The ABCs of Illinois’ New Private School Scholarships, Tax Credit Program

Illinois’ rollout of a new $100 million private school scholarship program funded by independent tax credits began in earnest on Jan. 1.

Within a few days, contributors have so far pledged $38.5 million to the controversial endeavor, which is celebrated by advocates of school choice but derided by teachers unions and other critics as a subversion of the public education system, given that it will divert up to $75 million a year from the state’s coffers—some of which would have ultimately flowed to public schools—while also making it easier for students to leave a public school for a private one, which could also drain districts’ budgets.

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Lawmakers passed the controversial Invest in Kids plan as a five-year pilot as part of a law overhauling how the state allocates resources to districts. Private school networks have been working since its approval this fall to drum up support.

Jim Rigg, superintendent of Catholic Schools for the Chicago Archdiocese, says an internal study showed that—not surprisingly—affordability is the major factor that keeps interested families from sending their children to its schools, where average tuition at the elementary level is $5,000.

“We know that families, particularly those that come from lower and even middle-income brackets, struggle to pay the cost of tuition and can’t afford event to send their kids to our schools, and we believe that those families deserve the same choices as families of means, and so tax credit scholarships give them the opportunity to access the education that we provide,” Rigg says.

Rigg says Catholic Schools has been reaching out to donors and plans further outreach to current and potential students to promote the scholarship program.

Both the tax credits and the scholarships will be given on a first-come, first-serve basis. But it’s more complicated than being first in line.

Would-be contributors need to first register on the state Department of Revenue’s “My Tax Illinois” website.

Once that’s done, they can “pledge” to give a tax credit, up to a maximum of $1.3 million; once that contribution has been authorized, a donor will receive a state income tax credit—not a deduction—worth 75 percent of the contribution. In the case of someone who gives the maximum $1.3 million, for example, the state credit would be worth $1 million.

Contributions themselves are made through pass-through management entities, called Scholarship Granting Organizations, or SGOs; there are currently eight, though more may be authorized by the state by the end of the month. 

Illinois’ revenues would take a $75 million hit should contributions meet the overall cap of $100 million.

There are further, regional limits within that cap, however (updated information can be found by clicking on the “regional and statewide thresholds” link found here).

Up to about half of the contributions, $51.2 million, can go to support sending students to Chicago area (region 1) schools. (As of Thursday night, $31.6 in contributions have been made to region 1, leaving $19.5 million in the area up for grabs.)

“The idea of the program is to make sure that we’re equitably sharing resources” said Myles Mendoza, director of the SGO Empower Illinois. “So we wanted to make sure that all the students outside of Chicago have a fair shake at scholarships, same as kids in Chicago.”

Each SGO operates differently, and will begin accepting scholarship applications on different dates.

Empower Illinois is authorized to operate statewide, and works with about 85 percent of the private schools in Illinois, Mendoza said.

Parents who are interested in their children taking advantage of the program must apply to an SGO, and to the private school (or schools) their child aspires to attend.

Mendoza recommends applying at several, and to do it as soon as possible.

“You want to make sure you increase your chances. Each SGO is going to have its own line that forms, so it’s first-come, first-serve, and you want to make sure that you get yourself in every line, in every SGO, everywhere,” Mendoza says.

Private schools will still set their own admissions criteria, so receiving a scholarship through the tax credit program doesn’t automatically qualify a student for enrollment at a particular school. 

Priority is given to the lowest-income families first, and to those who live in lower-performing “focus districts” where the students and the local public school are at or below state averages for the lowest-10 percent of students or those with graduation rates of less than 60 percent.

A student whose family is within 185 percent of the poverty level or less can get a full tuition, up to $13,000; a family within 185 percent to 250 percent of the poverty level is eligible for a 75-percent scholarship; and a family that earns 250 or above the federal poverty level can a scholarship for half of tuition. (Learn more about poverty guidelines here.)

So as to not disincentivize families from employment opportunities, in future years, a family that is already participating in the program can have an income up to 400 percent of the poverty level and still qualify.

The state may pick up more of the tab for gifted students, those who are learning English as a second language or those with learning disabilities who have Individualized Education programs, or IEPs. 

Follow Amanda Vinicky on Twitter: @AmandaVinicky

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Aug. 30: What role should the state have in private school education? A look at Illinois’ plan and how other states run the controversial program.

Education Overhaul Becomes Law, Scholarship Plan Attracts Scrutiny

Aug. 31: At long last, Illinois has tossed its old method of funding schools in exchange for a formula that aims to send more state money to the poorer districts that need it most.

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