In 1997, the Mackinac Center forwarded a policy solution to advance educational freedom known as the Universal Tuition Tax Credit. The proposed legislation would provide a dollar-for-dollar credit on one of three different state taxes to an individual or business underwriting tuition payments for an elementary or secondary student. Under the plan, the full individual student benefit would be capped at the lesser of two amounts: 50% of state per-pupil revenue or 80% of actual tuition costs.
The Wall Street Journal later recognized the Mackinac Center as the “leading advocate for a universal education tax credit.” Since the Center proposed the Universal Tuition Tax Credit late last century, 20 states have adopted similar legislation.[*] Rather than directly sending state dollars to pay for private schooling, these programs provide tax credits to tuition-paying parents or, more commonly, to K-12 scholarship donors.
The Center updated and improved the tax credit proposal a couple of years later. Key enhancements included an allowance of extra funds to support students needing special education, and additional educational uses of all tax credit funds beyond tuition, such as textbook purchases and school transportation costs.
Proposing the expanded use of these scholarships was well ahead of its time. It was not until 2011 that Arizona became the first state to create a program that included these elements. They’re now commonly called K-12 education savings accounts. These state-funded, restricted-use bank accounts have been available to Arizona families of students with disabilities for a decade, and more recently to students in foster care and those on Native American reservations. Seven other states since have enacted their own ESA programs. Most are limited to students with specific disabilities or otherwise qualifying for special education services.[†] Three of the seven states adopted ESAs in 2021. A notable exception, West Virginia approved the Hope Scholarship Program, the first ESA broadly available to the general student population — 93% of K-12 students are eligible.
[*] The 20 states are Alabama, Arizona, Arkansas, Florida, Georgia, Illinois, Indiana, Iowa, Kansas, Louisiana, Montana, Nevada, New Hampshire, Oklahoma, Pennsylvania, Rhode Island, South Carolina, South Dakota, Utah and Virginia. See “School Choice in America Dashboard” (EdChoice, 2022), https://perma.cc/8GQW-V9AN.
[†] The five states are Florida, Indiana, Mississippi, North Carolina and Tennessee. See “School Choice in America Dashboard” (EdChoice, 2022), https://perma.cc/8GQW-V9AN.