Giving spurred by new tax credit can go wherever donors see a good cause
A potentially huge new stream of money seems headed toward American schoolchildren — scholarships funded by private donors who are spurred on by a new federal tax credit.
Critics, including Gov. Tony Evers, have falsely suggested the program amounts to “vouchers” merely for private schools.
Public school district leaders beg to differ — and are thinking about what scholarships will do for their students as well.
“It will help,” said New Berlin School District Superintendent Joe Garza, with, for example, the district’s extensive tutoring effort or its array of co-curricular clubs. “At the end of the day, there’s going to be dollars available to us.”
The dollar-for-dollar tax credit for donations to nonprofit organizations helping schoolchildren will be available to taxpayers in all states, including Wisconsin, starting next year. But donations can only go to nonprofits in states that opt into the program.
Evers declared last September that he would not let Wisconsin take part. He claimed the program would be “catastrophic” for public schools.
In truth, the 2025 law states that nonprofit “scholarship granting organizations,” or SGOs, can help students in any kind of school, including public schools, so long as the aid is for any of a specified list of schooling expenses for those children.
“I don’t anticipate this will be catastrophic,” said Mark Hansen, superintendent of the School District of Elmbrook, in Brookfield.
Garza faulted media coverage of the tax credit. “The media seems to have a misinterpretation that this is only available for charter and private schools, and not necessarily for public schools,” he said, calling that “one of the first barriers we have to break.”
Under the law, taxpayers donate to nonprofits that, in turn, help children cover costs such as tuition, textbooks, tutoring, transportation and technology.
Students at private schools could use the money for tuition, among other things. Students at tuition-free public schools would benefit in many ways as well.
Garza pointed to New Berlin’s extensive system of “interventions” — from pulling struggling children in small groups for added help or “a heavier dose of high-level tutoring.” That takes money above what ordinary classroom instruction does, and donors could help.
Scholarships in public school could also fund involvement, for instance, in band or athletics, robotics teams or career-exploration clubs such as DECA for business and HOSA for health careers. “We’re close to 80 percent participation in co-curriculars,” said Garza, “so we’re not talking about a small group of kids.”
“If we can help offset those costs (with private dollars), why wouldn’t we?”
Hansen cited Elmbrook’s LAUNCH, which offers hundreds of high school juniors and seniors a chance to experience potential careers. Kids interested in engineering, for example, worked with Milwaukee Tool on designing an equipment charger. Others interested in legal careers worked with a law firm on projects from local companies.
The program relies on area employers, but there are also additional costs that could be covered with money from other private donors.
Most of the district’s graduates will live and work in the area as adults, Hansen said. “How are we equipping them to contribute to the local economy? That would be an awesome thing for an SGO to be a part of.”
Hansen took a cautious tone: The regulations governing SGOs and donations are still being written and won’t be released until sometime in summer. He expressed concern about how the use of donations will be monitored. “There has to be some quality measure.”
But what he and Garza see as uses for donations spurred by the credit are cited by national observers, too.
Education finance expert Marguerite Roza suggested that donor-funded scholarships could be used to cover extra support for foster children in public schools or to cover advanced placement exam fees. Or they could be used to fund beyond-the-classroom services, such as field trips, drop-in math help, or mental health services.
“That’s what we think will happen,” said Roza, who heads Georgetown University’s Edunomics Lab, to a webinar this week.
It only can happen in states where the governor opts in to the program, but “with this much money at stake, most states will opt in,” said Roza.
All of it also depends on the willingness of nonprofits to set up scholarship granting organizations.
Outside a few guardrails limiting overhead costs and preventing donor earmarks for individual children, SGOs are free to pick a purpose, said Roza. Some could focus on math tutoring or after-school care. Others could pick a particular subject across different school types — helping rural students’ music education, for example.
Some could focus on a particular set of schools: Independent foundations in both New Berlin and Elmbrook already help their districts. The latter, for instance, already supports an initiative to help disabled students play mainstream sports, said Hansen.
But whatever the focus, the decision lies with the scholarship granting organization that decides money will follow students for a specific purpose. The dollars don’t simply land in a district’s general operating budget.
SGO preparation is already under way. If the state opts in, the Catholic Archdiocese of Milwaukee “is prepared to support a scholarship granting organization that can support Catholic schools across Wisconsin,” a spokeswoman told the Badger Institute. The Metropolitan Milwaukee Association of Commerce, a nonpartisan business group, is preparing to set up an SGO when Wisconsin opts in, said president Dale Kooyenga — one that he sees as supporting needy children across a range of schools.
He says critics are wrong to think the program offers nothing to public schools. “There’s no public school in the state that has everything they want,” he said. “Not one.” And, he says, potential donors know that.
How much money will go where is unknown, in part because no one knows how many taxpayers will donate. The novel nature of the credit — taxpayers’ donations will be covered, dollar for dollar, by a reduction in federal tax liability up to $1,700 — means that for far more people than now, a decision to give won’t be limited by their means, only by their willingness.
It also means that the new money for education isn’t distributed by any decisionmaker in Washington or Madison or by school district leaders but by individual decisions of taxpayers to choose to donate to one particular SGO over another, one kind of school and not another. Unlike traditional budgets, which give each individual voter a negligible amount of control over an entire budget, the tax credit gives each individual taxpayer complete control over a small fraction of spending for students.
It means schools will have to demonstrate to donors that their money will be used well, said Garza. “We’re going to do our due diligence to campaign for these dollars,” he said.
But Wisconsin taxpayers will be able to donate to Wisconsin schools, public or private, only if the state opts in. Garza wants to see that happen.
“Give us that opportunity to be creative as needed,” he said, the chance to give “students and families the same opportunity that’s going to be given in all these other states that have already opted in. I’m not sure why we wouldn’t do that.”
Some candidates running to replace Evers have already said they would sign off on the program if elected.
“We need to unlock every resource possible for our children and teachers,” said Missy Hughes, a Democrat.
“As Governor I will opt Wisconsin into the Federal Scholarship Tax Credit so that Wisconsin families, students, and communities benefit from resources that would otherwise flow to other states,” she said.
Republican gubernatorial candidate Tom Tiffany has also indicated he would opt in if elected.
Patrick McIlheran is executive editor at the Badger Institute.
Any use or reproduction of Badger Institute articles or photographs requires prior written permission. To request permission to post articles on a website or print copies for distribution, contact Badger Institute Marketing Director Matt Erdman at matt@badgerinstitute.org.
Submit a comment
Go to the full page to view and submit the form.
