Should Democratic States Opt Into Trump's Stealth School Voucher Plan?

Here’s a question that Democratic governors across the country will have to wrestle with in the months ahead: should they opt into President Trump’s upcoming federal tax credit scholarship program, or hold the line against what will be the first federally funded private school voucher scheme?

Because of the sweeping nature of the plan, this is a follow up to an earlier episode of Education on the Line examining on the issue.  The program, approved by Congress as part of the  One Big Beautiful Bill, allows every taxpayer to "donate" up to $1,700 to scholarship-granting organizations -- and then get the entire amount refunded to them in the form of a tax credit on their federal income taxes.  The scholarship organizations then dole out the money to parents with children enrolled in private and religious schools to cover tuition and other educational costs. Some funds could be used to cover some expenses like computers and extra tutoring not currently covered by taxpayers..  Most Republican governors already have already "opted in."  

In our latest episode, we go inside the debate as it’s playing out in Illinois, where two prominent Democrats are publicly at odds. State Comptroller Susana Mendoza says it’s a no-brainer: Illinois taxpayers fund the program either way, and opting out just means that money flows to children in other states. Meanwhile, Gov. Jay Pritzker seems inclined to reject it. In April, The Chicago public school board voted unanimously to oppose it.  

Louis Freedberg interviews Comptroller Mendoza and Cassie Creswell of Illinois Families for Public Schools, who see the issue differently, as do dozens of other advocacy organizations. Cresswell says participating in the program would further expand a private school ecosystem the state can’t control, at exactly the moment public schools are already under severe financial and other pressures.

We talk with both Mendoza and Cresswell to understand the issues for and against. Their debate offers insights into how the issue could play out in other states. Subscribe and listen wherever you get your podcasts.

Sign up here so we can keep you posted on future podcasts on how education leaders are responding to the mounting threats against public schools In the United States. 

Transcript

A New Federal Scholarship Tax Credit

Louis Freedberg 0:04

Welcome to Education on the Line, a podcast series focused on the threats facing public education and the strategies emerging to meet them. I'm Louis Friedberg. When President Trump signed the so-called One Big Beautiful bill last year, it included a massive and unprecedented federal tax credit scholarship program, which will funnel billions of dollars into tuition for private and religious schools. We looked at the program in a podcast episode a couple of months ago, but this week we'll take a deeper dive into this extraordinarily generous program, which many view as a voucher program disguised as a tax credit. The program is scheduled to begin on January 1 of next year. Once it is up and running, if you are in a state that opts into this program, almost any taxpayer could donate up to$1,700 to what are called scholarship granting organizations. And then the taxpayer would get all that money back as a tax credit. The scholarship granting organization, in the meantime, would hand that money out to parents who apply for scholarships for their children to private and religious schools. A small amount of money, we still don't know how much, could be spent on some expenses for public schools that are not currently covered by taxpayers. One of the big questions is what states are going to do, especially states controlled by Democrats and governors who would make the final decision as to whether to participate. Colorado's Jarrett Polis has been quoted as saying he'd be crazy not to join. Meanwhile, Democratic governors in Wisconsin, Oregon, and New Mexico have said they won't. In other democratic states, including California, governors have not yet taken a position. However, in Illinois, the debate has taken quite a heated turn. The state's controller, Susanna Mendoza, is publicly urging participation while Governor J. Pritzker has raised red flags. Both are Democrats. Recently, the Chicago School Board voted unanimously to reject the program and to recommend to Governor Pritzker that he not participate. It's generally a difficult question. If a Blue State opts out, its taxpayers still fund the program through their federal taxes, and those taxes will go to benefit children in other states. But if it opts in, it will almost certainly expand a private school ecosystem operating largely beyond state control. It's a discussion we are likely to see in other blue states in the coming months, which is why we have invited two guests from Illinois to join us today. First, Susanna Mendoza, the Illinois State Controller. She was elected to the statewide office in 2022. Before becoming controller, she was the City Clerk of Chicago. And before that, she served six terms in the Illinois House of Representatives, where she was heavily involved in education policy issues. She was also co-founder of the Illinois Legislative Latino Caucus. And she may well run in the race for mayor in Chicago next year, as she did in 2019. Welcome, Susanna Mendoza.

SPEAKER_01 3:24

Thank you for having me, Lewis.

Louis Freedberg 3:26

I'm also pleased to welcome Cassie Cresswell, who is the Executive Director of Illinois Families for Public Schools, an advocacy organization, which she co-founded a decade ago. Her organization, along with dozens of other advocacy organizations in the state, strongly oppose Illinois' participation in the tax credit program, which they say is a voucher program just with another name. Cresswell is a graduate of the Chicago Public Schools, and she is a parent of a current student in the Chicago public school system. Welcome, Cassie Cresswell.

SPEAKER_00 4:04

Thanks so much for having me.

Mendoza Makes The Case To Opt In

Louis Freedberg 4:05

Well, let me start with you, Susano Mendoza. You generated, shall we say, some discussion when you uh wrote an op-ed piece in the Chicago Tribune arguing for Illinois' participation in this program. Could you just fill us in why you feel this is a good idea?

SPEAKER_01 4:23

The reason I feel strongly about this is number one, let me just be clear. I support public schools. In fact, I have the most skin in the game that a person could have with having my own son, who I adore, love more than anything in the world, in a Chicago public school. He has been in the neighborhood school since he was old enough to go. And his best friends are all public school students. As a state representative, you know, I've supported education for all our kids in the state of Illinois and certainly continued that in every role I've had in elected office. But I feel that at this time, even though I know that there's a lot of debate about this, I do feel that this is an easy decision because it really comes down to not whether or not this program should exist. What's important to drive the point home here is that this program, whether you like it or not, is now the law. It does exist. And so the only question that we have to ask ourselves here or that we have any control over is whether or not the people who donate who become eligible for this federal tax credit will in fact see their money stay in the state of Illinois and help both public and private school kids, or if they're okay with their money leaving the state of Illinois to helping public and private school kids in other states, primarily Republican states. So I think as a Democrat and as the mother of a child in Chicago public schools, I would love to see more money stay in our state, go to help kids in both public and private schools, and uh make sure that Illinois, that frankly gets abused financially by the federal government when we send more money than we ever get to keep, federal dollars, that is, to other Republican states. I'd like to see our money stay in Illinois. And so this is a pretty simple decision. It's already the law, Congress has passed it, and we need to keep those dollars in the state of Illinois.

Louis Freedberg 6:19

And just to clarify, because when I've tried to explain this program to some people, it's actually kind of hard to understand. You, as a taxpayer, can contribute up to$1,700 as a charitable contribution to this scholarship granting organization, and then you get all the$1,700 back. Because there's no other charitable contribution like that. This scholarship granting organization would then give out that money to parents who would apply, presumably, to that scholarship granting organization. I could make the contribution, I understand, to another state if my state didn't opt in. So my$1,700 or federal tax money would go to another state. Is that, do I got that basically correct?

SPEAKER_01 7:05

Absolutely correct. In fact, 165 million Americans file tax returns each year. And so if you were to think about every single taxpayer in the country is now eligible for this$1,700 donation that qualifies for a dollar-for-dollar tax credit. And so the only thing that happens here is if we do not opt in, then that means that every single one of the taxpayers, regardless of what state they're in, including our own state, who do take full advantage of the tax credit, because you can take the tax credit whether or not the state of Illinois opts in. So even if we don't opt in, you know, you and I would still be eligible for the$1,700 tax credit. The only difference is that every penny of that would go to benefit kids outside of the state of Illinois. Our Illinois dollars would leave Illinois to help fund public school and private school and things like scholarships, help with tuition, help with tutoring after school programs. The question is, do we want those in Illinois who qualify to send their money out of Illinois, or do we want Illinois children to benefit from this?

Louis Freedberg 8:18

And I should just mention that when this bill was first being discussed in Congress, they put a$5 billion cap on how much could be spent. Well, they actually lifted the cap. There is no cap right now. And the estimates range once this program is fully into effect, up to fifty billion dollars a year, potentially, which is just extraordinary. So we're talking about a significant amount of tax dollars that will be going into this program.

SPEAKER_01 8:46

You're talking about the potential for really significant amounts of money that we choose to say no to, only because I think in large part this came from the Trump administration. I'll just be clear that my disdain for this president, which I have made public, it's I'm not certainly a fan, but my disdain for him is, you know, outweighed by my love for the kids in the state and my desire to see the funding stay in the state of Illinois helping both public and private school kids. It's a no-brainer.

Louis Freedberg 9:20

Well, uh, let me bring in Cassie Cresswell, who is executive director of the Illinois Families for Public Schools. Your organization is completely against participation. And, you know, one of the reasons we invited both of you on is that this is really interesting and important to see this debate going on in your state, because this is the kind of debate that there will be in every state that has to choose whether to opt in. And it only goes into effect in January, but between now and then, December, they're going to be issuing regulations. And so this is something that's going to be on the table, one way or another, within the next few months. So, Cassie Creswell, why are you and many others opposed to participating in this program?

SPEAKER_00 10:09

So fundamentally, we think that what every family wants as their first choice is a local neighborhood public school located where they live and play. And public schools need to welcome all kids, and we need to fund those with public dollars. And we think it's not a good education policy to direct public dollars to private schools. We've seen it here before in Illinois, and it was a problematic policy and program, and this federal voucher scheme is gonna be even worse in really every regard. And what our state really needs to be doing is aiming for fair, full funding for our public schools and not through these tax credit gimmicks, which are mostly gonna benefit the wealthy. And that means whether they're going to private schools or whether some of the dollars might go to public schools. We've seen public school voucher programs elsewhere, and they disproportionately still benefit wealthy schools. So we think that's gonna be really problematic and harmful for our public schools in this state.

Louis Freedberg 11:17

Well, Cassie Christopher, let me just ask you one of the elements of this program, it does allow some of the money to be spent on public school expenses. Like it has to be something that the taxpayer wouldn't normally be funding, but like computers, potentially extra tutoring, other things. Would that be one argument to try to participate in some fashion?

SPEAKER_00 11:42

I think that the communities that are going to capture those funds for their public schools are ones that are already have a great ability to capture public and private dollars. To create a scholarship granting organization, you need to set up a 501c3, you need to solicit donations. So, you know, if you are, say, even within Chicago public schools, a couple wealthy schools can band together, create a joint, say, friends of two schools organization, and direct those funds to cover things that wouldn't otherwise be covered by tax dollars. That's really unlikely in a less wealthy set of schools or a school district. We already have a model for this that we see all over the country because there are nonprofits already that are set up as essentially foundations for public schools. Trying to raise for public schools through these individual taxpayer decisions based on tax credits that benefit the disproportionately wealthy is not a way to fund a public good like public schools.

Louis Freedberg 12:47

Let me bring Susanna Montosa back into the discussion. Susanna, I understand that shortly after you wrote your piece in the Chicago Tribune, you heard directly from the governor. And he said, Well, this is going to fund schools that promote anti-Semitism and other things that none of us would support. How would you respond to those concerns?

SPEAKER_01 13:10

Well, I don't agree with that. Let me just be clear that I think that anyone who knows me knows that I would never be okay with money going to fund anti-Semitism or anti-LGBTQ or things that are in favor of the KKK or white supremacy. Those were some of the things that the governor mentioned. He had a fear of being funded in the state of Illinois. I don't think anyone in their right mind would be okay with money going to that. Making an assumption or insinuating better yet that money that goes to private schools is going to be going in large part to fund horrific things is not fair to people who run private schools. I'm a believer that when done correctly, Chicago public schools can do an amazing job teaching our kids. But I also don't hold it against any parent who chooses to send their child to a private school for a myriad of reasons.

Rules Ahead And Limits On Oversight

Louis Freedberg 14:06

This law, as written, is very bare bones. There's a lot of details that still have to be filled in. And the IRS and the Department of Treasury are drawing up the regulations right now. Now we can assume that the regulations are going to come out in a way that's going to favor the Trump view of how school quote unquote choice should work. But one of the issues is like with this scholarship granting organization, how much control will the states have over saying how the money would be spent? We don't even know how do they have to prioritize private schools and religious schools? Would the regs say you can decide, you could spend all the money, or 50 or 60 percent, on the public school expenses that we talked about? Shouldn't we be waiting to see the regs, to see what's possible and what's not possible before making a decision?

SPEAKER_01 14:59

I think that's a fair question, and and that that would be a fair thing to do. But I do think that if you listen to the the debate on this issue, that's not the debate. It's really like villainizing this issue in and of itself and saying that if you support the money staying in your state, opting in, then you must be anti-public schools. And I fundamentally disagree with that. The irony here is that the people that are fighting against this the most are the teachers' unions, many of whom those teachers have their own children going to private schools, including the Chicago Teachers Union president who made the decision to send her son to a private school. Now, I don't certainly, you know, hold it against her that she did. I just think that it's not fair to villainize private schools when you send your own kids to private schools. I choose to send my son to a public school, and I believe that we should be helping all of our children in the state of Illinois, whether they're in public or private. And even though we don't know all the details, and it's absolutely fair, you do want to see what the final rules are. But that's a different debate than the one that's being had right now, which is whether or not we should opt in at all. I think all of us should be looking to opt in and then have a real voice in influencing what those final regulations are going to look like. And it's easier to do that when you choose to embrace something and say, yeah, this is good for all kids, and we should have a say in what the rules are going to look like. But right now, the fight is really we shouldn't even participate, no matter what those rules look like. There's an assumption that it's going to be the worst rules on earth. So I understand the distrust. I have it myself. But like I said, I can put my disdain for the current administration and the fact that most of their policies have wrecked so many things. That's outweighed by what I want to see happen for our kids, which is additional funding. That's what this does. That would include public schools for things like tutoring, uniforms, transportation, tuition, instruments for after school activities. Those are really important things that a lot of poor kids don't have. And in the district that I used to live in and represent, you know, if the only choice that you have as a parent is to send your child to what you know is a school that's failing, how is that, you know, good for that parent or that child?

Louis Freedberg 17:25

And Cassie Creswell, who is executive director of Illinois Families for Public Schools, both of them are parents who have children in the Chicago public schools right now. So that gives you a common bond right there. But Cassie Creswell, just as I asked Susanna Mendoza, shouldn't we perhaps be waiting until the regs come to see is there space within those regulations to make this work in Illinois?

SPEAKER_00 17:57

So the thing is the regulations are not going to constrain what private schools are doing. Private schools right now, if you're a 501c3, you cannot discriminate on the basis of race. Otherwise, you can pretty much discriminate on any basis you wish. Even schools getting funds through the National School Lunch Program, private schools, can discriminate on the basis of other protected categories that public schools can't. That's not going to change when we get the regulations for this program. And the truth is with the current court setup, if we try to start constraining private schools and saying only private schools that don't discriminate can get these dollars, that is rapidly going to run into legal issues. Who's going to decide which of their discrimination issues are not part of their religious beliefs? We've already seen that in other areas of the law. And so the practicalities of this are that private schools are going to continue to discriminate, and it's just a question of whether we're going to be using our public dollars here in Illinois to fund them again, like we did under our previous voucher program. And the regulations aren't going to solve that. And we also, as I mentioned before, the the IRS and the Department of Treasury, when they issued their notice of comment in December, made it clear that it was not on the table that states are going to be able to constrict who's operating an SGO in their state, such that you could say, okay, we are only going to have scholarship granting organizations that are benefiting very low-income students. We're only going to have scholarship granting organizations that benefit public school students. That's not even on the table. So it is clear that this program is being set up by and designed for big private school funding mechanisms.

Louis Freedberg 19:46

I just wanted to put another potential opening before closing the door on using this program at all. In a previous podcast, we did interview John Villant, who's director of the Brown Center on Education Policy at the Brookings Institution. My understanding is that states can opt in at any point. It's not like if you decide not to opt in now that you borrowed from the program forever. And he is proposing that governors hold off this year. You don't have to jump in right away, at least the first year, see how this operates. And then you could make a decision on that basis. Let me ask Susanna Mendoza, any thoughts on that?

SPEAKER_01 20:32

I think anytime you're leaving hundreds of millions of dollars on the table when you didn't have to, it's a grave mistake. I mean, all of these arguments that have been made would have been great arguments to make to Congress when they were debating whether or not to pass this legislation. At the end of the day, for me, this is just about what's best for the children in the state of Illinois. We should keep that money in Illinois.

Louis Freedberg 20:55

I could see how this could really affect public schools if large numbers of parents take this money and use it to go to private schools. Won't this lead to more students leaving the public schools and leaving the public schools in a weakened condition?

SPEAKER_01 21:12

Theoretically, I mean people have a choice of whether they want to send their kids now to public school or private school. They're already making that choice today. I knew a child who was born in Chicago, went to school K through fifth grade, and in fifth grade could not still speak English. And that's not okay. And so if the only choice that that parent had, which is how I found out about some of these issues, was to send their kid to a school that they knew was not serving them well, how do you tell that mom and dad that it's okay to send their kid to that school? So that's why some parents will choose a different option, whether it's a charter school being run by Chicago public schools, or they have to pay out of pocket. Families who can't afford to do that have to figure out how to give their kids a shot at the equalizer, which is a good education. Education.

Louis Freedberg 22:01

I wanted just to get Cassie Cresswell's view on whether to wait a year to see how this thing is implemented and then make a decision. So I guess going in with a bit more of an open mind. Any thoughts on that, Cassie?

SPEAKER_00 22:17

I think we should wait infinitely. It is not a good education policy. Vouchers harm academic outcomes, especially for low-income students. We have seen that everywhere. When you take a voucher and go to a private school, that overall hurts kids. When kids do leave public school to enroll in a private school, public schools are left with fixed costs that you can't rapidly decrease. And so if you looked and say two and a half percent even of Illinois public school students shifted to using a voucher in a private school, the fixed cost that would be left behind that would then have to be spread over the existing population would be about$500 million a year. So to make up for that with donations that would then get tax credits is really unrealistic. That's about the sort of shift that we see around the country when voucher programs start up. Ultimately we are seeing Democratic governors saying no to this. We saw Andy Bashir say that. We saw Tim Walls in Minnesota, Tony Evers in Wisconsin. Wisconsin has had voucher programs for 30, 40 years at this point. They looked at a study of 25 years of voucher programs in Milwaukee, four out of ten private schools that were getting vouchers basically opened and closed during that time. This is not a route to stable schools for low-income kids who need fair funding and full funding. And we're so many billions away from that in Illinois still. This is not a policy solution that fixes that.

Louis Freedberg 23:51

Well, reading the tea leaves in Illinois, I guess last word to Susanna Mendoza. It looks like Governor Pritzker, he seems inclined to reject this at this point.

SPEAKER_01 24:02

Well, I can't speak for the governor, but I thought it was important to make my opinion as a mother of a son in Chicago public schools and as the state's chief financial officers who's helped make sure that we are running a state fiscally responsibly, that it's important to speak up. And I think for me, this should not be political. It should just be about what's in the best interest of Illinois children and what can bring us more money rather than less money. I'm sick and tired of sending uh federal tax dollars to red Republican states that don't know how to manage their money and pretend they do. And if anything, you know, on your question about whether we should opt out for the first year and opt-in, I would suggest let's opt in. And if it turns out to be this travesty, we could always opt out. But it's better to opt in and not say adios to hundreds of millions of dollars that could be coming into the state of Illinois and helping our children.

Louis Freedberg 24:57

Well, I want to thank Susanna Mendoza. She's the controller for the state of Illinois for joining us today. Thank you.

SPEAKER_01 25:04

Thanks for having me, Lewis.

Louis Freedberg 25:05

And I want to thank Cassie Cresswell, who is Executive Director of Illinois Families for Public Schools. Uh, thanks for joining us today.

SPEAKER_00 25:15

Thanks for having me.

Louis Freedberg 25:16

On that note, we have to bring this episode of Education on the Line to a close. Our producer is Kobe McDonald, and our advisor is Pedro Nogueira, Dean of the USC Russia School of Education. Also, thanks to our sponsor, the Hewlett Foundation. Please share with us any thoughts you have on this really important voucher initiative that is coming down the pike. You can reach us by going to our website at educationontheine.com. That's educationon the line.com. And please subscribe to Education on the Line wherever you get your podcasts. I'm Lewis Friedberg. Thanks for joining us.