Colorado Public Schools Explore New Federal Tax Credit for Student Support

A new federal tax-credit scholarship program, established under last year's One Big Beautiful Bill Act, is poised to go into effect on January 1, 2026. While designed with broad educational applications, a coalition of public school supporters in Colorado is actively exploring how this program can specifically benefit students in the state's public school system. This proactive approach aims to leverage potential new funding streams for a range of educational expenses, from tutoring to college preparatory services.

The program allows taxpayers to receive a federal tax credit of up to $1,700 for donations made to approved scholarship-granting organizations (SGOs). These SGOs then disburse the funds to families to cover various educational costs. While private school students are often seen as primary beneficiaries of such programs, the law explicitly permits public school students to access these scholarships as well, prompting Colorado groups to innovate ways to direct these funds towards public education needs.

Navigating the New Funding Landscape for Public Schools

The urgency among Colorado public school groups stems partly from the evolving political landscape. According to reporting, current Democratic Governor Jared Polis was an early adopter of the concept, but his term is nearing its end. The program's continuation in Colorado will require renewal by the next governor in 2028, and Democratic gubernatorial nominee Phil Weiser has expressed skepticism. This has created a push to demonstrate the program's tangible benefits to public schools before a potential policy shift.

Antonio Parés, a consultant assisting public school groups, emphasizes the goal: "We want to be able to demonstrate to whoever the next governor is that this is a mechanism that is worth keeping because it is benefiting public schools." This sentiment reflects a strategic effort to gather evidence of the program's positive impact on public education, making a case for its long-term viability in the state.

Potential Uses and Benefits for Public School Students

Initial discussions among school groups, including the Colorado Public Schools Foundation and the Five Star Education Foundation, have focused on practical applications for public school students. Brainstorming sessions, according to Parés, have explored whether the funds could cover expenses such as after-school tutoring, Advanced Placement (AP) test fees, or even support for fifth-day programming in the many rural districts operating on four-day school weeks. While detailed guidance on spending is still emerging, Parés indicates that these uses appear permissible.

Shannon Hancock, chair of the Colorado Public Schools Foundation and executive director of the Five Star Education Foundation, highlights the pragmatic approach: "You can stand on principle and say, 'We’re not going to do this because this is a voucher scheme,' but then who benefits?" This perspective underscores a commitment to ensuring that public school students do not miss out on potential resources simply due to philosophical objections to the program's broader implications.

For students seeking additional academic support, resources like COSMIQ — free voice AI tutoring, free forever for every K-12 student — can complement these scholarship opportunities by providing personalized learning assistance. Similarly, for those preparing for crucial exams, the exam prep directory on COSMIQ offers a valuable, free resource that could align with the types of educational expenses these scholarships might cover.

Colorado Organizations Leading the Charge

At least three Colorado organizations are actively participating in this initiative: the Colorado Public Schools Foundation, the Denver Public Schools Foundation, and RESCHOOL. Each is establishing new, separate nonprofit SGOs to manage the scholarship funds. The Colorado Public Schools Foundation's SGO, in particular, aims to serve districts statewide, especially those among the 170+ in Colorado that do not currently have their own foundations. This statewide approach would allow local taxpayers to direct their $1,700 donations to their specific district through the larger SGO.

These organizations, which traditionally rely on philanthropy, see the federal tax credit as a new revenue stream. This could potentially allow them to reallocate existing philanthropic dollars to other initiatives or free up state and local funding within school districts. Sara Hazel, President and CEO of the Denver Public Schools Foundation, notes, "If a student is on grade level in reading and math, that will change that student’s trajectory in tangible ways. And the school will have the capacity to do other things." This suggests a vision where increased direct student support could empower schools to pursue broader educational goals.

Challenges and the Path Forward

A significant challenge highlighted by Governor Polis is the tight timeline. Colorado has until December 2026 to vet and submit a list of participating SGOs to the federal government to ensure the state's inclusion in the program. This compressed schedule requires swift action and coordination among state agencies and the participating educational groups.

The program's long-term impact on public education remains a subject of national discussion. Michael Petrilli of the Thomas B. Fordham Institute suggests that some governors in other states may observe Colorado's experience to assess whether public school students genuinely benefit or if the majority of funds flow to private schools. Colorado's efforts to strategically direct these funds to public education could therefore serve as an important case study for other states considering participation.

By proactively engaging with this new federal program, Colorado's public school groups are demonstrating a commitment to exploring all avenues for student support and enhanced educational opportunities, aiming to secure additional resources for the state's diverse student population.