South Dakota Gov. Dennis Daugaard signed a scholarship tax credit (STC) bill into law today, making the Mount Rushmore State the 29th state to enact a private school choice law, and the 21st to enact STCs. However, while an important step in the right direction, the number of students who will be able to receive tax-credit scholarships is vanishingly small.
South Dakota’s Partners in Education Tax Credit Program provides tax credits to insurance companies that contribute to nonprofit scholarship organizations that help low-income families pay tuition at the school of their choice. According to the Friedman Foundation, nearly four in ten South Dakota families meet the income eligibility requirements (150 percent of the federal poverty line, or about $67,000 for a family of four in 2015-16), but only a tiny fraction of eligible students will actually receive scholarships because the law only provides a total of $2 million in tax credits. With a scholarship cap equal to 82.5 percent of the state’s per-pupil expenditure at district schools, the maximum scholarship value in 2015-16 will be $4,023. That means that in a state with about 147,000 K-12 students–nearly 16,000 of whom are enrolled in private schools–only 500 students could receive scholarships worth $4,000.
That’s great for the one-third of one percent of South Dakota students who might get a scholarship, but it’s hardly revolutionary.