Despite being pigeonholed as a “voucher” or a “diversion” of funds from public schools, the recently passed federal tax-credit scholarship provision created under the Educational Choice for Children Act (ECCA) operates completely different than a voucher program and not only costs Minnesota zero education dollars but will benefit public school students, too.
Funded by charitable donations to qualified non-profits called scholarship granting organizations (SGOs), the scholarships can be used by eligible students toward a variety of eligible expenses under the existing federal Coverdell Education Savings Accounts.
Notably, public school students can use the scholarships toward supplemental learning expenses — tutoring, test preparation fees, AP, SAT, ACT exam fees, and services for students with disabilities, to name a few.
But states do have to opt in for eligible students to benefit.
A recent Star Tribune opinion piece by one of the newspaper’s interns “urged” Gov. Tim Walz to not opt in, stating the provision does nothing more than “divert much-needed funding for K-12 public education and equip for-profit education institutions with ample resources that only those who can pay the tuition can use.”
First, there is no “diversion” of public school funding because the federal tax credit does not take any state, local, or federal dollars from Minnesota’s public school budgets.
Ricky Austin with the Aim Higher Foundation also responded to this claim in his Strib counterpoint, reminding readers that “Minnesota’s public schools will continue to be funded at the levels set by Minnesota’s Legislature” and “to say otherwise mischaracterizes the opportunity that ECCA scholarships create to support Minnesota’s students directly.” Austin continues: “The donations, scholarships, and administration are all funded privately through the federal tax incentive.”
During the 2023 legislative session, the per-pupil funding formula was set to now increase automatically at the rate of the Consumer Price Index within a band not less than two percent or greater than three percent per year beginning in 2026. Is Minnesota K-12 public education in a state of “much-needed funding,” as is claimed? Education is the state’s largest general fund expenditure. Over the past 20 years (FY 2004-FY 2024), combined education revenue has increased 93 percent, exceeding inflation 27 percent over that time period. But again, no public education money is involved by opting Minnesota in.
Second, as noted above, the scholarships can be used toward a variety of educational expenses, not just tuition. And third, they are scholarships — they help remove financial barriers so that not only those with ample resources can access the educational learning environment and resources that will best set their student up for success.
If Minnesota does not opt in, the state’s students will pay the price, as they will be ineligible to receive the scholarships, but Minnesota taxpayers “will still be able to take advantage of the federal tax credit,” points out Austin. “Their donations will still support scholarships — but those scholarships will go to students in states that choose to participate.”
