It’s rare to find areas of bipartisan agreement these days, and we should celebrate them where they exist. One such area is support for school choice—the belief that families should be able to choose the right school for their child.
Indeed, support for school choice has risen to 80%, receiving strong support across demographics. And while the pandemic has clarified the need for choice, its broad benefits for families, teachers, and communities are “evergreen.” More on those, below.
Colorado curbing access to school choice
Despite strong public support for expanding choice, the Colorado Legislature is actively limiting families’ ability to choose the right schools for their kids. I’m not even talking about the fact that Colorado has declined to introduce legislation expanding choice beyond public schools (like the majority of other states have done). No, I’m simply talking about the refusal to follow federal tax code and allow 529 savings plans to be used for K-12 tuition.
529 plans are tax-advantaged savings accounts used to pay for qualified education expenses. While historically limited to higher education, in 2017 the federal tax code changed to allow these plans to pay for K-12 tuition. This was a valuable change as millennials are the most common owners of 529 plans, close to 10% of plan owners have annual household incomes less than $50,000, and 70% have incomes less than $150,000. This broadens education opportunities for families at crucial stages in their children’s lives. But it’s up to the states to adopt this tax code change. While the vast majority of states have followed suit, Colorado is one of 12 that have declined to do so.
If Coloradans can use 529 plan savings for private universities, why can’t we use them for K-12 private schools? In the formative stages of children’s lives, why limit choice and discourage equality of educational opportunity — especially when less than half of Colorado third-eighth graders are proficient in math and reading?
529 plan-related legislation
State Rep. Colin Larson (R-Littleton) has proposed bills each of the last three years to adopt the 529 plan federal tax code and expand access for families. Each time, the Democrat-led majority has rejected it.
Continuing to advocate for families, Larson recently proposed a “Compromise” bill which would create 529 “flex” accounts for K-12 tuition, trade schools, and apprenticeship/vocational training. It would allow a one-time $10,000, penalty-free roll-over from families’ existing 529 accounts. These “flex” accounts would be federal tax-free, but the state tax rate of 4.57% would still apply.
If the bill passes it’s a step in the right direction, but it’s unfortunate that Colorado families don’t get the same tax benefits as others across the country —that families have to “compromise” on their savings.
Why the pushback from Democrats?
The Democrat-led Legislature is concerned the budget would be hurt by letting families keep more of their savings. Analysis of the original 529 bill estimated this change could reduce the $7 billion annual education budget by a maximum of $3 million — a drop in the bucket especially when it means more school choice accessibility for families.
The estimated budget reduction also assumes families exercise their education-savings in masse. If that did happen there would be two reasons to celebrate: 1. Per-pupil funding in public schools would increase — since not all the pupil’s funding leaves a school when the student does, and 2. More families (using their savings) would be choosing schools that are right for their children.
Furthermore, the “Compromise” bill Larson is putting forth would ease Democrats’ concerns by keeping the state tax application in place.
School-related unions are also pushing back on this desire to expand families’ education freedom, saying it would hurt public schools. But if public schools are serving all students well, why would increasing access to choice threaten them? Should we be doing what’s best for students, or systems?
Benefits of school choice
Indeed, through freeing 529 plans for K-12 tuition use, the Legislature can make school choice more accessible to all. This choice delivers numerous benefits such as:
• Choice is a good in and of itself. Empowering families to choose the right schools for their kids sets them up for lifelong success.
• In general, private schools improve academic outcomes — especially for minority, low-income, and special needs children (it’s an equalizer!) as well as for students who remain in public school.
• Private schools are shown to improve student safety and tolerance.
• Parents with kids in private schools are more positive about their child’s academic, emotional, and social development.
• A more efficient use of taxpayers’ dollars.
Given these numerous benefits, why is the Legislature limiting families’ ability to access the right schools for their children?
Let’s empower families to use 529 plans for the K-12 school of their choice — helping children flourish now and in the future.
Will Johnson is a Colorado and country-loving writer based in Highlands Ranch.