Public Schools Eye Trump-Backed Voucher Program for Funding

The President Trump-backed tax overhaul has created a new national school voucher-style program that allows public schools to benefit as well.

President Donald Trump's One Big Beautiful Bill Act created the first national school voucher-style program to help families pay for private schools or homeschool costs.

When President Trump's tax overhaul known as the One Big Beautiful Bill Act last year created the first national school voucher-style program to help families pay for private schools or homeschool costs, it also allowed public schools to benefit as well.

According to U.S. Treasury guidelines, the program allows specific nonprofits to collect donations that people direct from their federal taxes for a vast array of public school costs, such as transportation or tutoring.

Public Schools to Benefit from Tax Credits

Taxpayers can contribute up to $1,700 to what's known as a scholarship-granting organization and receive a credit on their federal income taxes.

It's a dollar-for-dollar credit, meaning every pledged dollar reduces what an individual owes to the Internal Revenue Service by the same amount.

These new intermediaries could be formed by an array of nonprofits, including public school foundations, with approval from their state.

The scholarship-granting organization would then pass on the money to benefit private school and home school applicants in the form of scholarships - or to school districts so they could cover certain services for student applicants.

States Must Opt In

States must opt into the program, and so far, 30 states have done so.

Now it's up to individual school district leaders in those states to decide if they want to try to tap into the money.

Potential Drawbacks

School finance experts suggest the scholarships could help districts access funding comparable to 3 percent of their entire budget.

But tapping into this unexpected revenue risks political backlash and logistical headaches.

Governors and superintendents may face fierce resistance from teachers unions, which in many states have portrayed the new program as a Trojan horse for the expansion of vouchers in education because it allows money to funnel to families to pay for private school.

Some opponents also raise concerns about creating a new funding system that could favor school districts with a ready pool of wealthy donors over those in low-income communities where few residents may owe enough in federal taxes to contribute to the scholarships.

Districts Weigh the Benefits

The inclusion of public schools now places some governors, superintendents and school boards in a new dilemma: Do they choose to tap into a Trump-backed program that could boost their bottom line, or leave the tax-credit cash on the table for others to claim?

The reality is this program exists, and if there are dollars on the table that can go to our children and families, I don't understand the purpose of not trying to do everything we possibly can, said Justin Dayhoff, chief financial officer for Nevada's Clark County School District.

His district, like many around the country, is strapped for cash as health insurance and other costs increase and fewer students enroll in public school due to population decline.

Operational Hurdles

Under the new law, at least 90 percent of all donations to scholarship-granting organizations like the Denver Public Schools Foundation must go directly to student scholarships, leaving relatively little to cover marketing, staff, annual independent audits and payment processing.

Fees already take 4 percent of each credit card transaction, said Sara Hazel, president of the Denver Public Schools Foundation.

Yet even as she awaits further clarity from Treasury on how organizations can collect donations, she's imagining what the money could mean for Denver schools.

My dream is I can give every second grader a tutor and we get everyone to grade-level reading and math, Hazel said.

Her organization hasn't officially approached any of its corporate partners yet about enrolling their employees in the tax credit program.

Past donors to the foundation have included Chevron, the Colorado Rockies and United Airlines.

But Hazel's already thinking about whether Denver Public Schools will have to compete with other Colorado districts attempting to woo the same business leaders.

We're the largest school district in Colorado, so we already have an advantage, Hazel said.

But how can we go to a company and say, Your employees must choose between all these great school districts?