In 2027, a federal tax credit will take effect allowing taxpayers across the United States, including in Illinois, to claim a credit of up to $1,700 for donating to qualified Scholarship Granting Organizations (SGOs). SGOs can award scholarships to cover a wide variety of expenses, from student enrollment in public school services to private school tuition. Final Department of Treasury regulations are anticipated in September. A preview of guidance was released in June. If every eligible Illinois taxpayer contributed, the program would generate about $6 billion.

After Stand for Children’s June 10 townhall, we convened a coalition of public education advocates to rapidly examine how Illinois might take the controversial federal education tax credit and turn it into funding to support evidence-based programs for students in need. Given that 90% of students attend public schools, statewide education advocates have a responsibility to try to design creative, innovative, values-based approaches to turn these funds into positive educational outcomes.

The question before us is not whether to create the program—it already exists. The question before us is whether Illinois students should be able to access scholarship funds. There are high-impact tutoring organizations, disability service providers, vocational training programs, and after-school and summer programs ready to use the funds to impact Illinois children. Illinois taxpayers can contribute to SGOs and take the dollar-for-dollar tax credit regardless of whether Illinois opts in; however, opting in is the only way scholarship funds become available to Illinois students.

We believe:

• Illinois taxpayers will invest significantly in new tax credits, whether or not Governor Pritzker opts in, and Illinois students should be able to access those resources. At the same time, the design of the federal program was not centered around equity, and Illinois has an opportunity and a responsibility to elevate equity through intentionality.
• Public school students, particularly those with the most needs in the most under-resourced schools, deserve equitable access to resources.
• Scholarship Granting Organizations (SGOs) that accept funding in exchange for tax credits and scholarship-accepting organizations must be held to high standards of ethics so maximal funds reach students through high-quality, evidence-based programing with no waste, fraud, or abuse.
• SGOs already exist for private school tuition scholarships, but there is minimal infrastructure to support public-school-centric SGOs; the longer we wait to decide whether to opt in, the harder it will be to stand up new SGOs.
• Illinois students – not politics – should be at the heart of this conversation.

We anticipate developing recommendations for Illinois’ response to the federal tax credit scholarship program by early September. Ideally, federal regulations will be available by then; however, we are cognizant that the more we delay a decision, the further behind the curve public school-supporting SGOs will be in getting up and running.