The federal tax credit proposal is one of several ideas under review by the White House to fulfill Donald Trump’s campaign promise to promote the expansion of charter schools and vouchers that would allow families of low income to use public money for private school tuition.
The Trump administration is considering a first-of-its-kind federal tax credit scholarship program that would channel billions of dollars to families from working-class households to enable their children to attend private schools, including religious schools.
During a recent meeting with parents and teachers at the White House, Trump said he wants “every single disadvantaged child in America, no matter what their background or where they live, to have a choice about where they go to school.”
But the federal tax credit proposal already has critics on the left and right. Public school advocates say such a tax credit is a voucher program in disguiseand would divert tax dollars from struggling public schools.
“The end result is the same — federal tax dollars going to private schools,” said Sasha Pudelski, assistant director for policy and advocacy at AASA, The School Superintendents Association, who called the program “a backdoor voucher.”
While a tax credit may be more politically palatable than asking Congress to find or reallocate money to fulfill Trump’s $20 billion promise to expand charter and private school options, “just because it’s more palatable, doesn’t mean it tastes good,” said Noelle Ellerson Ng, the group’s associate executive director.
Critics on the right, meanwhile, worry such a plan would increase the federal role in education and pressure states to standardize state tax credit programs, many of which now allow nonprofit groups to prioritize a particular type of school, such as those of particular religious denominations, for instance.
A federal tax credit scholarship program could be part of a larger tax reform bill and pass through the budget reconciliation process with only 51 votes in the Senate. Delays in repealing Obamacare, however, are complicating Republican plans to push tax reform through Congress.
The White House did not respond to questions on the tax credit proposal or its status by deadline. Details of how the Trump administration might structure the plan remain unknown. But sources close to the discussions who were not authorized to speak publicly say the program might be capped at a level as high as $20 billion, and resemble legislation first introduced by Republicans Sen. Marco Rubio of Florida and Rep. Todd Rokita of Indiana in 2013, called the Educational Opportunities Act.
That bill, which has never passed either chamber, would have created a federal tax credit of up to $4,500 for individuals and up to $100,000 for corporations that make donations to nonprofit “scholarship-granting organizations,” or SGOs. Those organizations would award the funds to low-income students, who could use the money to attend private schools, including those run by religious groups.
Education Secretary Betsy DeVos praised the bill in 2015 when it was reintroduced and she was chair of the school choice advocacy group, American Federation for Children.
“There’s no single domestic issue more pressing than fixing our nation’s antiquated education system and the Educational Opportunities Act will empower parents throughout the country to have access to quality educational options that are otherwise out of reach,” she said.
Robert Goad, Trump’s education policy person on the White House Domestic Policy Council, is a former aide to Republican Rep. Luke Messer, who co-sponsored the bill and former executive director of advocacy group, School Choice Indiana.
It’s unclear whether a federal program would limit tax credits to residents and donors in states that already have their own tax credit programs with an infrastructure to support those. If that’s the case, it could incentivize states without such programs to create them.
DeVos has pointed to Florida’s tax credit scholarship program as one of her biggest successes. Before being named to Trump’s Cabinet, DeVos was on the board of the Foundation for Excellence in Education, a reform group founded by former Florida Gov. Jeb Bush. Together, they pushed for the creation and expansion of tax credit scholarship programs across the country.
The nonprofit Step Up for Students, which helps administer Florida’s program, says it has served more than 97,000 students. The scholarships, for low and middle-income students, are worth nearly $6,000 each. Nearly 70 percent of student recipients are black or Hispanic and more than 1,700 private schools participate in the program.
More than 80 percent of students use the scholarships to attend religious schools, with most coming from large, urban districts, a recent state report shows. About a quarter of the participating students are from Miami-Dade County public schools, the fourth-largest school district in the country.
“A well-designed federal program could, for the first time, empower low-income parents in blue states — and red states who have been reluctant — to choose a better school for their children,” said John Kirtley, founder of Step Up For Students. Kirtley is also vice chairman of American Federation for Children. “In states with legislatures dominated by the teachers unions, it may be the only chance they ever have to be empowered.”
Florida’s program, however, has been beset by legal challenges. And groups representing the nation’s traditional public schools say they would fight any proposals to introduce such plans on the federal level.
The National Coalition for Public Education argues that private schools accepting tuition funded through tax credits aren’t held accountable like public schools, the advocacy group notes. And states have had to take action to make up for a decline in revenue. Alabama once put aside $40 million in its budget to absorb the anticipated loss from the tax credits, Stateline reported.
Vic Smith of the Indiana Coalition for Public Education said Indiana’s tax credit scholarship program, which passed in 2009, was the “gateway drug to [a state legislation authorizing] vouchers,” which passed in 2011. Indiana has lost millions in tax revenues due to the state tax credit scholarship alone, the Chicago-based Center for Budget and Tax Accountability has reported. Teachers unions and public education advocacy groups in Texas are actively fighting a state tax credit proposal there.
“Vouchers in any form divert tax money to private schools or homeschoolers and take it from under-funded public schools, where the vast majority of school children will continue to be educated,” said Clay Robison, a spokesman for the Texas State Teachers Association. “When I say underfunded public schools, I am talking specifically about Texas, which spends about $2,700 less per child on education each year than the national average.”
While promoting school choice has gained political momentum, not all conservatives think a federal tax credit is the right way to go — largely because they don’t want to see a larger federal hand in education.
“I have reservations,” said Lindsey Burke, who leads the Heritage Foundation’s Center for Education Policy. “School choice is already moving along swimmingly in the states … We don’t want to over-convolute the tax code and there’s concern that this could get overregulated.”
Jason Bedrick, director of policy for the Indiana-based advocacy group EdChoice, worries that states and scholarship-granting organizations might feel pressure to conform to the provisions of a federal tax credit program.
For example, Bedrick said, the bill proposed by Rubio and Rokita would have given federal tax credits only for donations to scholarship-granting organizations that don’t “earmark or set aside contributions for scholarships on behalf of any particular student, or to any specific school or group of schools.” Essentially, donors would receive a federal tax credit only if they give to SGOs that award funds to all students looking to attend all types of schools.
A provision like that could “exclude a broad and diverse array of SGOs that currently participate in scholarship tax credit programs nationwide,” Bedrick said. That’s because most states allow these organizations to be “mission-based,” working with schools of a particular religious denomination or educational philosophy like Montessori schools, he said.
“It would be a mistake for conservatives to say, ‘now that we have control over the federal government, we’re going to push our ideas on a national scale,’” he added. “There’s going to be a lot more opposition than they think.”