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Update 3/16/23: After adopting the Finance Committee’s amendment and adding several other amendments on the floor, the full Senate passed S.285 by a vote of 28-9. One new amendment sets a family income limit of 400% of the federal poverty guidelines on the bill’s “general child” category. Accordingly, some of the details in this summary may not be reflective of the final legislation. We will continue to provide updates as the bill develops.
2023 could finally be the year South Carolina embraces meaningful school choice policies and enacts major education reform. Two K-12 education scholarship proposals are making progress at the Statehouse, both of which would provide thousands of students with scholarship opportunities to attend private schools of their choice and help pay for critical education expenses.
Despite some differences, both proposals are in pursuit of the same goal: providing more educational opportunities for students, and both should be enacted to serve as many students as possible. Here’s what you need to know:
S.39 State-funded scholarship program
What would it do?
Provide scholarships worth $6,000 per student that can be used by parents to pay for private school tuition and fees, or other education expenses, including textbooks, computers, approved tests, tutoring, and transportation costs for their children to attend other schools. Transportation costs are capped at $750 per school year.
Who would be eligible?
In the program’s first year (school year 2024-25), K-12 students would be eligible if they have a family household income at or below 200% of the federal poverty guidelines, which is $60,000, according to The Nerve. The income threshold would be raised to 300% and 400% of the federal poverty level in the program’s second and third year, respectively. As for the number of students, it would cover the following: 5,000 students in the 2024-25 school year; 10,000 students in the 2025-26 school year; and 15,000 students in the 2026-27 school year and in the years following.
A student would not be eligible if they already receive an Exceptional SC scholarship or their parent gets the related tax credit. Legislators will likely update this rule to exclude ACE scholarship recipients if that bill passes, since it would replace the Exceptional SC program.
How would it be funded?
The Legislature would appropriate money to a new scholarship fund set up by the bill, which the Department of Education would use to award individual scholarships. Parents would access these funds via individual online accounts set up by the department, and could use them to pay for the qualifying education expenses mentioned above.
Where is it?
The bill passed the Senate on Jan. 31 and has been sent to the House. The House Education and Public Works Committee has yet to schedule the bill for a hearing as of Feb. 23.
S.285 Privately funded scholarship program (Academic Choice in Education fund or “ACE”)
What would it do?
Provide scholarships of varying amounts that can be used by parents to cover the cost of private school attendance for their children, which includes tuition and fees, textbooks, tutoring, and transportation expenses to and from school (so long as transportation is provided by the school itself). Scholarships can also be used to pay for certain homeschool expenses, which the bill defines as curriculum packages, textbooks, digital education and testing materials. The program would start in the 2024-25 school year.
Who would be eligible?
Eligibility under ACE is much broader than the state-funded scholarship program and has four designated student categories: (1) students with disabilities; (2) students from low-income families; (3) homeschool students; and (4) K-12 students generally (“general child”).
According to the bill, group (1) students are those with a disability who need special education or who have been diagnosed as having a neurodevelopmental disorder or another disability that impedes their learning ability; group (2) students are those whose family meets the qualifications for Medicaid benefits or whose family household income is at or below 200% of the federal poverty guidelines; group (3) students are those attending an eligible home school; and group (4) students are those currently attending a South Carolina public school or who are eligible to enroll in a qualified first grade, kindergarten or pre-K program.
Scholarship amounts would vary by student category. For general students, scholarships would be worth up to the average state per-pupil expenditure, which is currently $7,042, according to the Senate Finance Committee. Scholarships for special-needs and low-income students, meanwhile, would be worth up to 140% of the per-pupil amount, which is currently $9,858. Finally, scholarships for homeschool students would be worth up to 20% of the per-pupil amount, which is currently $1,408. As per-pupil spending increases each year, so too would scholarship amounts.
According to the bill, a student who is already receiving the state-funded scholarship would not be eligible for an ACE scholarship.
How would it be funded?
The program would be funded via private contributions and provide donors with a one-to-one income or bank tax credit. Total scholarship funding is based on tax credit caps set in the bill, which are currently: (1) $15 million for contributions to special-needs scholarships; (2) $15 million for contributions to low-income scholarships; (3) $15 million for contributions to general scholarships; and (4) $10 million for contributions to homeschool scholarships. These caps could change if lawmakers increase or decrease them in the state budget.
Unlike the state’s current special-needs scholarship program, which is run by a government-designated nonprofit, the ACE program would allow multiple private nonprofits to raise money for scholarships, which is a smarter and more efficient approach that should yield better funding results. To access scholarships, parents would need to apply and certify their eligibility with the S.C. Treasurer’s Office. Money would then be sent to eligible schools on behalf of students by the scholarship funding organizations.
Where is it?
An amended version of the bill was advanced by the full Senate Finance Committee on Feb. 21 and is now on the Senate floor. (Note: This summary reflects the Finance Committee version of the bill)
Update: The full Senate passed the bill with amendments, which now goes to the House.
Passing both means more options and more students served
The programs have their own strengths and differences that make each worthy of passage. Perhaps the biggest advantage for the state-funded scholarship program is right there in the name: direct state funding. Having the Legislature provide dedicated funding for K-12 scholarships ensures a level of consistency not guaranteed with a private funding model. As noted in our recent report, inconsistent funding has proven a crisis for the state’s existing privately funded scholarship program for special-needs students, and a state-funded model can provide families some reassurance.
Parents would also have a bit more flexibility under the state-funded program, as it would allow scholarships to be used to pay for computers, various approved tests like industry certification exams, and even fees associated with extracurricular activities. While the Senate Finance Committee recently expanded how funds can be used under ACE, the list of qualifying expenses is not quite as broad.
Where ACE excels, however, is with the range of students that would be eligible for scholarships. ACE scholarships would be available to four student categories, one of which covers K-12 students generally. While participation would be limited based on available funding, the effort to include the broader student population in a school-choice program must be recognized. The state-funded proposal, as noted earlier, is limited to low- and middle-income students.
ACE would also offer bigger scholarships. Special-needs and low-income students would get scholarships worth up to $9,858 based on current per-pupil funding, while general students would get scholarships worth up to $7,042. Critically, these amounts would increase as state spending up. Scholarships under the state-funded program are fixed at $6,000.
We also recognize that opponents of school choice are likely to bring a legal challenge against the state-funded proposal, as the S.C. Constitution bans public funds from being used for the direct benefit of private schools. Legislators are aware of this, naturally, and have worked to craft the bill to make it legally sound, specifically with regard to how scholarship funds would be managed, and by allowing parents to use the money for more than just private school tuition.
We support these protective efforts and believe they make a stronger case for the bill’s passage. However, if constitutional reform is necessary, it is imperative that parents have a second scholarship option such as ACE to utilize in the meantime – another reason we support both bills.
We also hear the general concern that if private schools start accepting public dollars, the state may try to dictate private school policy. However, our review of the legislation does not support this theory. While the state-funded scholarship bill has basic requirements for participating schools, including that they conduct periodic assessment tests for students, do not unlawfully discriminate against students, and collect and report high school graduation rates, there are no legitimate signs of government infringement.
As an added measure, the bill offers a list of protections for private school autonomy, asserting the Department of Education or any other state agency “may not regulate the educational program” of an approved school, and that an approved school is must not be required to “alter [its] creeds, practices, admissions policy, or curriculum” to receive scholarship payments.
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Even with these programs, many parents will decide that their neighborhood public school provides the best educational option for their children. However, it is critical that other options are available for those who need them.
South Carolina has an opportunity to become a leader in the school choice movement and fully embrace the tried-and-true method of letting dollars follow the student. We strongly encourage the passage of S.39 and S.285 to maximize scholarship opportunities for as many South Carolina students as possible.