CHALKBEAT: Treasury Department preview of tax credit scholarship rules suggests limited role for states

CHALKBEAT: Treasury Department preview of tax credit scholarship rules suggests limited role for states

 
 

By Erica Meltzer, Chalkbeat Colorado

States most likely will not be able to place additional requirements or guardrails on scholarship groups funded through the new federal tax credit, according to a preview of the rules provided by the U.S. Treasury Department this week.

This position contradicts comments Education Secretary Linda McMahon made to Congress last month and at a Michigan school choice event in March in which she said states would be able to shape their own programs.

The U.S. Department of Education has declined to clarify those remarks, but it is ultimately the Treasury Department that will set the rules for the program.

And in remarks made Tuesday at a closed-door meeting and later released by the Treasury Department, Deputy Assistant Secretary for Tax Policy Kevin Salinger said that states may not impose “substantive” rules on scholarship groups that are more restrictive than federal law.

That’s welcome news for school choice groups who want more flexibility and limited rules for scholarship groups.

It may present a dilemma for Democratic governors who have said they are waiting to see these rules before deciding whether to opt in.

One of the key questions for this group has been whether they’ll be able to shape the program by putting additional rules on scholarship groups, requiring, for example, that they serve low-income families and students with disabilities or meet certain academic standards. Some Democrats have indicated they want the money only to go to public schools.

“I am never going to leave money on the table when it comes to supporting our kids in public schools,” Maryland Gov. Wes Moore said last week at the Education Writers Association conference in Baltimore when asked about the tax credit. But Moore said he was waiting on the regulations to decide whether to participate. “I do not believe that we should be taking public dollars and putting them towards private education.”

Salinger’s remarks indicate states will not be able to shape the program as they see fit, contradicting the administration’s promise to “return education to the states.”

Set to launch in 2027, the federal tax credit scholarship allows individuals to donate up to $1,700 to eligible nonprofits and get fully reimbursed through a federal income tax credit. The scholarship groups can provide vouchers to families earning up to 300% of the area median income to spend on educational expenses. Those expenses could be private school tuition, tutoring for a public school student, or specialized equipment or therapies.

Governors can decide whether their states participate, and those who do must submit lists of eligible scholarship organizations each year. Federal law imposes only minimal requirements, for example that scholarship groups operate as federally recognized nonprofits and provide money to students who attend more than one school.

The closed-door event at which Salinger spoke included a panel on ways public school students could also benefit.

Speaking at a separate Chalkbeat Ideas event Thursday, Rhode Island Education Commissioner Angélica Infante-Green said Democratic states should be open to possibilities, such as scholarships funding afterschool tutoring through approved vendors.

“This is not money that we would have,” she said. “This is money that, instead of going to the federal government, could come to our state.”

Another question has been whether homeschool families can benefit. That’s likely to be determined by whether state law considers a home school to be a school in a legal sense.

Sailnger laid out other aspects of the rules that school choice groups have been watching carefully, clarifying that they can operate in multiple states and that caps on administrative costs won’t apply to their entire budgets, only to money they raise for scholarships.

The rules will be finalized by the end of September, Salinger said.

Large national scholarship groups hoped for this flexibility so they can expand and serve more families.

“We have gotten our clearest signs from Treasury yet that this tax credit is going to benefit all students across all sectors,” said Ashling Preston, director of federal affairs for the American Federation for Children. “Every governor has the information they need to opt in right now. There are hundreds of millions or even billions of dollars at stake in every state.”

But Augustus Mays, vice president for partnerships and engagement at the progressive advocacy group EdTrust, said the preview of the rules only reinforces his belief that Democratic governors should opt out.

“If you’re a governor and you think you’ll be able to have the authority to shape this program to align to your public school priorities,” he said, “the answer is no, you’re not going to have that authority.”

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Chalkbeat is a nonprofit news organization covering public education, https://www.chalkbeat.org/2026/06/11/treasury-previews-tax-credit-scholarship-rules-that-shape-school-choice/

CURRENT: Accountability grades return for Indiana schools

CURRENT: Accountability grades return for Indiana schools

School districts in Indiana will receive an accountability grade as the Indiana State Board of Education approved a new system to evaluate schools earlier this year.

It marks the return of the A-F grade system that was paused five years ago. The new system focuses on student achievement metrics, like earning high school credits, taking dual credit and AP classes, performing well on ILEARN and meeting an attendance goal.

Greg McDaniel, coordinator of school services at Zionsville Community Schools, said the new grading system is meant to consider more factors than only a standardized test.

“This was designed to hold schools accountable for serving every single child, and that’s a wonderful thing,” he said. “We might not agree how they got there, but it’s a great thing and thought process.”

Schools will receive their first grades in the fall, based on this school year. Grades will be assigned to each district’s third grade, 10th and 12th grade, fourth through eighth grade, each school building and an overall district grade.

The first round of grades is for baseline purposes. There will be no consequences to this year’s grades. It is also unclear what consequences will be for low performing schools. It’s one of many details schools are still waiting on. ZCS Superintendent Rebecca Coffman said more guidance is expected from the Indiana Department of Education later this year.

Each student will receive a score based on a combination of metrics deemed academic mastery and additional knowledge. The scores will be used to determine letter grades for schools.

Metrics differ for what group of students are evaluated. For example, for 10th graders, credits earned as a freshman and earlier factor into the letter grade as does credits for specific subject areas like English and math, and taking dual credit, career and technical and AP courses.

“The whole idea behind school accountability was to push kids learning down further to open up opportunities at the top end, specifically work based learning, among other things,” McDaniel said in a presentation to the school board April 13.

College readiness factors, such as SAT performance, is a focus for evaluating a school’s 12th grade.

“We are going to be a school that gets advantaged by this,” McDaniel said. “This is going to help us.”

More than 90% of Zionsville Community High School students go to college.

The new grading system considers a high school student who earns a diploma seal to be at expectations. Above expectations, which would be scored higher, would require a student to earn a plus seal. A plus seal is more demanding, including several, sometimes more than 100, hours of work-based learning.

“That is going to be a challenge for high schools across the state,” McDaniel said. “It just will because there is a lot you have to do to get into that plus category.”

The seals are part of the state’s new graduation requirements that replace the old Core 40 and academic honors diplomas. The new requirements apply to the class of 2029.

The accountability model also weighs a student earning an academic honors diploma (the old diploma model applies to students who will graduate before 2029) as meeting expectations.

“They are setting up a system that says if you get an academic honors diploma you are, at best, a B student,” McDaniel said. “That’s pretty rigorous. That’s something that has made us uncomfortable.”

Accountability grades for fourth through eighth grades will be tied to ILEARN scores, demonstrating growth and soft skills. McDaniel said the state is developing an employability, soft skill test for these grades.

School board vice president Michael Berg said the accountability grade system will be biased toward communities like Zionsville, where parents have the time and means to invest in their children. He argued the system will create an environment that is critical of public education and places unachievable goals on certain districts.

“Just something I think that we need to be paying attention to as we look at the shifting landscape of public education,” he said.

 

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WTHR: Indiana nonprofit launches campaign to educate parents on school vouchers

WTHR: Indiana nonprofit launches campaign to educate parents on school vouchers

The window for parents to apply for Indiana's Choice Scholarship Voucher Program opened this week.

The program gives Hoosier parents money from the state to send their kids to any school they want.

A local organization is launching a program to connect more families with those vouchers and schools with open spots.

The Institute for Quality Education, a nonprofit K-12 policy organization, would like to see more Hoosier parents take advantage of school vouchers, since the Indiana General Assembly moved to universally fund them starting in the 2026-2027 school year.

This week, the institute launched the "Find Your Fit" enrollment campaign to educate families about vouchers and their educational options for their kids.

"It's really to try and marry parents and families who are looking for a better educational fit, defined by however that might be for them, right?" said Betsy Wiley, with The Institute for Quality Education.

Right now, according to Wiley, there are 9,000 open seats at non-public or private schools across the state.

Still, Wiley said the institute's research shows that six out of 10 Hoosier parents still don't know they have access to state funding to send their child to whichever school they think is the best.

Wiley is hoping the Find Your Fit campaign, which is partnering with 75 schools, can change that.

"What we're really doing with the Find Your Fit campaign is trying to make sure that families and students that are looking for a different or better educational opportunity are being introduced to schools that want to serve them and really trying to be that facilitator to make sure that they are finding their fit," Wiley said.

Not all policymakers are fans of the expansion of universal school choice in Indiana.  Democratic lawmakers have repeatedly expressed concern that the expansion of the state's voucher program comes at the expense of public school funding.

The Indiana Coalition for Public Education shares that position.

"For every child that uses a voucher to attend a private school, whether they've ever attended a public school or not, means fewer dollars left for the public schools that they would otherwise be served in," said Joel Hand, with the Indiana Coalition for Public Education.

Supporters of the voucher program, including Republican lawmakers have said that state dollars follow the student to fund students' education, not systems.

Hamilton County Reporter: Gov. Braun opts in to new federal tax credit for school choice scholarships

Hamilton County Reporter: Gov. Braun opts in to new federal tax credit for school choice scholarships

Indiana Governor Mike Braun announced last Thursday, Jan. 22 that Indiana is opting into a new initiative, which will allow Hoosiers to collect federal tax savings for investments made in K-12 scholarships.

The new federal tax credit, established under President Trump’s One Big Beautiful Bill, applies to charitable contributions made to Scholarship Granting Organizations (SGOs) that serve eligible K-12 students.

“Parents are in charge of their children’s education,” Gov. Braun said. “As a state, we are prioritizing that through universal school choice and a state tax credit for donations made to scholarship granting organizations, which helps make a high-quality education accessible and affordable for every Hoosier family. Under President Trump’s leadership, we welcome this increased focus on school choice at the federal level and are ready to leverage this additional, federal tax credit to expand opportunities for students and families across our state.”

Governor Braun visited Saint Philip Neri Catholic School to mark the occasion of opting into the new federal tax credit that will help parents remain in the driver’s seat of their children’s education. Gov. Braun spoke with teachers, and students showed him some of their most recent projects.

Families can access scholarships through eligible SGOs to support qualified educational expenses, including costs incurred for children at public and private schools, such as tuition, fees, tutoring, educational therapies, transportation, technology, etc.

Beginning Jan. 1, 2027, individuals will be eligible for a nonrefundable federal tax credit of up to $1,700 for contributions to participating SGOs. Any unused credit may be carried forward for up to five years. The below Indiana-based SGOs have already indicated they plan to participate in the new federal tax credit program in 2027; others may continue to be added:

  • Institute for Quality Education, Inc.
  • Sagamore Institute Scholarship for Education Choice
  • The Lutheran Scholarship Granting Organization of Indiana, Inc.
  • School Scholarship Granting Organization of Northeast Indiana, Inc.
  • Legacy Foundation


“Every child is unique, and Indiana is home to a variety of high-quality educational options to meet those needs, regardless of a family’s income or ZIP code,” Indiana Secretary of Education Dr. Katie Jenner said. “This new federal tax credit will continue to drive investments in scholarships, ensuring high-quality educational opportunities are within reach for every learner, in an environment that helps them reach their greatest potential.”

The State of Indiana also offers a 50 percent tax credit for donors to qualified Indiana SGOs. There are no limits to the amount a donor can contribute to a qualified Indiana SGO.

Capitol Chronicle: Indiana nears universal ‘school choice’ in new budget

Capitol Chronicle: Indiana nears universal ‘school choice’ in new budget

Indiana House Republicans secured a major win in the next two-year state budget with a voucher buildout that “school choice” advocates say makes the program virtually universal.

Expanded eligibility for Choice Scholarships — which allows families to receive vouchers to attend private schools — will raise the income ceiling to 400% of the amount required for a student to qualify for the federal free or reduced price lunch program, equal to about $220,000.

Currently, vouchers are limited to families that make less than 300% of the free or reduced lunch income eligibility level, meaning a family of four can make up to $154,000 annually.

Lawmakers said they’ll also eliminate the eight pathways currently in place — in addition to income requirements — that determine student eligibility for the voucher program. 

It’s a stark change from the Senate GOP’s proposed budget, which did not make any changes to the existing Choice program. An unexpected $1.5 billion in revenue forecasted last gave lawmakers more to work with.

Senate Pro Tem Rodric Bray, R-Martinsville, said the voucher expansion is a “win” for many in his caucus, though.

“It’s a really big number,” he said of some senators’ hesitation about the expansion’s cost, but projected growth in state tax collections “provided some flexibility.”

Leaders touted an 8% increase in overall K-12 tuition support formula over the biennium. But the voucher funding pot grows 69% the first year and 14% the second year.

On the public education front, K-12 schools are projected to see average per student funding increases of 3.4% in the budget’s first year and 1.7% in the second — for a total additional $1.2 billion.

Supplemental “complexity” funding schools receive for low-income and at-risk students is also set to increase — up 5.5% in fiscal year 2024 and 1.2% in fiscal year 2025.

Special education grants would additionally increase by 5% in the 2024 fiscal year, and 5% again the next year.

Per-student grants to help educate English-learners will see the biggest boost over the biennium, increasing by 23%.

Republican-written state budgets in the last decade have raised school funding by an average of 1.5%. But the final budget draft drew criticism from Democrats who argue that school spending is not keeping up with inflation.

“Expanding vouchers to that magnitude is despicable from our perspective,” said Rep. Greg Porter, D-Indianapolis. “I don’t think that the traditional public schools are going to benefit. At this rate, they’re not able to even get inflationary dollars.”

Breaking down the voucher buildout

Under the GOP-backed budget, newly-eligible families will be able to use the vouchers — even if they’re already paying to send their kids to private school.  

The broader eligibility provisions are projected to grow the voucher program from the current 53,500 students to some 95,000 students by 2025 — and more than double the state money spent on the Choice Scholarships.

After the expansion, the program could cost the state an estimated $500 million in fiscal year 2024, and another $600 million in the following fiscal year. The current state budget appropriates $240 million annually for vouchers.

Betsy Wiley, president & CEO of the Institute for Quality Education, said early number-crunching shows that only 3.5% of Hoosier families with school-aged kids would not qualify for vouchers under the new income limits.

“We would say it’s universal,” Wiley told the Indiana Capital Chronicle. “When this budget passes, I think Indiana will be the most educational choice-friendly state in the nation — across the board — between private school choice options for all Hoosier families, a robust charter environment, and district-to-district transfers. That literally will make any education available to any student in the state.”

Lawmakers use the 400% of reduced lunch threshold while other entitlement programs in the state use federal poverty level to determine eligibility. The new voucher guidelines equate to about 740% of the federal poverty level.

The move continues an aggressive program expansion that Republican lawmakers started in 2021, when the General Assembly raised the maximum income for a full voucher payment from the $4,800 cap previously in place.

Two years ago, state lawmakers additionally increased the value of vouchers so all participating families can get 90% of the amount of money per child that their neighborhood public school gets from the state.

Indiana voucher participation has grown rapidly since the program began in 2011, when less than 4,000 students used a Choice Scholarship. Wiley said she expects more families to embrace vouchers over the next two years, as well as an increase in the number of private and charter schools in the state.

“Making every educational option available to every family, you’re now really going to see the ability for families to get their students educated in what they think is the best learning environment for them,” she said. “The barriers are being removed.”

Wiley and other advocates blasted Senate Republicans earlier this month after the caucus nixed voucher expansion altogether. 

Public schools officials and teachers unions remain opposed to Choice Scholarship expansions, however, arguing that its projected cost over two years would stymie K-12 education funding increases for public schools. Critics emphasize, too, that only the state’s wealthiest will benefit.

“At the beginning of session, I called for a hand up for all Hoosiers,” House Minority Leader Phil GiaQuinta, D-Fort Wayne said in a statement Wednesday. “This budget is a handout for the state’s wealthiest families and individuals. Most people think that state subsidies go to the poor, but in the GOP supermajority they go to top-earners.”

Changes from the earlier House and Senate budget plans

Although Senate Republicans aimed to eliminate existing Career and Technical Education (CTE) grants and instead redirect those dollars back into the school funding formula to be disturbed to public K-12 schools statewide, the final budget reverts back to the House’s plan.

High-value CTE grant amounts will increase 5% in Fiscal Year 2024 and remain available to Indiana schools on top of basic tuition support.

Republican budget writers further approved $15 million over the biennium for career scholarship accounts (CSAs), which will be similar to Indiana’s ESAs. Participating students can use the $5,000 CSAs to pay for apprenticeships, coursework, or certification.

But pushback from public school officials prompted changes to other K-12 funding mechanisms in the final budget plan.

That includes a separate, $160 million annual line item added by Senate Republicans to eliminate student textbook fees at K-12 public schools. House budget writers originally took a different approach, seeking to require schools to dip into their foundational funding to fully pay students’ curricular materials costs. The standalone funding remains in the budget, as-is.

Private school students who qualify for free or reduced lunch will also see their textbook fee waived, according to the budget. 

Charter schools also win in the next state spending plan.

The budget will force school districts in Lake, Marion, St. Joseph and Vanderburgh counties — where a majority of the state’s charter schools are located — to provide a proportional share of an operating or school safety referendum adopted after June 30 with area charters. In other counties, sharing those funds would remain optional, at least for now.

The Charter and Innovation Network School Grants will additionally increase from $1,250 per average daily membership (ADM) to $1,400 at the start of the next fiscal year.

Those changes have drawn pushback from traditional school officials who argue that charters are not entitled to funding from local property taxpayers because those schools generally do not have the same expenses as their traditional public counterparts.