Lawmakers in Illinois have finally come to a bipartisan agreement in concept on education, and it includes a new scholarship tax-credit (STC) program, according to reports. The full details are still coming out, with big implications for Chicago Public Schools, but action is expected in the Illinois House over the next week.
Early reports suggest that Illinois will provide $75 million in partial tax credits (at a rate of 75 cents on the dollar) for private-school scholarships. This means that a total of $100 million will likely be available for students who seek to attend private schools, finally empowering their families with choice.
Like vouchers, STCs help parents to send their children to better schools of their choice, and to hold their schools accountable. However, there are some important differences. As the Cato Institute explains, “An STC grants a full or partial tax credit to individual and/or corporate taxpayers in return for contributions to non-profit scholarship organizations.” These scholarship-granting organizations then help families to afford schools of their choice.
“If signed into law, Illinois will become the 18th state to offer tax-credit scholarships to expand educational opportunities for families in need,” says Jason Bedrick, the director of policy for EdChoice. “These scholarship programs help more than 250,000 students nationwide attend the schools that work best for them.”
Some conservatives may worry that this program is fiscally irresponsible for the state of Illinois, already submerged in a budget crisis. However, STCs have been shown to reduce expenditures by more than they reduce revenues, actually generating net savings for state governments.
Perhaps most importantly, while vouchers and tax credits are both legal under the U.S. Constitution, STCs can circumvent the notorious Blaine Amendments to many state constitutions. For now, Blaine Amendments prevent states such as Illinois from sending public money to private religious schools. This is a major roadblock for voucher programs, which provide state funds to parents for use at a wide range of schools. However, tax-credit programs have maintained a perfect constitutional record in states’ high courts, because “no money ever enters the state’s control as a result of this tax credit,” as the Arizona Supreme Court put it. Rather, the money used for scholarships remains “private money” all the way through, as the tax credits take the form of non-collection of taxes, rather than direct provision of government funds.
STC programs also tend to be less heavily regulated than voucher programs, keeping schools free of the burden of government interference in areas like testing, religion, price controls, and accreditation. Finally, tax credits do not force taxpayers to fund a school whose values they find abhorrent, as is possible with a conventional voucher. Nobody has to donate to a scholarship program, and donors can pick between scholarships that only go toward Catholic, Montessori, or any other type of school.
This is a win for conservatives, but the Illinois Republicans did not get everything they wanted. Initially, Republicans sought $100 million in full tax credits, but seem to have compromised for $75 million at a 75 percent rate. Moreover, the program will apparently include a “sunset clause” that causes it to expire after five years. In practice, however, I suspect the program will be extended. As conservatives know, once the government starts doing something, it is difficult to get it to stop.
Look for more details to emerge as early as Sunday. Though Republicans and Democrats seem to have come to an agreement, the familiar battle lines are still drawn: The Catholic archdiocese is supporting school choice, while the teachers’ unions are bitterly opposed. But for now, conservatives can claim victory: Democratic leaders have agreed to a new school-choice program.