Encourage Newsom To Opt In To FSTC

EDUCATION - Governor Newsom could deliver billions of federal dollars to California students and their families if he opts into the Federal Scholarship Tax Credit. The FSTC allows working class families to access enrichment options for their schoolchildren that wealthy families access as a matter of course. You can help by signing a letter to him.

The FSTC is a new federal program that allows taxpayers to receive a tax credit of up to $1,700 ($3,400 for joint filers) for contributions to qualifying scholarship-granting organizations, which then provide scholarships to eligible students. Scholarships can support a broad range of qualified education expenses for students attending public, charter and private schools, including tutoring, academic enrichment, books and instructional materials, technology, transportation and services for students with disabilities. The program will take effect January 1, 2027. Governors have until the end of this year to opt in for Year 1.

Democrats For Education Reform estimates that California K12 students could receive up to $3 billion per year of enrichment dollars if just 30% of California’s federal taxpayers redirect $1,700 that would otherwise go to the IRS to a local education organization.

You would think this would be a no-brainer — there is no downside to a state opting in, only upside — and 31 states have already opted in, but Democratic governors are under pressure from teachers’ unions not to do so. Still, some Democratic governors have done so. Colorado Governor Jared Polis opted in because the program will “encourage Coloradans to give to charitable organizations and support public education here in Colorado.” New York Governor Kathy Hochul opted in because “we believe this program has the potential to bring millions of additional dollars to New York students and families without taking a single dollar from public schools or our state or local budgets.” Governor Newsom should join them.

As Nicole Pollock, President of DFER, said after New York State opted in, “Today’s decision is a huge win for public school students across New York. A third grader in Rochester who’s behind in reading can get a tutor. A student in the Bronx can get the speech therapy or counseling her school can’t afford to provide. A teenager in Buffalo can get a ride to an after-school program and a laptop to do his homework.” Shouldn’t the same be true in California? Shouldn’t a third grader in Sacramento who’s behind in reading be able to get a tutor? Shouldn’t a student in L.A. be able to get speech therapy or counseling her school no longer pays for? Shouldn’t a teenager in Oakland be able to get a ride to an after-school program and a laptop to do his homework? According to Jorge Elorza, Executive Director of DFER, wealthy families spend 9x more on out-of-school enrichment than low income families. The FSTC would help bridge that gap — and would cost California nothing.

(David Crane is a lecturer in public policy at Stanford University, co-founder and president of Govern For California, and a former economic advisor to Governor Arnold Schwarzenegger. He writes On California, offering analysis and commentary on California government, state budgets, public pensions, and politics.)