Illinois Passes Its First, Country’s 18th, Tax-Credit Scholarship Program



This week the Illinois legislature passed legislation creating the country’s 18th tax-credit scholarship program, and the bill is on its way to Gov. Bruce Rauner, who’s said he’ll sign it. UPDATE: Gov. Rauner signed the bill (see here).

Officially called the Invest in Kids Act, Illinois’ flagship tax-credit scholarship program was passed as part of a compromise school funding bill. (See SB 1947. On the lengthy legislative battles, see here and here.)

Unlike voucher scholarships, which are funded by government appropriations, tax-credit scholarships are privately financed through donations to non-profit scholarship organizations.

The Invest in Kids Act makes students from low- and moderate-income families eligible for scholarships, which are scaled based on family income. When awarding scholarships, non-profits must give priority to low-income students, students in districts with poorly performing public schools, called “focus districts,” and siblings of scholarship recipients.

Scholarship amounts cannot exceed the lesser of necessary private school costs and fees, or the statewide average public school operational expense per student, which averages just under $13,000. Scholarship limits are higher for special needs, English learner, and gifted/talented students.

Students from families whose income is less than 185 percent of the federal poverty level, currently $45,510 for a family of four, receive full scholarship awards. Partial scholarships worth 75 percent of the maximum amount can be awarded to students whose family incomes fall between 185 percent and less than 250 percent of the federal poverty level, currently $61,500 for a family of four. Students from families with incomes of 250 percent up to the program income limit of 300 percent of the federal poverty level, currently $73,800 for a family of four, are eligible for scholarships worth 50 percent of the maximum award.

Individuals and businesses can claim a credit off their state taxes worth 75 percent of their donations to scholarship non-profits, and the aggregate value of tax credits that can be claimed in a given year is capped at $75 million. That works out to a maximum of $100 million annually in donations for need-based scholarships.

Even though the Invest in Kids scholarship program represents just a fraction of Illinois state education funding, which amounts to $8.2 billion, Chicago Teachers Union Vice President Jesse Sharkey called it a “time bomb” that could “sabotage school funding.” (See here also.) Hardly.

States that have enacted tax-credit scholarship programs have saved as much as $3.4 billion combined—approximately $3,000 per scholarship student. An official government analysis of the country’s largest scholarship program in Florida also found that the state saved $1.49 in education funding for every dollar claimed in donation tax credits.

What’s more, under the 500+ page bill the Chicago Public School system gets an additional $450 million, and the City of Chicago gets to increase property taxes by $130 million.

Most importantly the Invest in Kids scholarship program “will bring hope to many students who have been trapped in schools that do not meet their education needs,” according to the Heartland Institute’s Lennie Jarratt.

Thus Illinois will soon officially be the largest blue state with a private school parental choice program, which should give hope to Californians that nonpublic educational choice could be a reality someday soon.

“Illinois, a state mired in debt and tortured by one of, if not the worst teachers unions in the nation, has finally done something to help children stuck in failing schools,” says the Heartland Institute’s Teresa Mull. Her colleague Tim Benson concurs, adding, “At the dawn of 2017, I never would have expected that one of the states to pass a new education choice program would be Illinois, the poster child for governance – both stupid and criminal. Yet here I am, pleasantly surprised to be wrong.”

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