The last couple of weeks have been a roller coaster ride for proponents of North Carolina’s popular Opportunity Scholarship Program (OSP).
On May 2 the North Carolina State Senate approved legislation (HB 823) to provide about $488 million to eliminate the waitlist for the OSP and ESA + programs and to replenish the OSP reserve fund.
The hope was that the North Carolina House of Representatives would take quick action and a bill would get to the governor’s desk quickly. It’s expected the governor would veto the legislation, and that would likely set up important veto override votes in each house. But that is not happening — yet. House leaders view the appropriation as a significant budget item. As such, they will likely instead include funding to eliminate the waitlist in the state budget.
Such a decision is bad for a variety of reasons.
Tying expansion to the budget bill hurts families and students. Families need to know now if they will have the money to move their child to another school. Practically speaking, tying this legislation to the budget delays their decision a minimum of two months. It only ensures parents will have no certainty about whether their child will have a scholarship and a new school to attend next year. By the time a budget passes, it will likely be too late for most families to take advantage of the additional funding, forcing them to wait another year.
Linking expansion to the budget bill also hurts schools. Delaying the decision means schools will not know how many new students to expect or how many students might be leaving. The uncertainty will cast a fog over the planning process at a very important time of year.
Lastly, the House’s actions are bad for lawmakers. Last fall, the House and Senate both basked in the glow of the good publicity lawmakers received for expanding educational options for parents. Promising voters and then not delivering when parents need to make decisions about their child’s education does not sit well with voters, especially six months before an election.
In addition to the legislative snags, opponents of universalizing the Opportunity Scholarship Program say lifting the cap goes too far in that it creates a welfare program for millionaires. Millionaires, they assert, will now have public money to pay for the private school tuition of their children. Progressives continue to beat this drum. However, repeating the same statements doesn’t make them true.
Let’s take a closer look at these claims. Having the public pay for the education of millionaires? There is something morally wrong here, so we’re told. Millionaires are freeloading off of taxpayers who are paying the freight of those who can afford to send their children to private schools. It’s not right.
But is that what is happening? A household with an income of $1,000,000 in North Carolina, after the standard deduction ($25,500) is subtracted and a tax rate of .045 percent is applied to the remainder, is subject to a state income tax of $43,852 (assuming they don’t itemize deductions or take any other deductions).
If the family is awarded an Opportunity Scholarship, it receives approximately $3,300. The household would still pay about $40,550 in personal income taxes, about 92 percent of the original liability. Average household income in North Carolina in 2022 was $92,878 . That income – if we assume a standard deduction ($25,500) and a standard deduction for two children ($1,500 x 2=$3,000) , produces a tax liability of approximately $2,900, about one-fourteenth the tax liability of a millionaire. The point: millionaires are paying not only for the education of their own children but also for the education of many others.
Critics seem intensely focused on the $3,300 scholarships high-income families might receive. It should be noted that the scholarship is pro-rated by income. Award to high-income households are significantly less than the $7,400 awarded to recipients with the lowest household income.
Lastly, if scholarship opponents are opposed to the $3,300 “subsidy” students enrolled in schools of their choice, why do they ignore the nearly $13,000 in subsidies each millionaire child enrolled in a traditional public school receives? Opponents also forget that high income households pay more in income and property taxes that help to finance a public school system for all.
Two weeks ago, the Senate did a courageous thing and immediately voted to approve money and move forward with the expansion. We hope legislative leaders in the House realize the delay is creating an array of additional problems for families and schools. We urge lawmakers in the House to vote now to eliminate the OSP waitlist. It’s the right thing for parents, students, and North Carolina.
