Reconciliation vs. Appropriations

Washington is awash with beautiful cherry blossoms forcing politicians and the public alike to stop and appreciate natural beauty for a few extra moments each day. But when the team isn’t navigating the crowds and cherry blossoms on Capitol Hill, our focus is on how Congress is trying to pass a budget resolution before the Easter break. This resolution will determine how much they are willing to spend and cut to pass an extension of the 2017 Trump tax cuts and increase border security.

This legislative process, known as budget reconciliation, is the same one that was used to pass the American Rescue Plan, the Inflation Reduction Act, and the 2017 Tax Cuts and Jobs Act. It can be extremely confusing as to how this differs from the appropriations process, which is why we put together this quick graphic to help you keep it straight.

While appropriations will begin in earnest following the President's budget release in May, the current emphasis is on reconciliation which is the process by which some House and Senate Republicans will try in earnest to create the first national school voucher program. The legislative vehicle for this is the Educational Choice for Children Act (HR 833/S.292), which cannot pass on its own and would need to be added to the budget reconciliation. This ECCA is unprecedented from both an education and tax perspective. It would be the first time the federal government would give any taxpayer a dollar-for-dollar tax credit (not a standard deduction) for a donation to a 501c3—and not just any 501c3, one that has the sole focus of bundling together payments for kids to attend private school or be homeschooled. But it’s also unique in that it would create a jaw-dropping tax shelter (read about it here) that any savvy  accountant would advise their wealthy investors to take advantage of regardless of their view on school voucher programs. The intentional tax shelter ensures that this becomes a $100 billion tax credit voucher program.

The voucher is nearly universal as it can go towards families making as much as 300% of the area median income and allows state and federal vouchers to be stacked together, offering sizeable subsidies for families already receiving tuition discounts. There is no limit to the voucher amount a family could receive and there is no sliding scale that would assume wealthy families receive less funding than low income families. There is no accountability for taxpayers regarding how the funding will be spent by families or schools. In fact, the federal government and States are prohibited from disallowing or even questioning a single expense or a single school that receives these funds, so that Republicans can claim the legislation will “maximize educational freedom.” We know this is our battle to lose. Recent polling shows that the public agrees that public funds should fund public schools, which serve over 90% of students, rather than being diverted to private schools. We will continue to join superintendents from across the country in fighting as hard as we can against this harmful tax and education policy. America cannot afford to subsidize a second private system of education when our public schools are underfunded. If you haven’t taken action yet, please reach out to our team and let us know how we can empower you to make a difference in this battle for the future of public education.