8h • General discussion
Why Faith-Based Schools Should Be Paying Attention 😀
Two weeks ago, in a hotel lobby outside Chicago, a superintendent from a set down her coffee and asked me the question I was hoping to hear. It was not about the money.
"Jeff, your sign says exactly what I have been thinking. Washington has “tried” to help before. What’s the catch this time?"
Is this constitutional? And if we accept it, what do they take from us? Behind both sits an instinct that has protected religious schools for a century. Nothing out of DC comes free.
Let me answer both. First, the math.
The Math That Is Squeezing These Schools
Tuition at a private high school here in Pennsylvania now runs between $10,000 - $12,000, and potentially even higher in some places. There are more than a few hundred similar Catholic, and private religious schools throughout the state. Every one of them runs on thin margins and a financial aid budget that never seems to stretch far enough.
Pennsylvania has, thankfully, done more than most states to help. The EITC and OSTC programs move real money and provide real support to our local communities. But that money is rationed. It comes from a limited pool of credits, and the pool runs dry every single year, while donors are still out there.
The EFTC, on the other hand, does not run dry. It is permanent, uncapped, and designed to be funded by individual taxpayers, in and around your community. For a school on the margin, that is not simply an extended version of what already exists. This is a brand new funding stream, open to parents at any school in an opted-in state.
The Two Questions, Answered
On the Constitution, the answer is settled, and it is good news! An EFTC gift is a private charitable donation to a 501(c)(3) scholarship organization, not a government appropriation. As I wrote a few weeks back, the courts have upheld that distinction time and time again. It is a settled fact that faith-based schools cannot be excluded from a program like this one. Not merely permitted to participate. Treasury has also given us strong signals that state governments won’t be able to impose additional restrictions on SGOs or schools that participate as well.
Regarding potential strings, I want to be careful, because we have seen programs get radically changed before. However, I think we can gain insight from the fiscal path built into the program. It generates private donations via a tax code incentive, as opposed to a state or federal education agency appropriation. A private scholarship organization handles the money and the compliance. The privately funded scholarship lands with the family, and then the family chooses you. Your front office never sees a federal dollar, and as a result, should never face additional federal liabilities..
Of course future administrations could attach conditions once schools grow dependent on the money. But most importantly the EFTC was not written for religious schools, which is precisely why it works so well for them. A neutral credit open to every family, at every school public or private, is far harder to turn into a weapon than one written to favor anyone in particular.
What to Do Before January
Two things:
First, start evaluating scholarship organizations and other partner(s) now, ahead of the rush. Ask whether they are registered to solicit. Ask how they actually plan on supporting you. Ask how they are paid. Then ask us the same three questions.
Second, get your financial aid office ready to identify eligible families, and potential donors, before the credit arrives.
One thing to be aware of, Treasury is still writing the rules and is expected to announce it in September. Be sure to confirm the final details before you build your initial campaign around them.
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Why Faith-Based Schools Should Be Paying Attention 😀
skool.com/fundedu
Learn how schools, ED foundations, and donors can use educational tax credits like the PA EITC and the federal Education Freedom Tax Credit.
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