How are public funds diverted to private schools?
Public resources have historically been diverted to private schools in myriad ways. From tax exemptions to grants, legislators have found creative ways to funnel taxpayer dollars into private schools. Over the last few years, the nation has seen the rise of vouchers and tax credits, and most recently, education savings accounts. These policies have primarily afflicted the South, though that has slowly been changing. New York State in 2015, for example, was considering a proposal to enact tax credit scholarships.
Vouchers allow families to spend taxpayer dollars at schools of their choice, including private schools. They allocate to families the money the district would have spent educating their child in the form of a voucher, which can be used to pay for private school tuition and fees.
Tax Credit Scholarships
Tax credit scholarships grant tax credits, the equivalent of cash, to corporations and individuals who donate to organizations that provide private school scholarships. The amount depends on the specific policy, but in some instances (e.g., Florida, Alabama, Arizona) donors receive 100% of the money they donated (with limits) back in the form of tax credits.
Education Savings Accounts
Education Savings accounts are similar to vouchers, in that they enable parents to access the money that would have been spent on their child were they in a public school. If a parent does not enroll their child in the public school system, taxpayer dollars are deposited in a government-authorized account, which the family can access for specific uses including private school tuition.
(The accompanying report does not cover ESAs, although they are an emerging trend worth noting.)