Page 11 - Report Card Vol. 9

FEDERAL SCHOOL

VOUCHERS ARE HERE – CONCLUSION

WHAT THEY MEAN FOR PUBLIC, The federal school voucher program introduces a new
funding mechanism that could reshape educational access
PRIVATE, AND HOME SCHOOLS and equity across the U.S. Its impact will vary widely
depending on state-level decisions. While some states may
embrace the opportunity to expand school choice, others
may prioritize stability and accountability within public
education systems. As implementation unfolds, stakeholders
will need to weigh the fiscal, administrative, and educational
trade-offs of participation.
SUSAN STEWART
SENIOR ACCOUNTANT

O n July 4, 2025, the United States entered a new era KEY FEATURES OF THE PROGRAM STATE-LEVEL PARTICIPATION AND IMPACT
in education funding with the passage of the first
federal school voucher program, part of the “One, As of August 2025, some states have begun implementing
Big Beautiful Bill Act.” This legislation marks a significant ► No federal spending cap: Unlimited contributions and the program, while others remain undecided or opposed.
shift in how federal funds can support students’ educational tax credits are allowed, with a $1,700 annual limit per For example, New York State has not adopted the federal
choices, with wide-ranging implications for K–12 education individual donor ($3,400 for a married couple). voucher program and has not established SGOs or legislative
across the country. ► State flexibility: States may opt in and define their own infrastructure to direct federal funds to private education.
rules for SGOs and participating schools. The federal
WHAT IS THE NEW FEDERAL SCHOOL credit is only available in states that have “opted in” and In states that choose not to participate, several outcomes are
VOUCHER PROGRAM? provided a list of qualified SGOs to the US Treasury possible:
Department.
The program introduces a permanent, uncapped federal tax 1. Preservation of public-school funding: Public dollars
credit for individuals who donate to Scholarship Granting ► Federal oversight: The Secretary of the Treasury remain within traditional public education systems.
Organizations (SGOs)—nonprofits that distribute vouchers has authority to regulate SGOs and schools receiving
to families. These vouchers can be used for private school voucher funds. 2. Greater fiscal stability: Predictable enrollment and
tuition, homeschooling materials, tutoring, and other funding support long-term planning and budgeting.
educational expenses. ACCOUNTING AND FISCAL IMPLICATIONS 3. Maintained accountability standards: Funds continue

Participation is voluntary for states, which may choose to From an accounting standpoint, several challenges may arise to support institutions subject to public reporting and
civil rights compliance.
establish SGOs and regulate their operations. There is no for participating states and districts: 4.
federal cap on total spending, and individuals can receive a ► Budgeting uncertainty: Enrollment shifts can make Reduced administrative burden: Districts avoid
dollar-for-dollar federal tax credit for donations up to $1,700 revenue projections volatile, affecting staffing, capital the complexities of voucher tracking and federal
annually starting in 2027. planning, and debt service. compliance.
► Administrative complexity: Tracking mid-year student 5. Limited access for families: Families seeking private
Unlike public charter schools, which are tuition-free and exits, reconciling federal and state funds, and meeting or religious education may not benefit from federal
publicly funded, voucher programs redirect public funds reporting standards adds burden. tuition support.
to support private and religious schools or homeschooling. 6. No access to new federal funds or tax incentives:
This “ funds-follow-the-student” model can reshape how ► Audit exposure: Federal oversight may extend to Residents in non-participating states cannot leverage
education is financed and accessed. schools and organizations not previously subject to
public audits. the tax credit for SGO donations.
► Dual funding systems: Public money may support
both public and private institutions, complicating
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