President Donald Trump's tax overhaul created the first national school-voucher-style tax credit program, and while it was built to funnel money toward private schools and home-schooling, it also opened a narrow door for public school districts to claim a share.
Cash-strapped superintendents across the country now face an uncomfortable choice – tap into a Trump-backed program critics call a Trojan horse for school choice, or leave millions of potential dollars on the table, reported the Washington Post.
Under the program established in the One Big Beautiful Bill, taxpayers can contribute up to $1,700 to a scholarship-granting organization and receive a dollar-for-dollar federal tax credit.
Those organizations, which can include public-school foundations, then distribute the money as scholarships for private and home-school students, or pass funds to districts to cover costs like tutoring and transportation. Thirty states have opted in so far, and the program takes effect next year.
For districts that have spent years closing schools and laying off staff amid enrollment declines, the appeal is obvious.
Justin Dayhoff, chief financial officer for Nevada's Clark County School District, which has lost more than 35,000 students since before the pandemic, said he sees no reason to pass up available money for children.
School finance expert Marguerite Roza estimates the scholarships could be worth roughly 3 percent of a district's total budget, potentially generating around $200 per student just by enrolling district employees.
But teachers unions and school-choice opponents warn the public-school carve-out was designed less to help districts than to make the broader voucher expansion politically palatable, particularly in Democratic-leaning states.
Thomas Toch of Georgetown's FutureEd think tank said the inclusion of public schools "was designed to make the case that this program can support the public sector in order to win support in blue states."
Critics also warn the funding structure favors wealthier districts with donors who owe enough in federal taxes to give, potentially widening gaps for low-income communities.
“In low-income areas, you’re going to find it’s not easy for school districts to raise this money,” Toch said.
At least 90 percent of donations must go directly to scholarships, leaving little room to cover marketing, staffing, audits and payment-processing fees, which already eat up 4 percent of every credit card transaction.
Districts that opt in must also compete with neighboring districts, and even with private-school programs, for the same pool of corporate and individual donors.
For officials like Sara Hazel of the Denver Public Schools Foundation, the trade-off feels worth navigating. But for critics, the program's design forces public schools to legitimize a voucher system by participating in it.