New Revenue Opportunity for Public Schools

A new provision in the recently enacted One Big Beautiful Bill Act (OBBBA)—Section 70411—creates a federal tax credit scholarship program that could open up a new stream of funding for students, including those enrolled in public schools. This is the section of the federal legislation that set up the federal voucher program to primarily benefit private schools. However, this bill presents a potential surprising opportunity that benefits public schools too.

What the Program Does

Beginning in 2027, taxpayers will be able to receive a dollar-for-dollar federal tax credit (up to $1,700 annually) for donations made to approved Scholarship Granting Organizations (SGOs). The law permits SGOs to collect donations for "expenses in connection with enrollment at, or for students attending, elementary or secondary public, private, or religious school."

These organizations will then distribute funds to students in the form of scholarships for a wide range of educational expenses.

Importantly, the law allows funds to be used for:

• Tuition and fees
• Academic tutoring
• Special needs services for a student with a disability
• Books, supplies, or other equipment
• Expenses for room and board
• Uniforms
• Transportation
• Supplementary items and services, including afterschool and extended day programs
• Expenses for the purchase of any computer technology or equipment or internet access

This means that, depending on how the program is implemented, public schools could partner with SGOs to access privately funded resources to support students—without reducing state or local funding.

Why This Matters for Public Schools

Because the program is funded through private donations incentivized by federal tax credits, it represents a new and potentially scalable funding source for student supports and interventions.

In practice, districts may be able to:

• Expand tutoring and intervention services
• Provide additional supports for high-need students
• Offer à la carte classes and services to non-enrolled students (depending on state rules)
• Leverage community partnerships to meet student needs

Important: Rulemaking Still Underway

At this stage, key details are not yet finalized. Federal agencies—primarily the U.S. Treasury—are still developing rules that will determine:

• How states opt into the program
• How SGOs are approved and regulated
• What expenses are ultimately allowable
• How public schools can participate in practice

In addition, states will play a significant role in shaping how this program operates locally, including how public schools can access these funds. On December 10, 2025, Governor Abbott announced Texas' intent to opt in to the program in this press release. More specifically, he said

"Students from families at or below 300% of local median income are eligible and will apply to qualifying SGOs for scholarships which may be used for tuition or other educational expenses at a public or private school such as tutoring, transportation or special needs services. States must opt in to in the program, which starts in January 2027."

What We’re Watching

The Texas School Coalition is actively monitoring:

• Federal rulemaking and IRS guidance
• State-level decisions on whether and how to opt in
• Practical pathways for districts to participate
• Potential fiscal and policy impacts on public education

We will continue to keep you informed as more clarity emerges and will provide guidance on how districts can evaluate and potentially leverage this opportunity.

If you have questions or would like to discuss how this could apply to your district, please don’t hesitate to reach out to me.