Despite pushback from several top New York lawmakers and education advocacy groups, Gov. Kathy Hochul says she's opting into a federal school tax credit program some say would negatively impact the state's
public schools.
The Federal Scholarship Tax Credit, often referred to as the Education Freedom Tax Credit, is part of the Trump administration's "big beautiful bill" passed last year and aims to provide scholarships for education-related services at private or public schools.
Both state Senate Majority Leader Andrea Stewart-Cousins, D-Yonkers, and Assembly Speaker Carl Heastie, D-Bronx, have raised red flags about the program and say New York should not opt-in to it. And New York State United Teachers (NYSUT) members have been vocal in their opposition of the federal program because they say it will take money away from public schools and drain billions from state revenues.
But Hochul says she's not changing her stance.
Here's why the governor is choosing to opt-in to the controversial federal school tax credit program.
Why Hochul decided to opt-in to federal Education Freedom Tax Credit program
Earlier this year, the governor's office voiced Hochul's support for the program, saying New York was expected to opt-in to the program, but her office would "thoroughly review the details of the policy for poison pills that could harm New York's education system."
And last week, when asked if the governor's position on the program has changed after Stewart-Cousins and Heastie's positions were brought to light, a spokesperson for Hochul said her administration is "carefully reviewing the proposed regulations."
In a statement released by Hochul on Oct. 9, the governor made her final verdict.
"I’ve been clear from the start that New York would participate in the federal scholarship tax credit program if, and only if, all schools and students, including those in our public schools, could benefit," Hochul said. "After a careful review of the federal regulations, 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."
"I’m not going to leave money on the table when it could help our kids. That’s why I have also been directly engaging with business leaders, who have committed to use this program to support public school students and their academic needs," she added. "I look forward to working with education leaders across the state to make sure these resources reach students in every community. My commitment to public education has not changed, and it never will."
How the federal school tax credit program works
Taxpayers in states that opt-in to the program looking to receive a federal tax credit of up to $1,700 for individual filers or $3,400 for married couples filing jointly must first make a charitable contribution to a state-approved charity that uses at least 90% of its income on scholarships for education choice options for eligible K-12 students, or Scholarship Granting Organization (SGO), according to the U.S. Department of Education.
After receiving the funds, the SGOs use the money to provide elementary and secondary school students within the state scholarships to attend a school of their choice, or provide access to other education-related services and products. The amount of scholarship money awarded will be determined by the SGO and there is no limit on how much they can provide.
When it comes time for state taxpayers to file their annual federal income tax return, they would then receive a credit against their tax owed up to $1,700 or $3,400, depending on if they filed individually or jointly, and have up to five years after to use up the entirety of the credit. The program takes effect on Jan. 1, 2027.
Hochul's opt-in draws mixed reactions from education advocacy groups
New York-based political action committee and advocacy organization Democrats for Education Reform (DFER) recently applauded the governor's decision to opt-in to the federal Education Freedom Tax Credit program.
"Governor Hochul kept her word, and New York's kids will be better off for it," says DFER senior fellow and former U.S. Secretary of Education Arne Duncan.
"Governor Hochul understands that the way to make this program work for the kids who need it most is to be at the table shaping it," Duncan continued. "Thanks to her courageous decision, students across the Empire State will have a new way to access K-12 resources next year."
According to an analysis conducted by the organization, nearly three million New York taxpayers could potentially benefit from the federal tax credit. Additionally, DFER says if every potential participant contributed the full amount allowed under the tax credit, scholarship granting organizations serving New York students could receive as much as $5.08 billion annually.
NYSUT asserts, however, that the program is estimated to drain around $2.3 billion from state revenues over the next decade, with New York expected to take a huge hit. School vouchers, which NYSUT asserts this is, redirect public tax dollars to pay for private school tuition and defund public schools because when students leave with vouchers, the public school loses that per-pupil funding but their fixed costs remain the same, they say.
And the income limit, which NYSUT says is more than $500,000 in parts of New York, makes the program "less an education program than a tax break for the wealthy."
"We are profoundly disappointed that a governor who has championed public education would opt into President Trump's private-school voucher scheme," NYSUT President Melinda Person said in a statement on Oct. 9.
Person added that "this fight is far from over," and that NYSUT will continue to work toward repealing the program at the federal level.
With Hochul's opt-in, New York becomes the 31st state to formally opt-in, according to DFER, as well as the second Democratic governor to do so, joining Colorado's Jared Polis.
Emily Barnes covers state government for the USA TODAY Network-New York with a focus on how policy and laws impact New Yorkers' taxes, communities and jobs. Follow her on Instagram or X @byemilybarnes. Get in touch at ebarnes@usatodayco.com.
This article originally appeared on Rockland/Westchester Journal News: Hochul opts NY into Trump-backed school tax credits despite pushback
