Tax Credit Scholarships: A Great Option for Nebraska Students

Dr. Vicki Alger

Earlier this month, Dr. Vicki Alger spoke about tax credit scholarships at the Platte Institute Legislative Summit. Twenty-one different tax credit scholarships currently operate across the country with participation rates ranging from less than 1% in New Hampshire to 15% in Florida. 

Tax credit scholarships are a form of school choice that allows individuals or businesses to receive a tax credit from state taxes against donations made to non-profit organizations that grant private school scholarships. This creates more options for students; if a student isn't doing well in a traditional public school, a scholarship makes it possible for her to attend a private school where she may have a better chance of success. Additionally, taxpayers benefit from tax credit scholarships because private donations help to fund education: the burden of educating K-12 students no longer rests exclusively on taxpayers.

Making Education More Efficient
​The U.S. Department of Education publishes data on "instructional" spending, which averaged $6,500 per student during the 2010-2011 school year. Of all the states in the nation, Nebraska spent the most: $7,700 per year. But that doesn't mean Nebraska students learned the most. In fact, only 39% of disadvantaged eighth graders scored proficient or better in reading and math. Contrast this with the performance of Arizona's disadvantaged eighth graders who had 51% proficiency rates in reading and math. Arizona spent $4,200 per pupil on instruction.

What's the difference?

One of the biggest differences between Nebraska and Arizona is that parents in Arizona have parental-choice scholarship programs, and parents in Nebraska don't. Schools have to compete for students in Arizona, and this competition improves all schools, public and private alike.

Nebraska state legislators are looking at tax credit scholarships, and fortunately, there are many existing programs in the country for them to examine. For example, Nevada's ESA program is universal and open to all parents while some programs are restricted to certain populations and demographics.

Some people who oppose tax credit scholarships worry that people will abuse the system, but there are ways to reduce risk of abuse. In most programs, funds are disbursed quarterly after receipts and expense reports have been submitted by parents. If abuse occurs, those parents are simply dropped from the program and their children return to traditional public schools.

Many thanks to the Platte Institute and Dr. Vicki Alger for helping us to understand the great potential of tax credit scholarships and how they could help students in Nebraska. You can read more about tax credit scholarships at the Friedman Foundation or at any of the state government websites that currently offer programs, like this one from Florida.

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