In contrast, once the proposed Tax Education Credit is enacted, the effect of an $11,100 donation to an ESO (assuming a 90% credit) would result in a near complete satisfaction of my state tax liability (90% credit of $11,100 is about $10,000) as well as a 122% increase in my support of Jewish education (from $5,000 to $11,100), all while shaving nearly $4,000 off my bottom line. It’s similar to participating in a matching campaign. Consequentially, this will compel schools to provide opportunities to their benefactors seeking the EITC, by aligning themselves with an ESO before another institution does.
That’s all good – but the creation of ESOs that exclusively benefit local yeshivas may have unintended implications for the Jewish community.
For one, institutions like synagogues, kollels, and beis medrash programs may find it harder to secure donations since their donors won’t benefit from the EITC–these institutions will likely not qualify under the program.
For schools that currently serve affluent communities and rarely grant tuition assistance, another problem may arise. Since ESOs can only make distributions to supplement a student’s tuition, schools that currently grant minimal scholarships may be unable to tap into ESOs that were generously funded to benefit them. Assuming that schools will re-direct expected donations to affiliated ESOs, it is highly unlikely that an ESO collaborating with a school in this context would implement a scholarship criterion that allows students currently paying full tuition to obtain scholarships. Unfortunately, the alternative is for schools to raise tuition across the board enabling an affiliated ESO to then allocate scholarships to some of those who were previously paying full tuition.
Since the bill allocates only $75 million in credits toward ESOs throughout the state for all ESOs in the first year, the portion of that directed to the Jewish community only will likely be too insignificant to result in the concerns discussed above.
If the program grows, however, these could become real issues for both parents and institutions that don’t qualify for scholarships from ESOs. But as with anything else, where there is reward, there is also risk.
While this bill’s immediate effect on our community may be uncertain, the precedent set by its passage would be monumental and could help create solutions that bring significant tuition relief going forward. The community should strongly support the passage of this bill.