SR 148: urging the governor to reconsider his decision not to allow hawaii to participate in the federal education freedom tax credit program.

SENATE RESOLUTION

urging the governor to reconsider his decision not to allow hawaii to participate in the federal education freedom tax credit program.

     WHEREAS, the Federal Education Freedom Tax Credit Program, scheduled to take effect in 2027, provides a federal tax credit of up to $1,700 for voluntary donations to certified scholarship granting organizations (SGOs); and

     WHEREAS, scholarships funded through the Education Freedom Tax Credit will be awarded to "students eligible to enroll in a public elementary or secondary school and from a household with income not greater than 300% of the area's median gross income"; and

     WHEREAS, scholarships can be used for a wide array of education expenses including tuition for students to attend private schools of choice, tutoring at public schools, and support services for students with disabilities; and

     WHEREAS, the Federal Education Freedom Tax Credit Program is funded by private contributions and the federal tax code, rather than through state appropriations; and

     WHEREAS, the Federal Education Freedom Tax Credit Program expands options for low- and middle-income families, while having no impact on state revenues and no reduction in public school funding; and

     WHEREAS, a state must opt-in to be considered a "covered state" participating in the program, and the statute provides the Governor of each state with the authority to make the election on behalf of the state; and

     WHEREAS, as of January 27, 2026, twenty-three states have elected to participate in the program: Alabama, Alaska, Arkansas, Georgia, Idaho, Indiana, Iowa, Louisiana, Mississippi, Missouri, Montana, Nebraska, Nevada, North Dakota, Ohio, Oklahoma, South Carolina, South Dakota, Tennessee, Texas, Virginia, West Virginia, and Wyoming; and

     WHEREAS, while even residents of non-participating states may make qualifying contributions to receive the tax credit, the non-participating state and its students will not receive the benefit of donated scholarship resources; instead, the donations will be used to benefit SGOs and students in participating states; and

     WHEREAS, if Hawaii elected to participate in the program, the State could designate SGOs supporting students in Hawaii to receive the qualifying donations; and

     WHEREAS, SGOs must be charities that use at least 90% of their income on scholarships for education choice options for eligible K-12 students; and

     WHEREAS, Hawaii reported 52% proficiency in reading and 40% proficiency in math in 2023 with some schools reflecting proficiency rates as low as 12% and significant disparities for Native Hawaiian and Pacific Islander students; and

     WHEREAS, opting-in to the Federal Education Freedom Tax Credit Program provides Hawaii's education system with more financial resources and empowers families with more decision-making power over their children's education; now, therefore,

     BE IT RESOLVED by the Senate of the Thirty-third Legislature of the State of Hawaii, Regular Session of 2026, the Governor is urged to reconsider his decision not to allow Hawaii to participate in the Federal Education Freedom Tax Credit Program; and

     BE IT FURTHER RESOLVED that certified copies of this Resolution be transmitted to the Governor and Superintendent of Education.

Report Title: 

Federal Education Freedom Tax Credit; Governor; Education; School Choice; Scholarships