Kids are about to head back to school, and for the first time ever, thousands of Illinois students will be using state taxpayer money to attend private schools.
Last August, with almost no public vetting or debate, Illinois passed a massive school choice program, making it the 18th state to add a “tax credit scholarship” program. Now, at least 5,600 Illinois students are headed to private school with taxpayer help, according to data compiled by WBEZ. Tens of thousands of kids tried for the scholarships, which can pay up to $12,793.
Tax credit scholarships aren’t technically vouchers, but for families and schools, there’s little difference. Opponents call them “neo-vouchers.”
Now that it’s up and running, key details of the scholarship program are emerging, including its groundbreaking size compared to other states and the fact that many students who aren’t poor are receiving scholarships.
Here are a few things the public might have learned had the plan gotten more scrutiny before it passed:
No other state has started off with a bigger program.
Illinois’ program allows up to $75 million in taxpayer money to be diverted to private schools each year. For comparison, Indiana’s program is $18 million; when it began in 2010, it was $14 million. Today, Florida has the biggest tax credit scholarship program in the country — last year they gave out $698 million in tax credits and 107,095 scholarships. That program began in 2002 at $50 million.
EdChoice, a school choice advocacy group, says Illinois’ giant first-year program should be put in perspective: “The $75 million credit cap, while seemingly large, is a small fraction of what Illinois spends on K–12 education.”
While Illinois’ program allows for $75 million in tax credits ($100 million in total donations), just $31.5 million in credits have been claimed. Advocates say taxpayers are still finding out about the program.
Tax dollars diverted so far to private school scholarships in Illinois
Source: Illinois Department of Revenue, Aug. 1, 2018
Illinois law prohibits sending public money to religious schools. This program gets around that.
With vouchers, states pay private schools directly from taxpayer funds. But with tax credit scholarships, the state never actually takes control of tax money. Instead,
- Taxpayers donate to a nonprofit “scholarship granting organization.”
- Those groups award scholarships and distribute the money to schools.
- The state then issues taxpayers a “credit” toward their tax bill.
In Illinois, taxpayers get a 75-cent credit for every dollar they donate. Because it’s all voluntary, state supreme courts have repeatedly upheld tax credit scholarship programs. Declining to hear a challenge in 2011, the U.S. Supreme Court said in a 5-4 decision that when “taxpayers choose to contribute to [scholarship organizations], they spend their own money, not money the State has collected.”
Maximum amount an individual taxpayer can divert to private school scholarships
Illinois taxpayers get a huge tax credit.
First off, a tax credit is worth much more than a deduction, which is what people usually get when they make a donation to a charity. (A deduction reduces a taxpayer’s income, lowering the amount they’re taxed on. A credit erases actual taxes owed.)
There are about a dozen credits Illinois taxpayers could possibly take. None comes close to giving back 75 percent of a donation or expense.
What’s more, Illinois allows individuals to claim a huge credit, far more than other states. In Arizona, where tax credit scholarships began, credits are capped at $2,213 for a married couple or $1,107 for a single filer. In Illinois, individuals can get up to $1 million dollars in tax credits.
The scholarships aren’t just for poor kids.
Early figures show 28 percent of the scholarships are going to kids who don’t qualify for free or reduced-price lunch. A family of four can make up to $73,800 and get one or more scholarships; once they’re selected they can make up to $98,400 without losing their tuition help. While poor kids are supposed to get priority under the law, that doesn’t necessarily happen. Kids who live in a low-performing school district also get priority. And donors can designate funds to specific schools. If scholarship groups can’t find enough free-lunch kids at that particular school, they can give the designated funds to non-poor applicants (more on this below).
Some school choice advocates are fine with this; they’re pushing for the middle class to be included in tax credit scholarship programs. Enrollment of middle-income students in private schools has been falling.
Percentage of scholarships going to kids who are not considered low-incomeSource: WBEZ analysis of data provided by scholarship granting organizations
It looks like many scholarship winners were already attending private school.
This has also happened in other states. Many Illinois private schools made sure to get the word about the scholarships out to their families; some held application events so their students would have a better shot at the new first-come, first-served scholarships. At St. Mary Star of the Sea School on the Southwest Side, 30 kids are getting tax credit scholarships. According to Principal Candice Usauskas, two-thirds were already students there. All seven kids who will attend Frances Xavier Warde with taxpayer help were already students at the school, according to the group that awarded their scholarships.
We may never know how many scholarship winners were already attending private schools because scholarship groups aren’t required to report that information.
Number of scholarship granting organizations subject to Illinois’ public records law
Transparency is a problem.
The scholarship groups must report certain information annually beginning Jan. 31, including the names of schools benefiting and the grade, race, gender, income level, and zip code of scholarship students. But other info, like the schools that students originally attended, remains hidden. Donor names are also kept private under the law. So far, eight wealthy Illinois taxpayers have made donations of at least $1 million. Their contributions make up 24 percent of the program funds. Scholarship groups submit an audit of their accounts and records completed by a CPA, but no one can watchdog or regulate the scholarship granting process as it plays out.
As the first students head to private schools with taxpayer help, WBEZ collected as much data as possible (viewable here), but scholarship groups had no obligation to share it. And some declined giving more detailed information. For instance, Empower Illinois, which controls 73 percent of all scholarship money and is the only active scholarship group operating in the entire state, declined to say where scholarship recipients live.
Scholarship groups are not subject to Illinois’ open records laws. That’s in contrast to Illinois charter schools, which are privately managed but receive taxpayer dollars, and are subject to FOIA.
Maximum scholarship amount
Illinois scholarships pay up to $12,973.
That covers full cost of tuition and fees at most Illinois private schools. Vouchers are sometimes criticized for not giving students enough money to actually attend all but the lowest-cost private schools. Illinois’ scholarship amount is tied to the average operational expense of public schools. It’s the most generous scholarship amount in the country.
The nonprofits that administer the scholarships take 5 percent of all donations.
Empower Illinois, the group that controls 73 percent of all scholarship funds, wrote and lobbied for the tax credit program and is now benefiting from it financially. The group has accepted $30.8 million in contributions, which entitles it to $1.5 million.
Amount “scholarship granting organizations” can take in administrative fees
There are no limits to the number of nonprofits that can administer scholarships.
Nine groups have been approved by Illinois as scholarship granting organizations. Of those, five actually raised money and distributed scholarships. In some states, scholarship organizations have become a cottage industry. Georgia has 30 SGOs. Arizona has 62. In Pennsylvania, where the scholarship groups can take up to 20 percent of contributions as an administrative fee, there are 189 groups administering one tax credit scholarship program; 258 groups administer another, making oversight a challenge.
School choice is limited by donors.
When proponents talk about Invest in Kids, it sounds like a way for low-income kids to go to the private school of their choice. But it turns out donors have a big say in shaping which schools kids can attend. That’s because they’re allowed to designate that their contribution go to a single school or set of schools (think Wheaton Academy or Chicago Archdiocesan schools).
Kids can apply to any school they like, but if there aren’t enough funds designated to that school, they’ll be out of luck. So far, according to the scholarship organizations, the majority of funds they’ve received are designated. Business donations are all undesignated, but those contributions have lagged.
Donors’ ability to designate funds also allows for higher income children to move faster to the front of the scholarship line. At schools with lots of donor-designated funds (typically schools with powerful alumni or well-developed donor networks), the scholarship granting organizations can start handing awards to higher income kids once they’ve exhausted applications from priority students.
An example: All funds donated to Children at the Crossroads scholarship organization were designated to one school, Frances Xavier Warde, known in part for the politically connected families enrolled there. Only two of Frances Xavier Warde’s seven scholarships will go to kids who qualify for free lunch. (Children at the Crossroads was a pre-existing foundation that became an official state-approved scholarship organization after the Invest in Kids program was passed.)
Scholarship groups and school choice advocates say allowing people to channel their money to to a particular school or set of schools makes them more likely to contribute. But some states prohibit scholarship granting organizations from benefiting a single school.
Archbishop of Chicago Cardinal Blase Cupich pushed for this program, and early numbers show Catholic schools winning big.
Schools with the most tax credit scholarship recipients include elite college prep schools like St. Ignatius in Chicago, Loyola Academy in Wilmette, and Fenwick High School in Oak Park. Also on the list of top beneficiaries are Waukegan’s Cristo Rey St. Martin College Prep and Chicago Jesuit Academy on the city’s West Side. In fairness, Catholic schools make up the majority of private schools in the Chicago metro area. The top non-Catholic beneficiaries appear to be Solomon Schechter Day School, a Jewish school in Northbrook, and the Islamic Universal School in Bridgeview.
No state with a tax credit scholarship program has ever repealed it.
Illinois’ program sunsets after five years, which means lawmakers will have to pass legislation to extend it. This year, donations to the program only reached half what they’re allowed to. But with each additional donation — and every scholarship granted — the number of supporters and invested families grows, making repeal less likely. Supporters are already organizing parents and schools to win greater support from Democratic lawmakers, many of whom opposed creating this program. A bigger school choice program has never passed in a blue state, and advocates want to keep it alive. Democratic gubernatorial candidate for governor J.B. Pritzker has said he would end the private school scholarship program.