Potential Loss of Education Funding for States
A recent analysis indicates that states opting out of the Education Freedom Tax Credit (EFTC) may miss out on nearly $23 billion in education funding over the next three years. This finding comes from the America First Institute for Policy Studies.
In an effort to illustrate these possible losses, the organization plans to roll out an interactive tool—a fund loss calculator. This tool aims to provide insights into how much funding nonparticipating states might forfeit related to the federal tax credit program and its associated charitable contributions.
According to projections, 23 states could collectively lose close to $23 billion between 2027 and 2029, which would affect over 4.1 million students who may lose scholarship opportunities.
Erica Donald, AFPI Educational Opportunity Chair, emphasized the importance of this information, stating, “We wanted governors, and especially the residents of their states, to understand what they’re missing if they do not participate in this federal tax credit scholarship program.” She noted that the program provides families with a variety of resources, such as funds for private school tuition, homeschooling costs, tutoring, and special needs services. Importantly, the funding for these programs comes from private donations, not from state budgets.
So far, 28 governors have engaged with the program.
Scandal in LA United School District
Meanwhile, a recent scandal involving the LA United School District has led to charges linked to the misappropriation of $22 million in student funds.
Under the existing policy, taxpayers can access a federal tax credit of up to $1,700 for every dollar donated to scholarship grant organizations designed to cover K-12 expenses. However, only students from states that participate in the program can benefit. Consequently, taxpayers in nonparticipating states can still claim credits, but their donations will support organizations in other states, which effectively diverts education funding away from their localities.
The new calculator will allow users to explore various participation rates and examine expected losses on a state-by-state basis. Advocates believe this tool serves to highlight the implications for governors when deciding on participation in the program.
“All parents should have the right to make educational choices for their children,” Donald remarked, pointing out the increasing demand for school choice options across the country. “In Texas, there were 250,000 applicants for a program that could only accept about 80,000 students within a month. Similarly, Tennessee saw over 50,000 applicants for a program that could accommodate just 20,000. There shouldn’t be waiting lists when it comes to educational freedom,” she concluded.
