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Jake Penwell 40-40


A recent article in The Billings Gazette asserted that “Montanans are not lining up for school choice tax credit.” The implication was that Montanans do not want additional educational options, but that conclusion is misleading. The  demand for expanded choice is high, and hundreds of Montanans are benefitting from school choice despite the limitations of our tax credit program.

ACE Scholarships has been providing privately funded K-12 scholarships to low-income students in Montana since 2012, and the organization currently supports nearly 750 students annually in Montana. Demand has been clear from the beginning. In the first year, with no marketing, ACE received over 800 applications from families looking to change schools, and the demand has multiplied over the last five years.

ACE does not currently participate in Montana’s scholarship tax credit program because of limitations built into the policy. Scholarship tax credit programs are designed to be incentives for charitable giving toward privately funded K-12 education scholarships, and policy details are essential to their success. Although Montana’s legislation also created assistance for public schools, political compromises led to a Montana program that is far from the initial design.

Out of 18 states with scholarship tax credit programs, Montana’s is the most restrictive. Capping the tax credits for individual contributors at $150 per year effectively discourages most donors from participating. For some, such a small credit may not even be worth filling out the required paperwork. For others with significant giving capacity, the restrictions make it more attractive to direct their philanthropy away from education.

Tax credit too small

As a consequence, Montana’s program generated less than $10,000 in donations in 2017. By comparison, Arizona’s four scholarship tax credit programs generated $130.8 million for scholarships in fiscal year 2016. Even Nevada’s new scholarship tax credit program brought in $5 million in contributions in its first year. With careful design, many tax credit programs actually save money for their respective states.

Fortunately, generous individuals in Montana have enabled ACE to advance our mission of expanding opportunity for low-income students. However, improved programs that truly provide incentives would allow ACE and other educational charities, like Big Sky Scholarships, to provide additional options to students who can’t afford school choice.

The difference educational choice is making in the lives of ACE students and their families in Montana is clear. ACE students in Montana reach higher levels of proficiency in math than their public-school peers, do as well or better in most grades when it comes to reading, outperform those same peers in all ACT subject areas, graduate from high school at higher rates, and directly enroll into colleges and universities after high school at higher rates.

Generations benefit

In the future, the children of current ACE students will also realize benefits from their parents’ educational success. Studies have identified parental education as “the single strongest correlate of children’s success in school, the number of years they attend school, and their success later in life.” ACE students are more likely to reach higher levels of academic success and attainment, so we can expect their children to do the same, creating a generational ripple effect throughout the Montana. Without the opportunity provided to their parents by educational choice, those outcomes could be very different.

ACE and other scholarship organizations are engaged in the hard work of changing the world by changing as many individual lives as possible for the better. That work is generating powerful impacts for students and families. Montanans may not be lining up to participate in the state’s limited scholarship tax credit program, but hundreds of Montana families are indeed benefitting from expanded choice in education, as are hundreds of thousands of students nationwide.

In light of the success of ACE scholars, the lack of participation in Montana’s limited scholarship tax credit program demonstrates that we could be doing far more to help education as a whole in our state. We should make sure our focus remains finding ways to do just that.

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Jake Penwell, of Billings, is the state director of Montana and Wyoming for ACE Scholarships, a nonprofit that provides scholarships to nearly 5,000 students across six states.