The new federal tax-credit could bring billions of dollars into education. States that opt out aren’t stopping that money — they are just sending it somewhere else.
The structure of the program is straightforward. Taxpayers receive a credit for donating to nonprofit scholarship organizations. Those organizations then fund scholarships that help students in public, private, and home schools pay for services such as tutoring, special education therapies, test prep, exam fees, or tuition, to name a few. The caveat is that states have to opt in. If they don’t, those donations will flow to states that do participate. Taxpayers still get the credit, but the benefits land elsewhere.
Opponents are framing the program as a “voucher” or a “diversion” of funds away from public schools. But that framing doesn’t hold up.
The program is funded through voluntary, private contributions incentivized through the tax code, not direct appropriations pulled from a state education budget. And the scholarships aren’t limited to private school students; public school students are eligible as well. In fact, the scholarships are meant to “serve students across multiple schools and communities, ensuring that the program expands access rather than concentrating it,” writes Jeanne Allen with the Center for Education Reform. (Federal rulemaking is now focused on making that design work in practice.)
Opting out, then, doesn’t “protect” public schools. It simply leaves money on the table that could support students. And the amounts are significant.
According to a new dashboard published by the America First Policy Institute, even modest participation by Minnesota taxpayers could send hundreds of millions of dollars out of the state over the next few years if the state doesn’t opt in.
For example, if just 10 percent of Minnesota single filers earning $75,000+ donate the maximum creditable amount ($1,700) from 2027-2029, over $463 million could flow out of Minnesota instead of supporting students here. If participation ticks up slightly over time, say 12 percent in 2028 and 14 percent in 2029, now we are looking at roughly $500 million over a three-year time period.
For a state that routinely argues it needs more education funding, saying “no” to this opportunity is an odd place to draw the line.
More than two dozen governors, including Colorado’s Democratic Gov. Jared Polis, have already opted in. They recognize this as a way to expand access to educational services without increasing state spending.
| Participating States Alabama Alaska Arkansas Colorado Florida Georgia Idaho Indiana Iowa Louisiana Mississippi Missouri Montana Nebraska |
Nevada New Hampshire North Dakota Ohio Oklahoma South Carolina South Dakota Tennessee Texas Utah Virginia West Virginia Wyoming |
A Bloomberg editorial in the Pioneer Press criticized Democratic governors who are “playing politics with scholarships” by letting special interests (namely teachers’ unions) impact their decisions to opt out.
Union leaders argue that the tax credit will drain money from public schools, but in fact it doesn’t touch state budgets. It only adds money to the overall education system. If anything, per-pupil public education spending may increase, because states are often slow to reduce school budgets, even when head count falls.
In addition, the credit will likely increase the money that flows to local districts, which can establish scholarship funds to pay for extra tutoring, books, supplies, transportation, technology or other needs. Public schools, not just private ones, will benefit financially.
At its core, union opposition isn’t really about funding. It’s about accountability, “which the unions routinely block,” continue the authors.
The solution to failing public schools shouldn’t be preventing students from attending high-quality alternatives. It should be overriding the unions’ objections to basic standards, including ending social promotion, intervening in poorly performing schools, rewarding great teachers, and making it possible to remove teachers and principals who aren’t making the grade. Until more elected officials embrace such reforms, demand for private, charter and other alternative schools will continue to rise.
And families want options. Polling shows strong support for state participation, especially among parents of school-age children.
Gov. Tim Walz’s current refusal to opt Minnesota into this new federal education initiative won’t stop Minnesotans from claiming the credit. It will just make sure the benefits go to students in other states.
“Governors are responsible for all children in their states — not just those aligned with a particular political coalition,” writes Allen. “Refusing to opt in for political reasons, while taxpayers in your own state can still send resources elsewhere, is not a strategy. It’s folly.”
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Let Gov. Walz know you support Minnesota opting in to the new education tax-credit program. And join us for a rally near the Capitol on April 14 to let state leaders know there is broad support for school choice policy.
