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The Pros And Cons Of Illinois’ Proposed Tax-Credit Scholarships

Illinois’ legislative leaders reached a tentative deal Thursday on how to fund schools in Illinois.

The details aren’t all public yet, but it’s built around a few key elements — including more state money for Chicago teacher pensions and a controversial new tax credit program to fund private school scholarships.

On Friday, Republican Gov. Bruce Rauner gave the deal mixed reviews. He said there's still too much money for Chicago and said he'll try to fix problems with "subsequent legislation."

Lawmakers are expected to vote Monday. Passage would break a political impasse that is holding up money for all Illinois schools.

WBEZ reporter Becky Vevea explains one piece of that deal: a tax-credit scholarship program.

What is the tax credit scholarship program being proposed by lawmakers?

Becky Vevea: Fundamentally, here’s how they work: When you or I, or any company for that matter, do our taxes in April, we can get a tax credit if we donate to a special pot of money. The money in that pot then gets distributed to students to pay for private school tuition. Most states do limit who is eligible — and typically, it’s based on family income. … Supporters of this plan say it gives poor students access to the same school options as wealthy students.

Why are these tax-credit scholarships so controversial?

Vevea: One reason is that any tax credit reduces the total tax revenue that comes into state coffers. In a state like Illinois, every penny counts.

The other is that students who do go to private schools with the help of this kind of program no longer attend the local public school. When a public school loses students, in theory, they get less money from the state.  

In other states, did programs like this one hurt public schools?

Vevea: David Figlio, an economist at Northwestern University who has studied Florida’s tax-credit scholarship program, found that the program increased competition among schools, which actually spurred improvements in the local public schools.

But the funding situation in Florida is quite different than in Illinois. There, they have huge county-level school districts that are better able to absorb enrollment loss. He says that could play out very differently in Illinois.

This interview has been edited for clarity and brevity. Click the “play” button to hear the entire segment.

Becky Vevea covers city politics for WBEZ. Follow her on Twitter @beckyvevea.

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