Five Democratic governors are asking the Trump administration for more clarity on the federal government’s ambitious new school choice program as they consider whether to enroll their states.
In an Oct. 22 letter to Treasury Secretary Scott Bessent, whose agency will oversee the program, the governors of California, Connecticut, Massachusetts, Michigan, and New Jersey asked for more details on the soon-to-launch program, particularly regarding its costs to states, details on expenses it can cover for public school students, and whether they can do anything to ensure lower-income students benefit.
Governors need to tell the Internal Revenue Service by Jan. 1 whether their states will participate in the program in its first year.
The request for clarity from the Treasury Department is a sign of some movement on the issue, and shows what Democratic governors are considering as they decide whether to participate.
“As we consider whether to participate in the Federal Scholarship Tax Credit under Section 25F of the Internal Revenue Code, we seek clarity on whether and how the program can provide meaningful opportunities for public school students while avoiding unintended consequences that could divert resources from or otherwise weaken our public education systems,” the letter states.
It was signed by Govs. Maura Healey of Massachusetts, Ned Lamont of Connecticut, Gavin Newsom of California, Mikie Sherrill of New Jersey, and Gretchen Whitmer of Michigan. Spokespeople for all five told Education Week earlier this month that they’re reviewing the Trump administration’s newly released regulations for the program.
The federal school choice program incentivizes donations
The Federal Tax Credit Scholarship incentivizes individual taxpayers to donate to nonprofit scholarship-granting organizations by offering dollar-for-dollar tax credits on donations up to $1,700 (or $3,400 for married couples). Those nonprofits, also called SGOs, then award scholarships to students to spend on, say, private school tuition or qualified expenses tied to their education in public schools.
The Treasury Department released proposed regulations on Oct. 1 outlining how the program will function, but it omitted detailed guidance on what counts as eligible expenses for scholarship funds. The IRS, a part of the Treasury Department, said it would release those additional guidelines soon but did not give a specific timeline.
The Treasury Department didn’t respond to a request for comment on the governors’ letter, which was first reported by Politico.
The federal law that authorizes the program and the IRS regulations explicitly permit public school students to use scholarships for tutoring and special education services. But the governors said in their letter that they need more specifics—not just on which tutoring and special education expenses qualify, but also which expenses related to educational technology, transportation, and after-school and summer programming qualify, if any. The governors also inquired about any quality standards attached to services to tutoring or special education services.
After reviewing the regulations, the five governors said they also needed questions answered about combating fraud, program costs, and state control and oversight in order to make “fully informed decisions regarding the 2027 program year.”
Among their questions:
- What information will the IRS provide to participating states so they can monitor SGO activities for fraud and abuse, as the proposed regulations would require?
- Will there be federal funding available for participating states to help with oversight?
- What will the federal government do to enforce the law when an SGO violates program requirements?
- What oversight responsibilities do states have over SGOs that operate in several different states?
- What actions can states take to encourage participation from disadvantaged students—such as those from low-income families or those with disabilities—without putting restrictions on SGOs that would run afoul of federal rules?
Most Democratic governors still haven’t said whether they’ll opt in
Will they opt in, or won’t they?
That’s ultimately the question hanging over most of the nation’s Democratic governors as they weigh whether to opt in to the federal government’s new school choice program.
Their choices will ultimately dictate how big the program can grow, as students can’t participate unless their governors sign their states up for it.
Of the 16 governors (and the mayor of the District of Columbia) who haven’t announced plans to participate one way or another in the Federal Scholarship Tax Credit program, 15 are Democrats. That number hasn’t changed since May.
Even if the 16 states that haven’t announced their intentions and the District of Columbia don’t opt in, the Federal Tax Credit Scholarship program is poised to become one of the federal government’s largest education-related line items.
The IRS projects that it could grow to at least 2 million students and $26 billion annually by 2030 in the 30 states that had opted in by Oct. 1. Title I, the U.S. Department of Education’s largest funding stream for schools, totaled $18.4 billion in 2026 by comparison.
While outstanding questions about how the program will function may be delaying decisions from some Democratic governors, the upcoming midterm elections may also factor into their hesitancy.
Democratic governors must balance some supporters’ opposition to school choice with the potential money the federal program could reel in.
So far, two Democratic governors—Jared Polis of Colorado and Kathy Hochul of New York—have opted their states in while three have said they won’t. Those that haven’t decided have faced intensifying pressure from supporters and opponents.
In a recent debate, Pennsylvania Gov. Josh Shapiro, a nationally prominent Democrat running for a second term, said that while “a number of governors have shut the door on this,” he is “very open” to opting his state in and that he’ll make a determination in the coming weeks.
