WASHINGTON, D.C. – On Tuesday, Congresswoman Terri A. Sewell (D-AL) introduced the Public Funds for Public Schools Act (H.R. 4269), a bill which would close a tax loophole that diverts resources away from public schools and allows the wealthy to turn a profit on donations to private school voucher organizations. Each year, wealthy donors use tuition tax credits to divert an estimated $1 billion in taxpayer funding to private and often unaccountable schools. Rep. Danny Davis (D-IL) is an original co-sponsor of the Public Funds for Public Schools Act.

“As the daughter of two long-time educators and the proud product of Selma public schools, I know the power of public education,” said Rep. Terri Sewell. “Today’s legislation would stop wealthy donors from cheating our tax system and diverting dollars away from children in our public schools. Under current law, wealthy donors in states like Alabama can turn a profit on contributions to private school voucher organizations by claiming both state and federal tax benefits. At a time when our public schools are short on resources and Congress is struggling to find funding for important programs such as the Individuals with Disabilities Education Act (IDEA), we have a responsibility to close this tax loophole and protect public funds for public schools.”

Tuition Tax Credits (TTCs) are offered to individuals or corporations in 18 states who contribute to Scholarship Granting Organizations or school voucher nonprofits. In seven of these states, the tax credit is dollar for dollar. In addition to receiving a full refund from their state, these wealthy donors qualify for a federal tax deduction on the same donation, allowing many donors to turn a profit off of their contribution to the private school system.

For more information on the Public School Funds for Public Schools Act, see the one-pager.

In addition to the lost revenue for public education, TTCs hurt public schools by encouraging the departure of well-resourced students to private schools. Thirty-five states provided less overall state funding per student in the 2014 school year than before the recession took hold in 2008. Rather than investing more in public schools, states with TTCs are reimbursing the wealthy for providing funding to private, often unaccredited schools.

Savings created by the Public Funds for Public Schools Act could be reinvested in the school system to offset costs for K-12 education programs, like those under the Individuals with Disabilities Education Act (IDEA).