Illinois Governor Signs First Substantial School Choice Program

As part of an overhaul of the state’s school financing system, Illinois created the nation’s 22nd tax-credit scholarship program and the first in the Land of Lincoln.

Illinois, which previously had a private school tuition deduction as its only form of K–12 educational choice, narrowly advanced Senate Bill 1947 through its House Monday. The massive education bill includes—among many other things—a $75 million tax-credit scholarship for private school tuition. The state’s senate passed the bill Tuesday in the closing days of the legislative session, Gov. Bruce Rauner signed it into law today.

If enacted as currently proposed, the tax-credit scholarship would launch in time for the 2018–19 school year, with contributions from individual and corporate donors to scholarship-granting organizations (SGOs) starting in January 2018. The program would sunset after 2023.

STUDENT ELIGIBILITY

Students must (1) be eligible to attend an Illinois public elementary or high school the semester prior to receiving a scholarship or be starting school in Illinois for the first time and (2) reside in the state.

Students must also be members of households whose income does not exceed 300 percent of the federal poverty level (FPL, which is $73,800 for a family of four in 2017–18). Once a child has received a scholarship, families may earn up to 400 percent of the FPL ($98,400 for a family of four in 2017–18) to remain eligible year-to-year.

STUDENT FUNDING

Scholarship amounts for general students cannot exceed the lesser of the state’s average operational expense per pupil (OEPP; $12,973 in 2015–16) and the cost of tuition and fees of the private school.

• Students identified as gifted and talented children may receive a scholarship worth up to 110 percent of the state’s average OEPP.
• Students who are English Language Learners may receive a scholarship worth up to 120 percent of the state’s average OEPP.
• Students eligible to receive services under IDEA may receive a scholarship worth up to 200 percent of the state’s average OEPP.
• Students whose household income is less than 185 percent of the poverty level ($45,510 for a family of four in 2017–18) may receive a scholarship worth up to 100 percent of the state’s average OEPP.
• Students whose household income is between 185 percent and 250 percent of the poverty level ($61,500 for a family of four in 2017–18) may receive, on average, a scholarship worth up to 75 percent of the state’s average OEPP.
• Students whose household income is 250 percent or more of the federal poverty level may receive, on average, a scholarship worth up to 50 percent of the state’s average OEPP.

Donations made to SGOs by individuals and corporations shall fund the scholarships. Those taxpayers may receive a 75 percent credit on their donations.

No donor may claim a credit in excess of $1 million per year. A maximum of $75 million in credits may be claimed in a calendar year.

ALLOWABLE USES

Scholarships may go toward all the necessary costs and fees paid by non-scholarship students at an approved school and may include costs associated with student assessments.

REGULATIONS

Scholarship-granting organizations are required to grant priority to:

• eligible students who previously received a scholarship
• families whose income does not exceed 185 percent of the FPL
• students who reside in school districts that have a school with at least one subgroup whose average student performance is at or below the state average for the lowest 10 percent of student performance in that subgroup or with a school with an average graduation rate of less than 60 percent
• and siblings of scholarship recipients.

Ninety-five percent of revenue must be used for scholarships. SGOs must allow  students to keep their scholarships on a prorated basis when they transfer from one participating school to another during the school year. Students in the tax-credit scholarship program must take the state test.

A scholarship-granting organization must submit an application for approval to issue certificates of receipt that include:

• documentation of 501(c)(3) status
• separation of operating and scholarship funds
• certification that the scholarships will be distributed to eligible students
• a list of names and addresses of all members of its governing board
• and a copy of the most recent financial audit by an independent certified public accountant.

SGOs are required to grant priority, in this order, to:

• eligible students who previously received a scholarship
• families whose income does not exceed 185 percent of the FPL
• students who reside in districts that have a school with at least one subgroup whose average student performance is at or below the state average for the lowest 10 percent of student performance in that subgroup or with a school with an average graduation rate of less than 60 percent
• and then siblings of scholarship recipients.

Qualified schools accepting scholarship students must provide SGOs all documentation required for the student’s participation. Participating schools must annually provide guardians with a written explanation of their student’s progress and annually administer state assessments in the same manner they are administered in public schools.

What the Research Says

A 2016 survey by EdChoice found two-thirds of school parents across the nation—69 percent—say they are in favor of tax-credit scholarships after being provided with a description of this school choice mechanism. Between 61 percent and 71 percent of school parent respondents expressed their support of tax-credit scholarships from 2013 to 2016.

For a full program profile, including our EdChoice Expert Feedback and a family eligibility quiz, visit Illinois – Invest in Kids Program.