OPINION
A new federal tax credit scholarship law will provide a windfall of new money to fund children's scholarships for K-12 expenses, regardless of where they attend school.
To make this scholarship money available to children, it is up to each state's governor to decide if the tax credit will apply to their respective states.
Last summer, President Trump and the U.S. Congress included the first nationwide school choice law as part of the budget reconciliation law that will help children in all K-12 school settings, public, private, charter, or religious.
That means more, not less, funding for K-12 education.
A wrinkle in this new law, which takes effect in 2027, is that each of the nation's 50 governors must annually decide if this law, and the billions of charitable dollars that would result, will benefit children in their respective states — informally known as the "opt-in" "Guidance from the Internal Revenue Service (IRS) on this process was issued earlier in December and more is expected soon.
For each state's children, the "buck" literally stops with the governor.
If each governor "opts in" to this federal tax credit scholarship law, up to $24 billion annually in additional charitable donations from individuals would accrue, according to an analysis by Democrats for Education Reform.
The resulting scholarship money would make educational options and supplemental services affordable for many more families to use for tuition, tutoring, special needs, after-school programming and much more, irrespective where they attend school.
If a governor refuses to opt in, due to opposition to school choice, millions of that state's taxpayers may donate up to tens of millions worth of scholarship funds to states with governors that do opt-in — meaning, children in other states will benefit.
One of those states is Colorado, where Democratic Gov. Jared Polis last month stated he would let the federal law take effect.
The tax credit scholarship law "is a real boom of investment in kids," he said.
"It supports donors to give more money to our schools; I mean, I would be crazy not to" opt the state into the program. North Carolina's Democratic Gov. Josh Stein last summer indicated that he would do likewise, recognizing the tax credit would benefit public school students.
The federal scholarship law is unique in that it is a 100% credit against individual income taxes for donations of up to $1,700 per year to not-for-profit scholarship granting organizations (SGO).
This dollar-for-dollar incentive means that a donation to an SGO in a state that opts in would cost the donor nothing.
Either the individual taxpayer pays Uncle Sam's treasury or donates up to this maximum to support children in K-12 education.
For those states that face budget gaps where budgeted spending exceeds revenue, such as the multi-billion dollar gaps in California and New York, the merits of opting in to this federal law to generate potentially billions more in education funding directly to families are clear.
Opting in to the federal tax credit could forgo potential state tax hikes.
While the federal tax credit scholarship taking effect in the states is a no-brainer, one of the most politically powerful interest groups, the teacher unions, is knee-jerk opposed.
The rub is that teacher unions will reject substantial new funding from the tax credit for children in public schools if a single child stands to obtain a scholarship to access a private school alternative.
Indeed, more important to teacher unions than new money is its monopolistic control over K-12 education.
Since the federal tax credit scholarship law also would enable families to financially access private and religious schools, teacher union leadership will oppose any state "opt-in" to the federal law, notwithstanding its major windfall for children and teachers in public education.
And, what of the school boards and superintendents?
Will they also deny their district students additional resources?
Governors have a decision before them, especially in states that have opposed school choice: help all children with billions in private donations with no loss to state or school district budgets or side with the teacher unions and the system they want to remain in control over.
Governors throughout the country have overcome the teacher union opposition to pass state school choice laws.
Those governors traditionally in opposition to choice should follow those examples by letting the federal tax credit scholarship law take effect so that their state's taxpayer-donors can benefit their own states’s school children.
Peter Murphy is Senior Advisor to the Invest in Education Coalition, which supported the adoption by Congress of the federal tax credit scholarship law.
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