only are parents Susan Pendergrass (21:02) Like four years ago. Yeah, four or five years ago, yeah. Shaka Mitchell (21:20) really enthusiastic about what's happened and they're, they're seeing high satisfaction rates, but we're also seeing data like from Ohio, that shows that the Ed choice program has, higher college attainment rates among students, especially black and brown students. those kinds of numbers, when you look at that and go, all right, now we've had enough data for enough years that we can say, Hey, how are kids doing academically? You know, if that's the metric that's really important to you and it is a metric that's important to us at AFC, we say, all right, here, look at the edge choice program. It's a rigorous study. It's a longitudinal study. and the kids are doing really well and parents take notice. Susan Pendergrass (21:59) And then your internal investment is astronomical. It's like the little preschool programs, Abbasidarian and High School Perry preschool projects from a long time ago that were small numbers of kids that have these really high ROIs because if you keep two kids out of 30 out of prison, all of a sudden you have saved millions of dollars, right? So for every child who finishes college and has higher educational attainment, higher median earnings, it just... Shaka Mitchell (22:18) Yeah. Yeah. Susan Pendergrass (22:26) pales in comparison to the $7,000 they got that year. So it is a really high ROI and I hope that more folks come to see that. Because parents like what you just pointed out, they're taking a small fraction of what is being spent on everyone else. They're taking $6,000. But the average spending per student is $18,000. And they're like, we're going to make this work somehow at a much lower cost, which I don't personally think they should have to do. you know, I think we're going to see big returns to these programs in college enrollment, persistence, attainment. I think it's, there hasn't been anything that I have seen in 30 years of working on ed reform coming out of the traditional public schools that's had as big of an impact. Shaka Mitchell (23:10) Yeah, I think it, this feels like the same energy that I remember, um, in, don't know, call it like 2002, 2003, right? When there was a lot of excitement around, mean, people forget, but when no child left behind was passed, it was a pretty landmark thing, right? That was one of the first times that we actually had school level disaggregated data. And then we said, all right. Susan Pendergrass (23:32) shoot. Shaka Mitchell (23:39) Now we're not just going to look at it when it's not just for navel gazing, let's do something about it. And you had, organizations that were working on teacher performance pay and charger schools and turnaround schools and private choice. This feels like that time felt right. Except that I would say that this is even more grassroots because it's, it's a, a, coalescing of families around the country and in States. mean, I'm, I'm on a. I'm part of a Facebook group here in my state in Tennessee for families interested in the Education Freedom Scholarship. And you've got parents helping parents navigate the application process. Parents helping parents answer questions that folks at the Department of Education just don't have the manpower to do. You've got other folks, somebody from Memphis helping to answer a question from someone in Chattanooga. That's pretty cool. so now technology is allowing for that. I don't think you can put that genie back in the bottle. Susan Pendergrass (24:34) That's right. That's what I say. mean, I don't think you're going to go from more choice to less choice. Most don't think the world works that way. And I know that anecdotally, I've heard of a couple of people who are considering moving to the state of Missouri who were like, whoa, I can't pick my child's school. No, thank you. Like that's just going to be, and you have kids who have come out of these programs who are having kids, right? So it's not going to go. It's, don't think it's going to go back. Shaka Mitchell (24:40) Yep. Yeah, yeah. Right. That's right. That's right. Yeah. There's, there's a, really interesting article just today in the New York times that's talking about, expanded choice, private choice around the country. And there are some great quotes. would not expect this coming out of the New York times, but a direct quote from it says the monopoly is dead. And it's like, Well, I mean, from the, from the New York times to God's ears. ⁓ yeah, but, Susan Pendergrass (25:21) Wow. Yeah, I think that's what the lawsuits are. mean, it feels like a desperate last gasp, but I don't want to predict that. you know, I just, yeah, I have always said that like, underestimate parents and what they will do for their kids because they will show up hard. And I think that that's a lot of what we're seeing in this case. Well, thank you so much for coming on and talking to us about these things. That was super interesting. And I know you'll be following the lawsuit. Shaka Mitchell (25:27) Last gasp. I'm with you. Susan Pendergrass (25:49) I don't really expect it to go anywhere, I'm looking forward to seeing what happens too with this federal tax credit thing that could be such a big deal for a state like Missouri. But I really do appreciate you explaining it to us. Shaka Mitchell (25:59) Yeah, happy to do it. Thanks for having me, Susan. Susan Pendergrass (26:01) Great, thanks.