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Tuesday, April 30, 2024

Midwest states expand school choice while Illinois fights to save scholarships for low-income students

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Illinois Policy Institute

Illinois’ only school choice scholarship program is set to expire at the end of 2023. But across the Midwest, states are establishing and expanding school choice programs.

Since Illinois enacted the Invest in Kids Tax Credit Scholarship Program in 2017, five other Midwest states have enacted school choice programs. In the last year, two Midwest states – Indiana and Ohio – expanded their existing school choice programs to include nearly universal eligibility statewide.

Now it’s Illinois lawmakers’ turn to save scholarships for the low-income students and families relying on the funds to attend schools that best fit their needs. More than 9,600 students received scholarships in Illinois last school year. Thousands more are in line for scholarships and waiting on lawmakers to extend the program this fall. If the program expires, those students will be left without options.

“If Invest in Kids sunsets, we would probably move out of state,” said Gail Clark, whose son is a recipient of an Invest in Kids scholarship. “The scholarship is the only thing that has kept us here for the last six years.”

Types of school choice programs in the Midwest

Nine of the 12 Midwestern states have private school choice scholarship or voucher programs in state law. Those programs include tax-credit scholarships programs such as that in Illinois, school voucher programs, education savings accounts and tax-credit funded education savings accounts.

Tax-credit scholarships are funded by taxpayers who receive full or partial tax credits, depending on each state’s requirements, when they donate to nonprofit organizations that grant private school scholarships to eligible students. Seven states in the Midwest have tax-credit scholarship programs: Illinois, Indiana, Iowa, Kansas, Nebraska, Ohio and South Dakota.

School vouchers allow funds typically spent by a school district to be allocated to an eligible family in the form of a voucher to pay full or partial tuition for private schooling. Three states administer 10 different school voucher programs in the Midwest: Indiana, Ohio and Wisconsin.

Education savings accounts give eligible parents a deposit of public funds into government-authorized savings accounts whose funds can cover a multitude of expenses, including private school tuition, online learning programs, private tutoring and other approved learning expenses. Only two Midwest states – Indiana and Iowa – have ESAs, both of which were enacted in the last two years and include nearly universal eligibility.

Tax-credit ESAs are similar to traditional ESAs, but they rely on taxpayers to donate to nonprofits that fund and manage parent-directed education savings accounts and receive tax-credits in return. Missouri is the only Midwest state with a tax-credit ESA program.

Midwest states with school choice scholarship or voucher programs

Illinois: The Invest in Kids Tax Credit Scholarship Program, enacted in 2017 and serves over 9,600 students with income restrictions. The average scholarship value was $8,340 in 2021-2022. It expires at the end of 2023.

Indiana: A school voucher, an education savings account and a tax-credit scholarship. Nearly 59,000 students statewide were awarded vouchers or tax-credit scholarships in 2021-2022. Indiana expanded its school voucher program in 2023 to make income eligibility nearly universal, with 98% of families statewide income eligible for the voucher and tax-credit scholarship programs.

Iowa: A tax-credit scholarship and an ESA. Over 12,600 students were awarded tax-credit scholarships in 2021-2022 according to the program’s income restrictions. Iowa’s ESA program is set to launch fall 2023 after being enacted earlier this year. The ESA program will phase out its income restrictions to make all students statewide eligible by the 2025-2026 school year.

Kansas: The Tax Credit for Low-Income Students Scholarship Program, which was enacted in 2014 and served 1,340 students in 2022-2023 with an average scholarship value of $3,199. The program has among the most restrictive income requirements in the nation with less than one-quarter of families income-eligible statewide.

Missouri: The Missouri Empowerment Scholarship Accounts Program, a tax-credit ESA, which was enacted in 2021 and served 970 students in 2022-2023. It has limited eligibility based on students’ special needs, family income and geographic location.

Nebraska: The Opportunity Scholarships Act, a tax-credit scholarship, which was enacted earlier this year and is set to launch in 2024. Most students are eligible statewide, and scholarships are awarded according to a tiered priority system favoring previous year recipients and siblings of scholarship recipients then families with lower household incomes.

Ohio: Five school voucher programs and one a tax-credit scholarship. Over 77,000 students participated in the five school voucher programs in 2021-2022. Ohio’s tax-credit scholarship is yet to launch after expanding to allow 100% of students to be eligible statewide. The other five programs include restrictions or prioritizations-based family income or student special needs.

South Dakota: The Partners in Education Tax Credit Program was enacted in 2016 and served 1,288 students in 2021-2022 with an average scholarship value of $1,729. About four in 10 students are eligible for a scholarship based on income restrictions.

Wisconsin: Four school voucher programs. Wisconsin’s first school choice program, the Milwaukee Parental Choice Program, is considered the nation’s first modern private school choice program after its launch in 1990. Over 52,000 students were served in fall 2022 by Wisconsin’s four school voucher programs. Three of the programs include income restrictions while the Special Needs Scholarship Program is limited to students receiving Individualized Education Plans (IEPs).

Lawmakers should save Illinois’ only private school choice program

The Invest in Kids Scholarship Tax Credit Program will expire at the end of 2023 unless lawmakers take action during the fall veto session. If lawmakers let it die, more than 9,600 students attending private schools on scholarships will lose their funding.

Support for school choice is on the rise in Illinois, with 64% of Illinoisans supporting it, up from 62% in April. And 63% support the Invest in Kids tax credit scholarship program, with bipartisan appeal.

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