Funding the Future

I wrote my first article on vouchers in 2008. While the media portrays it as a controversial issue, I have always tried to take a balanced approach when I write about vouchers. School Choice: Vouchers, Scholarships, and More; Vouchers aka Tax Credits and Scholarships; What Strings Do School Vouchers Have Attached?; Charter Schools and Vouchers illustrate my thoughts on the subject.

This time, because so much more information about voucher programs is available, I asked an authoritative source to answer my questions on your behalf.

Rob K: What is the purpose of a private school voucher program?

ChatGPT: A private school voucher program aims to provide families with publicly-funded scholarships or vouchers that can be used to pay for tuition at private schools rather than at public schools. The goal of such programs is typically to increase school choice and provide families with access to educational options that they might not otherwise be able to afford.

Proponents of voucher programs argue that they promote competition among schools and can help improve education quality by giving families more options and forcing schools to compete for students. They also argue that voucher programs can help to reduce educational inequality by providing low-income families access to high-quality private schools that they might not otherwise be able to afford.

Critics of voucher programs argue that they divert public funds away from public schools, which can lead to reduced resources and lower-quality education for students

Parents turn to private K-12 education for all kinds of reasons, from overall quality of curricula and individualized teaching strategies to location and religious affiliation. Now they may be adding another motivation to the list: overcrowded classrooms and public school bus rides just seem more dangerous in the age of coronavirus.

If you’re home-schooling your kids right now, the day they return to classes may seem like a distant dream. (How’s your blood pressure?) But September will come—with or without online classes. Chances are you’re making decisions right now that will affect at least a year of your child’s future. Chief among them may be how you will continue to finance your child’s private school education.

In 2020, the average cost of K-12 private school tuition reached $11,012. Depending on where you live and whether you have elementary-, middle-, or high school-age kids, your mileage may vary. But across the country, student loan debt has been increasing steadily along with the rising cost of education. K-12 loans aren’t subsidized by the federal government like higher-education loans. Still, many parents clearly believe that private school education is worth the investment. The question moms and dads should be asking themselves is, “How can I be sure I’m investing wisely?”

School Stability

The global coronavirus pandemic has injected uncertainty into every sector of the economy. That’s true at the micro-level, as many parents join the fast-expanding ranks of unemployed workers. It’s also true for private schools,

According to Wikipedia.org, "School choice is a term for K–12 public education options in the United States, describing a wide array of programs offering students and their families alternatives to publicly provided schools, to which the location of their family residence generally assigns students." Vouchers have been in the headlines for almost thirty years. So, this is not a new issue, although the media attention sometimes implies that vouchers are a new idea. A timeline is helpful when dealing with a controversial issue such as school vouchers. But before we do that, what are vouchers?

EdChoice describes vouchers as:

"School vouchers give parents the freedom to choose a private school for their children, using all or part of the public funding set aside for their children’s education. Under such a program, funds typically spent by a school district would be allocated to a participating family in the form of a voucher to pay partial or full tuition for their child’s private school, including both religious and non-religious options."

You will hear vouchers called various names, such as parental choice, education grants, scholarships, and tuition grants, to list but a few of the names you will encounter for vouchers.15 states and the District of Columbia currently offer 26 voucher programs. School Voucher Laws State-by-State Comparison offers a useful table comparing the voucher programs offered in states that have them.

Why are vouchers controversial?

Now that you have access to

The Tax Cuts and Jobs Act of 2017 made many changes which impact charities and not-for-profit organizations such as private schools. Large private schools have expert tax advice at their disposal, as well they should. However, small private schools may not have a fulltime accountant on their staff. The point of this article is to encourage the administrators and trustees of small schools to discuss The Tax Cuts and Jobs Act of 2017 with tax and legal professionals at their earliest opportunity. These small schools need to understand what impact the new tax code has on their operations.

Here then are five items which I offer as talking points for your discussions.

1. The Impact On Charitable Giving

The Tax Cuts and Jobs Act – What Nonprofits Need to Know by Sandra Cyr in Philanthropy Journal News offers some insight into how the Tax Act might impact charitable giving. I use the verb "might" advisedly, because it is too soon as of this writing in July 2018 to know what the real impact on charitable giving will be. We will have a better idea about that in the spring of 2019. In the meantime, I suggest that you discuss giving with your board and try to develop a realistic plan. Don't assume that giving will stay the way it has been. Assume that it will change and be prepared for that change.

2.

In December 2017 the 115th Congress of the United States passed a major act dealing with taxes. One of the changes in the Tax Code pertained to ESA or Educational Savings Accounts. Most parents and grandparents are probably familiar with ESAs as a means of saving for their children and grandchildren's college educations. Congress has expanded Section 529 ESAs to include K-12 education expenses as well as college expenses.

First, a bit of history. The educational savings accounts known as Section 529 plans were created by the Small Business Job Protection Act Of 1996. The section of this act which pertains to educational savings accounts is entitled PART VIII—QUALIFIED STATE TUITION PROGRAMS. The text begins on page 141. This is worth reading so that you can discuss the topic with your financial advisor when you set up your 529 plan.

Changes to the Tax Code

On Friday, December 22, 2017 President Donald Trump signed An Act to Provide for Reconciliation Pursuant to Titles II and V of the Concurrent Resolution on the Budget for Fiscal Year 2018 While the Act has effects on a wide range of tax situations, the specific text pertaining to K-12 educational expenses can be found on page 74. Here is the relevant paragraph:

‘‘(7) TREATMENT OF ELEMENTARY AND SECONDARY TUITION.—Any reference in this subsection to the term ‘qualified higher education expense’ shall include a reference to expenses for tuition in connection with enrollment