Follow the money

What does the federal tax bill mean for schools and families? These stories can help you understand

PHOTO: Caroline Bauman

If the federal tax bill that the U.S. Senate signed off on in the middle of the night this weekend becomes law, the biggest implications are likely to be for the country’s highest earners and corporations, who will see their tax burden decrease.

But the fine print — which some senators said they had not yet read — spells out potential changes for educators, families, and their schools.

These changes include a provision to allow families to use 529 savings accounts to pay for K-12 private schooling and an increase in how much teachers can deduct for school supplies they buy. Changes to how state and local taxes could be deducted could also prompt changes to education spending.

Fortunately for anyone trying to make sense of the potential changes, journalists covering all topics have been scrutinizing the tax bill (which still has to be reconciled with the version passed by the House two weeks ago). Several have given a closer look at the education implications.

To understand how changes to state and local tax deductions could affect schools, read Moriah Balingit and Nick Anderson in the Washington Post:

Like the House bill, the Senate measure curtails the federal deduction for state and local taxes. Advocates worry that states, counties and cities will have a tougher time raising money for schools — which get nearly all of of their money from state and local tax revenues — because those taxes will no longer be fully deductible.

Separately, the bill would bar school districts from using cost-effective, tax-free “advance refund bonds” to refinance school bond debt, a prohibition that could prove costly for districts looking to refinance to save money, according to John Musso, executive director of the Association of School Business Officials International.

For a primer on the teacher supply deduction, here’s a piece from Andrew Ujifusa at Education Week’s Politics K-12:

The bill’s changes would allow teachers to deduct $500 from their taxable income for purchases they make out of pocket for their classrooms, from pencils to software. Current law allows individual teachers to take a $250 deduction for those purchases. The new $500 deduction would take effect for income earned in 2018.

The deduction is “above the line” on tax forms, meaning that teachers don’t need to itemize their federal tax returns in order to claim it.

The House GOP tax bill, meanwhile, would scrap the deduction.

And for more about those 529 accounts, look to Ron Lieber’s November column in the New York Times:

Now, a quick 529 refresher. You put money in, and in 35 states you get some sort of tax break when you do so, according to Andrea Feirstein, a plan consultant. The money grows tax free, and when you withdraw it to pay for higher-education expenses, you pay no taxes, capital gains or otherwise.

So what would it mean to add private school benefits to 529 plans? Take a wealthy family in the highest tax bracket. It has a newborn baby, and through some combination of gifts and its own savings, it opens a 529 plan with $200,000 and never deposits another dime.

If the money grows at 6 percent annually, that family could take out the $10,000 each year, avoiding $2,380 in taxes annually. If it did that for 13 years (kindergarten through 12th grade), it would save $30,940 in taxes. Plus, according to numbers that Vanguard ran for me, it would still have enough left over after high school ($370,717) to pay for many pricey private colleges in full, as long as tuition inflation there ran no more than 3 percent annually.

We’ll also be keeping our eye on what the federal tax changes could mean for local schools and the people who depend on them. But with nearly 500 pages and handwritten addendums, it can be hard to know where to look first. So for now, a question: What are you paying attention to? What do you want to learn more about?

By the numbers

Trump’s proposed education budget: more for school choice, less for teacher training

PHOTO: Gabriel Scarlett/The Denver Post

In a similar proposal to last year, the Trump administration said Monday that it wants to spend more federal dollars on a school choice program — which includes private school vouchers — and less on after-school initiatives and teacher training.

Last year, the administration’s budget proposal was largely ignored, and many see this year’s as likely to suffer a similar fate.

The plan doubles down on the administration and its Secretary of Education Betsy DeVos’s belief that families should be able to use public money set aside for education to attend any school: public, private, charter, or virtual. It also highlights a key tension for DeVos, who praised the budget but has been sharply critical of past federally driven policy changes.

Overall, the administration is hoping to cut about 5 percent of funding — $3.6 billion — from the federal Department of Education. Keep in mind that federal dollars account for only  about 10 percent of the money that public schools receive, though that money disproportionately goes to high-poverty schools. (The budget initially sought even steeper cuts of over $7 billion, about half of which was restored in a quickly released addendum.)

The latest budget request seeks $1 billion to create a new “opportunity grants” program that states could use to help create and expand private school voucher programs. (The phrase “school voucher” does not appear in the proposal or the Department of Education’s fact sheet, perhaps a nod to the relative unpopularity of the term.) Another $500 million — a major increase from last year — would go to expand charter schools and $98 million to magnet schools.

The proposal would hold steady the funding students with disabilities through the Individuals with Disabilities Education Act.

But the request would take the axe to Title II, funding that goes toward teacher training and class-size reductions, and an after-school program known as the 21st Century Community Learning Centers. The administration has argued that both initiatives have proven ineffective. Teacher training advocates in particular have bristled at proposed cuts to Title II.

The budget is likely to get a chilly reception from the public education world, much of which opposes spending cuts and private school vouchers.

Meanwhile, the administration also put out $1.5 trillion infrastructure plan, but it doesn’t include any money specifically targeted for school facilities.

school choice word choice

The ‘V’ word: Why school choice advocates avoid the term ‘vouchers’

PHOTO: Grace Tatter
Students, parents and activists against vouchers fill a committee room at the Tennessee State Capitol.

A new poll by the pro-voucher group American Federation for Children is meant to illustrate Americans’ support for school choice. But it also offers some insight about how advocates choose how to talk about hot-button education issues.

What caught our eye was something buried in the polling memo: Voters said they narrowly opposed school vouchers, 47 to 49 percent, even though similar approaches like “education saving accounts” and “scholarship tax credits” garnered much more support.

These findings help explain why advocates of programs that allow families to use public money to pay private school tuition often avoid the word “voucher.” The website of National School Week, for instance, doesn’t feature the term, referring instead to “opportunity scholarships.” (Notably, Education Secretary Betsy DeVos, who led AFC before joining the cabinet, herself has been less shy about saying “vouchers.)

The debate on how to brand “school choice” — or to critics, “privatization” — has been long running, and Republican pollsters have advised advocates to avoid the word “voucher.”

This phenomenon may help explain the national rise of tax credit programs, which function like vouchers but usually go by a different name and have a distinct funding source. It also makes it quite difficult to accurately gauge public opinion on the policy, as small tweaks in how a question is worded can lead to very different results.

The recent AFC poll points to substantial support for “school choice,” with 63 percent of respondents supporting that concept. That’s in response to a question with very favorable wording — defining school choice as giving a parent the ability to “send their child to the public or private school which best serves their needs.”

Still, support for school choice dropped several percentage points from last year. That’s consistent with a poll from August that found support for charter schools was falling, too.

Showing how wording can matter, a 2017 survey from the American Federation of Teachers asked parents their view of “shifting funding away from regular public schools in order to fund charter schools and private school vouchers.” The vast majority were skeptical.

When school vouchers have been put up for a vote, they’ve almost always lost, including in DeVos’s home state of Michigan. Supporters and critics may get another shot this year in Arizona, where the fate of a recently passed voucher program will be on the ballot in November, barring a successful lawsuit by voucher advocates.