Education

Oklahomans’ demand for school choice exceeds supply

June 5, 2024

Ray Carter

When the Oklahoma Parental Choice Tax Credit was enacted in 2023, opponents argued that demand for school choice was limited largely to only wealthy families in Oklahoma’s metropolitan areas.

But demand for the tax credit has proven so robust it has blown well past the first-year program cap, leaving thousands of Oklahoma families unable to access the program. Beneficiaries came from all income levels and all parts of the state.

And even more families are expected to apply for the program next year as more working-class families pursue a private-school education for their children.

Supporters are pleased the program is working so well but note that officials must take action to ensure the Oklahoma Parental Choice Tax Credit program serves all families that wish to participate in the future.

“The demand for school choice is abundantly clear and overwhelming. It’s amazing to see parents in the driver's seat and see students in a school that fits them,” said Governor Kevin Stitt. “One of the best investments we can make in Oklahomans is expanding education freedom, and that means raising the cap on the parental choice tax credit program. I’m hopeful my colleagues in the Legislature will see how the tax credit has changed the lives of countless students and work with me to meet the demands of our constituents.”

“This is an issue the House anticipated, which is why the original House proposal included no cap for the credit,” said House Speaker Charles McCall, R-Atoka. “Over 5,000 Oklahomans that wanted to access the credit to further their children’s educational future were left on the waiting list. That is proof of the popularity of the credit, but a problem that needs to be solved. Thankfully, the credit has expansion triggers that will allow more to access it soon, but the next Legislature will definitely be met with a challenge to make supply meet the demand.”

House Bill 1934, which was signed into law last year, created the Oklahoma Parental Choice Tax Credit Act. The law provides refundable tax credits of $5,000 to $7,500 per child to help Oklahoma families cover the cost of private school tuition.

The lower a family’s income, the larger the tax credit. Families earning up to $75,000 can receive a $7,500 per-child refundable tax credit with the credit provided in two semester installments, while those earning $75,001 to $150,000 get a credit of $7,000 per child. The size of the credit slowly declines as income rises. The final bracket provides a $5,000 credit to those with incomes above $250,000.

The two lowest-income brackets are given priority and served first in the program before other families with greater income.

According to the Oklahoma Tax Commission, roughly 36,000 applications were submitted for the program this year, of which 16,800 were in the “priority” income brackets. The number of recipients in the priority categories exceeds the student enrollment at all but seven of Oklahoma’s more than 500 public-school districts based on enrollment data for the just-completed school year, while the total number of students from all income levels that applied for the program exceeds the enrollment at even the state’s largest school district.

In 2024, the Oklahoma Parental Choice Tax Credit program is capped at $150 million in tax credits. The cap has been reached this year with roughly 5,600 applicants denied participation as a result.

This year’s round of credits included $101 million awarded to families with incomes below $150,000.

In 2025, the cap will increase to $200 million, and in 2026 the cap will rise to $250 million.

If all families who applied this year reapply next year, up to $30 million of the extra $50 million in tax credits provided next year could go to current applicants. The remaining $20 million would pay for just under 2,700 additional students from families with incomes below $75,000, so it’s possible that demand may exceed the supply of credits again next year.

Many more lower-income families are expected to apply for the credit next year since many private schools are now working to attract students from those households, who can now pay for private education thanks in part to the existence of the tax-credit program.

However, there may be even less room for growth than those initial figures indicate because a significant number of this year’s student beneficiaries were given only a fraction of the credit they qualified for under a bizarre legal interpretation imposed by the Oklahoma Tax Commission this year.

Although qualified families are supposed to receive their per-child tax credit in two equal installments by semester, families who enrolled a child in a private school for the first time starting next fall were treated differently by the Oklahoma Tax Commission. Many of those families instead received just one-fourth of the credit. Thus, parents earning less than $75,000 who expected a credit of $3,750 per semester instead received $1,875.

In some instances, working-class families who were approved for participation in the tax-credit program may nonetheless be prevented from enrolling their children in private school, while others who were able to make their personal finances stretch to make up the difference are expected to qualify for the full credit next year.

In a signing statement for another bill related to the Oklahoma Parental Choice Tax Credit program, Stitt urged lawmakers to address the quarter-payment problem, and members of the Oklahoma House of Representatives advanced legislation addressing the issue via amendments to Senate Bill 1477. The House amendments would have ensured that families shortchanged for the fall 2024 semester received the entirety of their remaining tax credit in spring 2025 to make them whole.

However, members of the Oklahoma Senate never granted a floor hearing to the amended version of SB 1477, leaving in place the quarter-payment process used by the Oklahoma Tax Commission.

The success of the Oklahoma Parental Choice Tax Credit program has occurred despite the size of the tax credit being far less than the per-pupil funding provided in public schools.

According to Oklahoma State Department of Education data, public-school district funding in 2023 totaled $9,538,453,992 when student enrollment was 701,066, meaning per-student funding was $13,605 that year, the most recent for which full data are available.

That is significantly higher than the maximum tax credit of $7,500 for private school. Yet families are pursuing private school because it provides better academic outcomes and a better environment in many instances, despite many private schools having less money per pupil than their public-school counterparts.