Updated: This article has been updated with information from additional governors’ responses to Education Week inquiries asking whether they plan to participate in the federal scholarship tax credit program.
Federal officials have not yet released precise rules for how a new education tax credit will work. But that’s not stopping school leaders in Gwinnett County, Ga., from preparing to participate.
The Gwinnett County Public Schools Foundation, a 501(c)3 nonprofit, already gives out dozens of student scholarships each year. It also partners with local organizations to supply classroom materials and necessities like food and clothing to students and staff.
Now, the district hopes to boost investment in its 183,000 students by pitching the dollar-for-dollar federal tax credit launching next year as an incentive for donating to the foundation.
“I’m already getting emails from promoters of the bill in various forms making you aware that you can use it,” said Masana Mailliard, the district’s chief financial officer. “... It’s definitely something that I think we should be able to qualify very easily with.”
Mailliard’s district is among several public education providers—including both traditional district and charter schools—weighing how they can take advantage of money that will become available next year with the launch of the new federal scholarship tax credit program. The program, authorized by the One Big Beautiful Bill Act Congress passed last July, will bankroll scholarships covering private school tuition, home-school expenses in some states, and a range of expenses tied to public schools.
The program offers taxpayers dollar-for-dollar credits of up to $1,700 in exchange for donations to organizations that give out scholarships to cover K-12 expenses, whether at private, religious, or public schools.
It has been a priority for school choice proponents for years. Republican lawmakers have pitched similar policies over time, and the first Trump administration unsuccessfully tried to include a program like it in its 2017 tax-cut legislation.
“With more scholarships for private schools, some districts could lose students, and that’s where we’ve seen the bulk of the conversation,” said Marguerite Roza, a research professor and director of the Edunomics Lab at Georgetown University. “But, per the law, school districts are also named, too. There’s been much less conversation about how school districts can tap these funds.”
So far, 31 states have opted in or are on track to participate, according to Education Week’s tracker of state decisions. Two governors have said they won’t participate, and the remaining 17—all but one of them Democrats—have yet to announce their intentions. The scholarships will only be available in states where governors opt in.
Some undecided governors have said they want to ensure the funds can benefit public school students before committing.
This week, the U.S. Department of the Treasury confirmed that public school students can benefit from the scholarships, and previewed aspects of regulations governing the program the agency intends to propose by the end of September.
“Now that there is that clarity, there’s no reason left why any governor shouldn’t opt into this opportunity immediately,” said Ashling Preston, director of federal affairs for the American Federation for Children, a school choice advocacy group.
But in a Thursday letter calling on Democratic governors not to participate, leaders from 30 state teachers’ unions said: “Voucher schemes undermine the very foundation of public education.
“... Supporters of this proposal point to limited or incidental benefits for some public school students or districts,” the letter reads. “But no temporary benefit is worth legitimizing a policy designed to weaken public education itself.”
The Treasury Department’s information release didn’t yet appear to have shifted many undecided Democratic governors toward decisions late in the week. Seven Democratic governors whose offices responded to inquiries from Education Week said Thursday and Friday their positions hadn’t changed, with some saying they would await official rules from the Trump administration.
Gov. Tina Kotek of Oregon said Friday she would not opt her state in, saying it had become clear that “states like Oregon will not have the flexibility they need to participate in alignment with our values.
“At this point, I simply cannot trust that any education policy coming from Trump’s White House is in the best interest of Oregon’s kids and our public education system,” Kotek said in a statement.
The Trump administration in its preview of program regulations said it wouldn’t allow states to impose rules on SGOS in their states—such as nondiscrimination requirements or mandates that the groups serve only lower-income or public school students—that are more restrictive than what’s in the federal law.
The tax-credit scholarship could change school fundraising drives
Public school administrators ignore conversations about the tax-credit scholarships at their peril, said Roza.
“Years from now, districts will think of their revenues as having four sources: federal, state, local, and our tax-credit money,” she said. “This really could change the financial landscape of school districts.”
Roza hosted a June 2 webinar for public schools about how they could harness funds from the program, and the Edunomics Lab plans to assemble a working group to monitor how the scholarships affect public education.
Public school supporters should start thinking now about how they will secure commitments from parents, community members, and even out-of-state grandparents to give to scholarship-granting organizations, or SGOs, that award money to public school students, Roza said.
The law specifically lists tutoring, before- and after-school programs, uniforms, books, technology, and services for students with disabilities as school-connected expenses the scholarships can cover. The Treasury Department said this week that it plans to issue additional guidance on allowable expenses later this year.
One day, Roza said, the annual student bake sale fundraiser could be replaced with a drive to encourage people to sign up to send funds to an SGO that supports their public school, and employers could let workers easily direct funds from their paycheck withholdings to SGOs supporting local public school students.
This really could change the financial landscape of school districts.
But the notion that public schools can benefit from the tax-credit scholarship program is a Trojan horse meant to make opting in palatable for reluctant governors, private school choice opponents argue. Private schools will see the most benefit, and decreased federal tax coffers will ultimately harm public schools, these opponents argue. (The program could grow to $4.4 billion annually by 2034, according to federal estimates, though others have produced higher estimates.)
“I expect that public school kids are going to get crumbs, and the biggest winners are going to be those that are trying to privatize public education,” said Melinda Person, president of New York State United Teachers, which is affiliated with both the National Education Association and the American Federations of Teachers. “The question isn’t just about this year’s dollars and what we can get for public school kids this year. It’s about whether we’re helping to entrench a policy that we believe is ultimately going to weaken public education.”
Public school districts could charge for ‘add-ons,’ paid for by scholarships
Just what could public schools do to take advantage of the program? Roza envisions three possible scenarios.
The first is relatively financially modest: Private or home-schooled students could use the scholarships to pay public schools for “add-ons,” like participation on sports teams or à la carte courses. In a second scenario, public school students would use the scholarships for programs like after-school tutoring or summer enrichment.
In the third, most ambitious option, districts would bundle a set of “enhanced services” covered by the scholarships, like expanded electives, mental health supports, and out-of-school learning opportunities. Districts would then work with families and a supporting SGO to sign up every eligible student for a scholarship that covers those services.
The size of those scholarships would be determined by how much the associated SGO can raise. The federal law doesn’t specify the size of scholarships, and most students will be eligible—anyone from families earning up to 300% of their area’s median income, which is $510,000 in Westchester County, N.Y., on the high end and about $114,000 in Wolfe County, Ky., on the low end, according to EdChoice, a school choice advocacy organization.
“Frankly, most districts are already doing this, just not charging a fee, right?” Roza said during the June 2 webinar. “You don’t have to legally provide field trips, you don’t have to have a specific set of electives.”
There are limitations, she said. Schools could not require scholarships for special education services, which they are required to provide under federal law. They would also be bound by state laws that govern what materials and services schools can charge for and what additional costs may infringe on a student’s right to a free public education—like charging for textbooks.
Under any of those three scenarios, public school-supporting SGOs could also seek contributions from taxpayers in other states that don’t opt in to the federal program, Roza said. That’s why she’s encouraging conversations now about how those organizations can hit the ground running once the federal regulations are finalized.
“Eyes wide open, people,” she said.
