Seven Reasons to Support Scholarship Tax Credit Programs

Since Arizona created it first scholarship tax credit program in 1997, states across the country have followed suit, enacting private school choice programs that let individuals and corporations donate money to nonprofit organizations that provide scholarships for students to attend the public or private school of their parents’ choice.  Today, there are 12 scholarship tax credit programs in 10 states. Already this year, Virginia and Louisiana having enacted programs and Florida and Arizona have expanded existing programs.  And more states are considering creating scholarship tax credit programs, including New Jersey, North Carolina, South Carolina, and New Hampshire.

Despite recent attacks on scholarship tax credit programs—and letters to the editor correcting these fallacies, support for scholarship tax credit programs (from both Democrats and Republicans) is stronger than ever.  Keep reading to see seven reasons why these programs are so important to the families enrolled in them.

Scholarship Tax Credit Programs…

...Serve the Children Most in Need

Scholarship tax credit programs help students from low-income families that could not otherwise attend a school outside of their assigned public school.  Of the 12 publicly-funded private school choice programs, nine are means-tested and one is tailored for students with special needs.  In fact, a June 2010 Pennsylvania General Assembly report shows that the state’s Educational Improvement Tax Credit—the nation’s largest scholarship tax credit program—serves the educational needs of predominately low-income families.  The average income per family participating in the scholarship program is $29,000, which is 48 percent of the maximum allowed for a family with one child in the scholarship program.

...Have Been Upheld by the U.S. Supreme Court

In 2011, the highest court upheld the constitutionality of scholarship tax credit programs.  In Arizona Christian School Tuition Organization v. Winn, the Supreme Court held that scholarship tax credit programs do not violate the separation of church and state.  Writing for the majority, Justice Kennedy wrote that “contributions result from the decisions of private tax payers regarding their own funds.” 

...Boost Academic Achievement

The highly-successful Florida Tax Credit Scholarship is providing dramatic educational benefits to children who encountered significant problems in public schools. A recent study found that students receiving scholarships performed just as well—if not better—than students nationally.

“The typical student participating in the program tended to maintain his or her relative position in comparison with others nationwide. It is important to note that these national comparisons pertain to all students nationally, and not just low-income students,” the study’s author, David Figlio, said. Per-pupil spending on the scholarship program is about one third of per-student spending in traditional public schools. (Northwestern University, 2009-2010)

...Include High Accountability Standards

The Alliance for School Choice measures the financial, administrative, and academic accountability measures of scholarship tax credit programs, including participating schools and scholarship organizations.

Click here to see a comparison of accountability measures for each program.

..Improve Public Schools

The idea of a dose of healthy competition is good for all schools is true when it comes to scholarship tax credit programs.  A study conducted by professors David Figlio and Cassandra Hart found that the passage of the Florida Tax Credit Scholarship program in 2001 led to standardized test score gains in the public schools most likely to lose students to private schools. (Northwestern University, 2009)

...Are Operated by Non-Profit Organizations

Scholarships tax credit programs provide state tax credits to businesses and individuals who donate money to scholarship organizations.  These organizations are nonprofit, tax-exempt entities that enable students to attend the school of their parents’ choice.  The scholarships do not originate from state appropriations, but from charitable donations made under the provisions of the tax code.  Therefore, they are not funded by public agencies.

...Save Taxpayers Money

Scholarship Tax Credit Programs can produce fiscal savings in three ways: by restricting the type of students who are eligible; restricting the size of the scholarship; and restricting the size of the tax credit. It is not necessary to use all three methods in order to produce a fiscal savings.  And in the Florida program, a legislatively required fiscal analysis by the non-partisan Office of Program Policy Analysis & Government Accountability estimated that the scholarship program saved $36.2 million for fiscal year 2008-09.

- American Federation for Children | Alliance for School Choice, MSG