The Chesapeake School Board voted overwhelmingly to support Virginia taking part in the Federal Tax Scholarship Program, despite the teachers' union asking them Tuesday to say no.
The program is part of the One Big Beautiful Bill Act passed last year, and Virginia opted in under former Gov. Glenn Youngkin. The state, however, still needs to complete the process to take part in the program and Gov. Abigail Spanberger can opt out.
The teachers' union believes the program will reduce resources for public school students because the funds can be used for private schools, and it wanted the school board to oppose it.
The program creates a dollar-for-dollar tax credit of up to $1,700 annually for a donation to an existing or new Scholarship Granting Organization, or SGO.
The SGO can use the money for K-12 expenses such as tuition, fees, technology, extended-day programs and tutoring.
The money can’t directly go to a public school or a school division.
For example, a donation could not be made to a public middle school. But a donation could be made to an SGO that provides scholarships to a private school, including a religious school. The person who makes the donation could then enroll a student at that school and use the SGO scholarship money to pay.
“Opposing this federal tax credit does not mean rejecting educational innovation or parents' concerns,” Chesapeake Education Association President Katelyn Ritenour told the school board. “It means insisting that any education policy we support be fair, accountable to taxpayers, and honest about its consequences for every child, not just those who can successfully access an alternative.”
School Board Member John McCormick said he thought public schools could take advantage of the program.
“I'm not fearful of it,” he said. “I see it as an exciting opportunity to benefit our students, to benefit our community, and we can do it together in a bipartisan or a nonpartisan way, where we can work together – Republicans, Democrats, Independents – to set up an SGO to benefit our students here in Chesapeake.”
The resolution to ask the governor to opt out failed 2-7, with members Malia Huddle and Amanda Quillin supporting it.
The Chesapeake Education Association said on Facebook the outcome was disappointing, but it would “keep pushing forward and continue fighting to fully fund our public schools that our students deserve.”
What is the Federal Tax Scholarship Credit Program?
The program is set to begin in 2027. States must opt int by Jan. 1 and will need to do so annually.
That might not happen for Virginia in 2027. Spanberger told the Richmond Times on Friday that the “current status of where we are remains in question.”
For states that opt in, the policy allows someone to redirect money that would normally go to the federal government through income tax revenue to an SGO, said Jon Valant, a senior fellow at the nonpartisan think tank Brookings Institution.
The $1,700 tax credit is nonrefundable, meaning if someone doesn’t owe federal income tax, they would not get a credit.
It’s different from a school choice or private school voucher because, in theory, the money could be used to support public school students. Valant said some districts are starting to think about creative mechanisms for their students to benefit.
The Trump Administration argues the program expands school choice, restores parental rights and returns power to the states.
“Education freedom is the key to unlocking opportunity and success for our next generation of students,” U.S. Secretary of Education Linda McMahon said in a statement earlier this month. “The Education Freedom Tax Credit, the largest expansion of school choice in history, will supercharge those opportunities for millions of children.”
Even skeptics of the credit argue that by not opting in, states are leaving potential dollars on the table.
However, states that opt in have little say in the program’s design and implementation. Approved SGOs have to be a nonprofit and use 90% of its funding for scholarships for at least 10 K-12 students, two of whom have to go to different schools. And funding can’t be earmarked for a particular student.
“This is really a departure from the way that the federal government has supported students and schools in the past,” Valant said. “The federal government historically has been there to protect the rights of and provide additional resources to students in need, and it looks like this is pushing in exactly the opposite direction.”
States can’t set other restrictions. If an SGO, for example, doesn’t want to offer a scholarship because of a student’s religion, sexual orientation or disability status, it doesn’t have to, Valant said.
There’s also no reporting requirement to show how the money improved student outcomes.
Data shows the program will most likely benefit wealthy families, Valant said.
“One of the reasons is that what typically happens with these kinds of programs is that people donate funds that stay in their local community,” he said. “And you have to have the kind of flexibility and room in your budget to make that donation, and then wait for the tax credit from the IRS. And that is going to be an easier pitch to people who have more disposable income, to people who have more experience, kind of navigating confusing tax policies.”
The program is projected to generate $26 billion annually, according to the Treasury. That also means the federal revenue will be reduced by $26 billion annually.
That’s more money than Title I, which supports students in poverty, and the Individuals with Disabilities in Education Act.
Valant said he would recommend that money be used instead to expand the child tax credit or to better fund programs such as IDEA.
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