With Treasury’s Education Freedom Tax Credit rules now out, pressure is building on states that haven’t opted in, including Washington, where Gov. Bob Ferguson said he was waiting for the updated guidance before deciding. His office did not respond to The Center Square’s request for comment. At a Sept. 15 Washington Policy Center event, former U.S. Education Secretary Arne Duncan urged state leaders to opt in, saying “we have to be accelerating student learning, and that is not happening in the vast majority of our states, and very candidly is not happening in Washington.” Duncan estimated Washington could gain at least $700 million a year, possibly more than $1 billion, on top of state and local funding: “It doesn’t replace a single dollar. It’s additive.”

Democrats for Education Reform CEO Jorge Elorza, speaking at the same WPC event, said the program has the potential to change lives. “Reasonable minds can disagree as to the wisdom of the federal law. But now that the federal law has passed, the only question is how the money will be spent,” he said. “Will it be spent in Washington? Or will it be spent in other states?” Elorza argued that if Washington opts in and just 30% of taxpayers redirect their $1,700, there’s no reason to stop there, and he expects participation to exceed that rate once the program is running: “This program has the potential to be huge. And first and foremost, that’s what gets me really excited.”

The regulations, released Oct. 1, confirm that married couples filing jointly can each claim up to $1,700, for $3,400 total, and that donors can give to an eligible scholarship-granting organization (SGO) in any participating state regardless of where they live. Households earning up to 300% of area median income qualify, which Treasury puts at about 95% of children and Education Department officials say covers roughly 28 million children in the 30 participating states. States must opt in by Jan. 1 and submit SGO lists by Feb. 15. Governors must include every organization that meets federal requirements, and states can’t restrict which schools families choose or which allowable expenses scholarships cover, according to a Treasury official.

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The Treasury Department’s proposed rules for the Education Freedom Tax Credit, released Thursday, are increasing pressure on the states that haven’t yet opted in. The regulations set out how taxpayers, states, and scholarship-granting organizations will participate. Taxpayers can claim up to $1,700 for donations to approved organizations, which can award scholarships for private school tuition, tutoring, and services for students with disabilities. One provision bars states from restricting the types of schools that benefit.

Public school students may qualify for support with certain expenses, but Treasury still needs to clarify what counts as a qualified education expense, per Politico. Treasury estimates the program could fund as many as 2.2 million scholarships annually by 2030. Thirty states have opted in so far, with several others holding off pending guidance.

Political tension has kept some Democratic-led states reluctant to enroll, Georgetown’s Edunomics Lab director Marguerite Roza told District Administration earlier this year. Teachers unions are urging states to reject the program, and American Federation of Teachers President Randi Weingarten called it a “poison pill,” arguing that “for every previous public dollar funneled to private schools… public school parents will be hunting for pennies on the floor.”

Other Democrats have pushed for participation. Colorado Gov. Jared Polis wants to use the program for tutoring and after-school programs, and Arne Duncan, a senior fellow at Democrats for Education Reform, said, “No program is perfect, but the only way to shape this one and make sure it works for the kids who need it most is to opt in.” Treasury will accept public comments through Dec. 1 and hold a public hearing on the proposed rules on Dec. 15.

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With the arrival of the long-awaited rules, Democratic governors are under more pressure to say whether they will opt in.

Lauren Lumpkin reports that the Treasury Department released long-awaited rules Thursday governing the Federal Scholarship Tax Credit before its January launch, intensifying pressure on Democratic governors to decide whether to opt in. The program, created by last year’s Republican tax and spending bill, provides a 100% federal tax credit for donations to scholarship-granting organizations that pass money to families—designed primarily to benefit private school students but also usable for public school students’ out-of-pocket costs like tutoring, after-school programs, and special education. Thirty mostly Republican-led states have joined; most remaining holdouts are Democratic-led, facing a tricky call since opting out forgoes federal dollars that could flow to their public schools. The CBO estimates $26 billion in lost revenue over a decade, and under the rules, families earning less than three times area median income qualify (over $490,000 in D.C.), covering an estimated 95% of children.

Lumpkin reports the rules bar states from restricting which schools benefit—meaning funds could go to religious schools that bar LGBTQ students or private schools without certified teachers—and that states opting in for public-school benefit must also allow private-school vouchers. She lays out the divide: AFT President Randi Weingarten urged governors to reject the “poison pill,” while Democrats for Education Reform president Nicole Pollock took the opposite position, writing in an open letter that “the decision to opt into [the FSTC] should be straightforward” to help public schools. The Southern Education Foundation’s Raymond Pierce said his group’s position “evolved” toward helping SGOs direct money to public-school families, particularly Black and low-income students. Lumpkin notes a 60-day comment period, expectations of an explosion of SGOs (Treasury estimates room for 600–700 through 2030), required annual financial reviews, and mixed research—positive results for targeted programs but mostly null or negative effects for larger-scale ones, with a coalition of 20-plus civil rights, labor, and faith groups warning the public-school component is a “sweetener” that affluent families already in private school will dominate.

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The 74 reports on Treasury’s newly released rules for the federal Education Freedom Tax Credit, including provisions on eligibility, fraud prevention and state limits. DFER CEO Jorge Elorza is quoted urging undecided governors to opt in so they can shape the program for their state.

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POLITICO reports that the Treasury Department released rules for the first federal school choice tax credit, increasing pressure on Democratic governors weighing whether to opt in. DFER senior fellow Arne Duncan is quoted saying opting in is the way to shape the program for the students who need it most.

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In a guide for donors, the Philanthropy Roundtable argues that the Federal Scholarship Tax Credit—which takes effect Jan. 1, 2027, letting taxpayers claim a nonrefundable federal credit up to $1,700 for donations to scholarship-granting organizations—is entering a critical policy-to-implementation phase with a short runway, and that philanthropy can play a distinctive role beyond the credit itself. With 30 states having made advance elections and Treasury’s proposed regulations expected by the end of September, the Roundtable frames the credit as capable of generating major new K-12 resources that nonetheless can’t, alone, build the infrastructure to move dollars, reach families, or ensure quality options exist.

The guide lays out six areas donors should watch: get the rules right (funding legal and technical expertise to interpret Treasury regulations, citing Defense of Freedom Institute and ExcelinEd); get states in (research and coalition-building where participation is undecided, naming 50CAN, Democrats for Education Reform, and American Federation for Children); get dollars flowing (SGO infrastructure and donor-acquisition channels through tax preparers, advisers, and employers, citing ACE Scholarships, AFC Scholarship Fund, Children’s Scholarship Fund, and Step Up For Students); get families enrolled (outreach and navigation via trusted local institutions); get schools ready (risk-tolerant capital to develop new schools and leaders, citing VELA and Education Freedom Foundation); and protect the program (building legal and compliance capacity before disputes arise, citing Education Freedom Legal Network). The overarching advice is to “follow the bottleneck”—recognizing the binding constraint will shift over time from rules to participation to supply to legal capacity—and to ask where a philanthropic dollar can remove a bottleneck or create capacity that wouldn’t otherwise exist.

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In an op-ed, Steven Velardo—a father and president of Foundations in Education—urges Gov. Ned Lamont to opt Connecticut into the Federal Scholarship Tax Credit, framing it as a simple choice: whether $1,700 of a taxpayer’s federal liability goes to the IRS general fund or toward Connecticut students. He explains the mechanics (a dollar-for-dollar federal credit for donations to approved nonprofit Scholarship Granting Organizations) and pushes back on the assumption that it benefits only private-school students, noting the funds can also cover tutoring, special-needs services, test prep, books, technology, and other K-12 expenses for public school students. Drawing on his organization’s decade of donor-funded scholarships (more than $29 million across Fairfield County), he argues the credit democratizes giving so ordinary parents, grandparents, and small-business owners—not just major philanthropists—can invest directly in a child.

Velardo cites a Democrats for Education Reform estimate that Connecticut has roughly 640,000 taxpayers with enough liability to use the full credit, translating to nearly $11 million at 1% participation, more than $163 million at 15%, and about $326 million at 30%. He notes the program takes effect Jan. 1, 2027, that 30 states have opted in (including Colorado) and that New York’s Hochul supports it, and stresses there’s no new state tax or appropriation involved. His central argument: opting in is only the first step—it creates the opportunity but not a single scholarship—so if Lamont says yes, the responsibility shifts to Connecticut residents to actually redirect their dollars behind students.

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The latest news from Maryland’s classrooms may look promising at first glance, but a closer look paints a far more urgent picture. While academic gains have been real, the pace of change has been far too slow and notably uneven.

Consider Baltimore, where fewer than one in three students read at grade level and multiple schools don’t have a single child doing math at grade level. Statewide, barely half of all students read at grade level, and for Black, Latino and special needs children, the numbers fall even lower. At less than a point of progress a year, Maryland is failing to close achievement gaps fast enough for thousands of kids. There is a way to speed things up and reach those kids now at no cost to the state: it takes just one decision from Governor Wes Moore.

Starting in January 2027, the new Federal Scholarship Tax Credit allows Americans to take up to $1,700 of the federal taxes they already pay and redirect those dollars to non-profits that support K-12 students. The tax credit dollars can pay for tutoring, technology, transportation and special-education services for public school students. Under this program, a Baltimore student falling behind in math gets a tutor. A Rockville child with dyslexia reaches a specialist her district can’t staff. A Cumberland teenager earns college credits his school is too small to offer.

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Kara Arundel reports for K-12 Dive on two Thursday sessions at the Reagan Institute Summit on Education, where panelists described U.S. education as at a pivotal moment—full of reform opportunities but also challenges around equitable access, pressure to innovate, and AI risks. In a session tied to the nation’s 250th anniversary, speakers expressed optimism that the system is preparing students for college, career, and civic life. Education Department official Kirsten Baesler said she sees students with a growing sense of purpose, stressed that attendance and effort matter (“it shouldn’t be an easy pathway to achieve the American dream”), and argued the one-size-fits-all 50-minute-class model can’t serve 54 million children. Strada Education Foundation’s Stephen Moret emphasized that educational pathways to opportunity should be attainable for all, and both voiced cautious optimism about AI’s effect on future jobs.

A separate panel examined expanding school choice, with panelists agreeing the growth of public choice, private choice, and models like microschools over 30 years has been positive—EdChoice’s Robert Enlow noted 75 private choice options now operate across 34 states plus D.C. and Puerto Rico. Jim Blew of the Federal Scholarship Tax Credit Coalition said good choice systems give families information and hold schools accountable for performance. DFER CEO Jorge Elorza said the movement empowers families and spurs improvement: “It does introduce a healthy level of competition… creates a system that is more student-centered, creates a system that’s more innovation-serving.” But panelists cautioned that access and outcomes vary widely and that choice alone doesn’t guarantee quality. The Center on Reinventing Public Education’s Robin Lake framed choice as “risk and opportunity,” urging state leaders to listen to families while recognizing that many will stay in neighborhood schools and that “districts are not going to magically vanish.”

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The Lynnwood Times reports on a Sept. 15 virtual press call for Washington State media in which former U.S. Education Secretary Arne Duncan and DFER CEO Jorge Elorza made the case for the Federal Scholarship Tax Credit, as Gov. Bob Ferguson remains undecided and Washington has not opted in. They explained the mechanics—a dollar-for-dollar federal credit up to $1,700 for donations to certified 501(c)(3) Scholarship Granting Organizations, with money going to families (not districts) for tutoring, tuition, and other expenses for students in households at or below 300% of area median income. Elorza stressed that district-affiliated educational associations can form their own SGOs, potentially requiring that tutoring be provided by district teachers, and framed the decision bluntly: “This is a no brainer. You can opt out and the money leaves the state, but you can opt in and support kids in Washington.”

Elorza addressed the “chicken and egg” problem—nonprofits hesitant to become SGOs before states opt in, and governors hesitant to opt in without an SGO list—arguing there’s no shortage of organizations, including national SGOs that can designate funds for Washington. On accountability, he described a state’s post-opt-in role as “ministerial” (any nonprofit in good standing can join the list) while local officials steer which SGOs align with state priorities; Duncan framed this as “democratizing philanthropy” that creates healthy competition among providers measured on student results. Both acknowledged the program differs significantly from what was originally advocated—Duncan noting eleventh-hour changes like the $1,700 cap and gubernatorial opt-in, and predicting the law will evolve. Washington Policy Center’s Vicki Murray added that donor choice itself serves as a guardrail, citing Arizona’s experience. On timing, Elorza said Treasury should have draft rules by the end of September in two batches, and Duncan—emphasizing high-dosage tutoring’s proven results in Chicago and Oakland—urged against delay: “given the urgency in which kids need help, this is not one that I’d be studying for five years.”

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