As Governor Pritzker weighs the question of joining the federal school voucher program, Illinois Families for Public Schools encourages him to take a hard pass.
We’ve already seen what a voucher program looks like in Illinois, and it wasn’t good. We just ended a state-run voucher program in 2024. It sent millions of dollars to private schools, with virtually no oversight or accountability. That money funded discrimination and hurt education equity. IL-FPS documented the myraid of issues with Illinois’ program extensively.
Like Illinois’s now defunct voucher program, the new federal voucher program will also be structured as a tax credit scholarship program. That means that taxpayers make contributions to so-called “scholarship granting organizations” (SGOs) in exchange for a one-to-one credit on their federal income tax bill. SGOs are middleman/pass-through 501c3 orgs that take taxpayer contributions and pay them out as vouchers to cover private school tuition, while pocketing a generous 10% administrative fee.
This complex legal structure is a way to circumvent the Establishment Clause of the 1st Amendment, since the majority of private schools are religious. It also disguises what is actually an education policy as tax policy. And, since the new voucher law is part of the tax code, the US Department of Treasury and the IRS are writing the regulations to implement it. They recently issued a Request For Comment as they start writing guidance and regulations.
Disturbingly, based on what they’ve said so far, it looks like states are likely to have almost no say in overseeing the SGOs in their state:
| “But on one of the key questions — can governors put restrictions on scholarship-granting organizations, such as requiring that they serve only low-income families or prohibiting them from discriminating against LGBTQ students? — the answer may already be no. The request for comment indicates that Treasury expects to require participating states to include all organizations that meet the bare-bones statutory requirements, such as being a federally recognized nonprofit and serving more than 10 students who don’t all attend the same school. ‘It’s really a take it or leave it scheme,’ said Rachel Canter, director of education policy for the Progressive Policy Institute, a think tank.” Will federal tax-credit scholarships help public school students? – Chalkbeat |
If Illinois were to opt in the federal program, we could end up with billion-dollar, out-of-state voucher orgs, like Florida’s scandal-plagued Step Up For Students, running programs here in Illinois. Note that SGOs will be able to use 10% of the funds they process for operating costs, and, since this program could be worth $12 billion, or far more, this is a lucrative opportunity for large, established voucher SGOs.
SGOs will be able to distribute funds not only for private school tuition and fees, but for any “qualified education expenses.” Technically, this could mean vouchers could be issued to cover costs that public school families incur—like afterschool programs or tutoring. However, the majority of dollars will almost certainly flow through SGOs set up to fund private school expenses, especially if, under the regulations, states have no flexibility to set parameters on SGOs operating in their state.
Furthermore, the public school communities most likely to benefit from this tax gimmickry are the ones with the resources to set up a SGO and solicit contributions from wealthy taxpayers, in other words well-resourced school districts that don’t need additional funds in any case.