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Scholarship Tax Credit Leaves Democratic Governors with Difficult Choice

Fournier: Will most Democrats stay the course and reject federal support for school choice? Or will they buck the traditional party line?

School choice supporters gather at the State Capitol in Denver. (Getty Images)

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As 2026 gets under way, Democratic governors face a difficult choice: whether to play ball with the Trump administration on the new federal scholarship tax credit that takes effect on Jan.1, 2027. This is an especially important decision in light of the this November, which will come after most governors have already decided whether they will opt their state in.聽

In December, Colorado Gov. Jared Polis made waves by his intention to opt his state into the program, becoming the first Democrat to do so and setting the stage for his Democratic peers. Three other Democratic governors 鈥斅燭ina Kotek of Oregon, Michelle Lujan Grisham of New Mexico and Tony Evers of Wisconsin 鈥 have that they won鈥檛 opt in.聽

So the question remains: Will most Democrats stay the course and reject federal support for聽school choice? Or will they follow Polis鈥檚 example, bucking the traditional party line? How they proceed may have profound impacts on Democrats鈥 electoral chances this year.

As approved by Congress last summer, the program allows donors to receive a $1,700 federal tax credit for money given to organizations providing scholarships for private school tuition, tutoring and other education costs for families whose annual income is at or below 300 percent of their area鈥檚 median income. The Internal Revenue Service is currently drafting guidance for administering the tax credit, and states are evaluating whether to participate.

In addition to Polis, have either opted in or declared their plans to do so. One Democrat, North Carolina Gov. Josh Stein, vetoed an opt-in bill but said he expects to sign up after he reviews the IRS rules.

Jorge Elorza, CEO of Democrats for Education Reform (DFER) and former mayor of Providence, has been pushing Democratic governors to opt into the program. This is part of a marked change in DFER鈥檚 positioning on private school choice, which Elorza casts as a turn in the right direction for a party that has, according to DFER鈥檚 , lost its lead with voters on education. For Democrats concerned about being out of touch with the majority of voters on school choice, this decision represents a 鈥渓ifeline,鈥 he told me. 鈥淚t is a convenient off ramp so that we can not only talk about K鈥12 education policy in a new way, but also take an important step in the direction of choice.鈥

The main argument he uses to get them on board, he said, is that 鈥渋f a state does not opt in, then by default, the first $1,700 in every single federal taxpayer鈥檚 taxes is going to leave your state.鈥 Because it鈥檚 a federal tax credit, Californians are every bit as eligible to donate as Floridians. But because states have to opt in, California鈥檚 children aren鈥檛 eligible to receive scholarships unless Gov. Gavin Newsom or the state legislature decides to participate. Elorza believes the decision for Democrats is a 鈥渘o brainer.鈥

John Schilling, a school choice advocate, offered another argument: 鈥渋t鈥檚 all additive.鈥 Because it鈥檚 a tax credit, 鈥渋t is adding K-12 resources, which are going directly to parents and students. It does not affect what the federal government or what state governments provide for K鈥12 education.鈥 And since the law allows public school students to benefit from the scholarships, tutoring or afterschool activities, Schilling sees little reason why Democratic governors wouldn鈥檛 opt in. He too called it a 鈥渘o-brainer.鈥

Not everyone agrees. Thomas Toch, the director of the Georgetown University think tank FutureEd, argues the decision to opt in could be 鈥渧ery problematic鈥 for governors, especially if they can鈥檛 target scholarships to students from low-income families or provide much oversight of private schools. Because there are so many unanswered questions, Toch hopes governors will 鈥渨ait until they understand in detail what the parameters of the program will be鈥 before they opt in or out, which won鈥檛 be until the IRS releases its rules later this year.

Another concern is a perennial one for school choice opponents: that private schools can discriminate against students, including LGBTQ kids. Jon Valant, director of the Brown Center on Education Policy at the Brookings Institution, said the tax credit is effectively a 鈥渂ackdoor voucher program鈥 that states 鈥渁ctually have very little control over.鈥 Democrats might be wary of opting into a program 鈥渨here, for example, they can do very little to protect against some discriminatory behaviors.鈥

Such concerns are why Robert Enlow, president and CEO of the school choice research and advocacy organization EdChoice, believes governors in states on 鈥渢he harder sort of left鈥 鈥 he mentioned California, Massachusetts and Connecticut 鈥 may choose not to opt in. Toch added: 鈥淚n some states, especially where teacher unions are influential, there鈥檚 going to be a lot of pressure to just say no for no鈥檚 sake.鈥

Advocates argue that school choice, and particularly the scholarship tax credit, is popular. In September, DFER released showing that 64% of voters wanted their governor to opt into the program, including 61% of Democrats and 59% of Independents, with even stronger showings among Hispanic and Black voters. Enlow also pointed to done by EdChoice and Morning Consult showing that 65% of adults and 75% of school parents support tax-credit scholarship programs. With numbers like these, 鈥渙pting in is not just popular, it is overwhelmingly popular,鈥 DFER鈥檚 Elorza said.

Yet in 2024, voters in three states 鈥 Colorado, Kansas, and Nebraska 鈥 pro-school choice ballot measures. Elorza chalks these defeats up to 鈥渃oordinated campaigns that raise a parade of horribles that will materialize鈥 if these measures are adopted. Coordinated campaigns or no, those ballot measure defeats are surely going to give fodder to opponents of the tax credit scholarship program.

For now, most Democratic governors seem for the IRS rules. As a spokesperson for Pennsylvania Gov. Josh Shapiro put it in an email: 鈥淭he Shapiro Administration is awaiting federal guidance to address key questions about how this program would work, including which students will be eligible, how this federal initiative will interact with existing programs, and more. We look forward to reviewing that guidance.鈥 The offices of the governors of Illinois, Michigan, California and Michigan did not respond to requests for comment.

Toch applauds the wait-and-see approach: 鈥淢y argument is that the devil is in the details, and the political leaders in both parties should scrutinize the details carefully and not commit to a program unless it serves valuable public policy ends.鈥

The question for Democratic governors facing re-election is simple: After a decade of declining student achievement, will voters want a massive change in how education is delivered? Or will they prefer a more cautious approach that maintains stricter oversight?

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