HJM 4013
In CommitteeHouse
K-12 federal tax-credits
Urging Governor Ferguson to establish a framework with the legislature to opt Washington state into the federal tax-credit scholarship program for K-12 educational expenses.
This status may be delayed. See Action History below for the latest updates.
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- Floor Vote: The full chamber (House or Senate) debates and votes on the bill.
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- Governor: The Governor reviews the bill and decides whether to sign or veto it.
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AI Analysis
This joint memorial urges the governor to opt Washington into a new federal program that lets taxpayers redirect up to $1,700 in federal tax credits to scholarships for K-12 students from working- and middle-class families. The program would bring an estimated $732 million per year in federal funds to Washington students at no state cost, with strict accountability rules for scholarship organizations.
- Calls on the governor to elect Washington’s participation in the federal tax-credit scholarship program established by Public Law 119-21 (enacted July 4, 2025).
- Requires the governor to identify and submit a list of qualified scholarship-granting organizations in Washington to the IRS by January 1, 2027.
- Limits scholarships to students from working-class and middle-class families with household incomes at or below 300% of area median gross income.
- Allows individual taxpayers to direct up to $1,700 in federal tax credits annually toward scholarships for Washington students.
- Requires scholarship organizations to meet strict federal accountability standards, including annual financial audits, public reporting, income verification, and spending at least 90% of funds directly on student scholarships.
- Authorizes use of scholarship funds for tutoring, special education services, educational therapies, curriculum materials, technology, and other qualified K-12 expenses.
Who is affected
- Working and middle-class families with K-12 students — Families with household incomes at or below 300% of area median gross income who may receive scholarships for K-12 educational support.
- Scholarship-granting organizations operating in Washington — Organizations that provide scholarships and must meet federal accountability standards (e.g., audits, spending requirements) to participate in the program.
- K-12 students in Washington — Students in both public and private K-12 schools who could benefit from tutoring, special education services, technology, and other approved educational expenses.
- State of Washington (Governor and Legislature) — State government, which would not incur any costs but would enable federal funds to flow into the state for educational support.
Pro/Con Analysis
Stronger case for benefits
Potential Benefits (5)
Brings an estimated $732 million in federal funds to Washington students annually at no state cost, directly supporting tutoring, special education, and technology for working- and middle-class families—many of whom currently lack resources for private educational support.
EducationPeopleRef: Limits scholarships to students from working-class and middle-class families with household incomes at or below 300% of area median gross income (WHEREAS clause 4); Fiscal impact: $732 million in annual federal funds at zero state cost (WHEREAS clauses 6, 11)Expands access to specialized educational services (e.g., special education therapies, assistive technology) that public schools often underprovide—directly benefiting students with disabilities and learning differences who need targeted support.
EducationPeopleRef: Authorizes use of scholarship funds for tutoring, special education services, educational therapies, curriculum materials, technology, and other qualified K-12 expenses (WHEREAS clauses 2, 10); Requires scholarship organizations to spend at least 90% of funds directly on student scholarships (WHEREAS clause 9)By ensuring federal education funds flow to Washington students rather than being lost to other states, the program helps reduce educational inequity and may improve long-term outcomes (e.g., graduation rates, workforce readiness) that reduce future public safety and social service costs.
Public SafetyPeopleRef: Requires income verification and prohibits self-dealing (WHEREAS clause 9); Fiscal impact: $732 million in annual federal funds at zero state cost (WHEREAS clauses 6, 11)Creates new demand for scholarship-granting organizations and related service providers (e.g., tutors, ed-tech vendors), potentially generating local jobs—especially in education support and nonprofit administration.
Business & EmploymentPeopleRef: Allows individual taxpayers to direct up to $1,700 in federal tax credits annually toward scholarships (WHEREAS clauses 3, 5); Requires the governor to identify and submit a list of qualified scholarship-granting organizations by January 1, 2027 (WHEREAS clause 7)The program is structured to avoid state fiscal liability while capturing federal funds—potentially freeing state education funds for other priorities or reducing pressure for future tax increases to meet existing K-12 needs.
FinancialLean peopleRef: Fiscal impact: No state cost; leverages $732 million in annual federal funds (WHEREAS clauses 6, 11); Participation is voluntary and requires no state mandate (WHEREAS clauses 7, 11)
Potential Concerns (5)
The program’s income cap (300% AMGI) excludes many working families just above the threshold—e.g., a household earning $120,000 in King County (AMGI ~$100,000) would be ineligible—limiting access to families just above the middle class and creating a sharp cliff effect.
EducationPeopleRef: Section 25F(g)(1)(B) of the Internal Revenue Code (cited in WHEREAS clauses 1, 2, 5, 7, 11, 13); Limits scholarships to students from working-class and middle-class families with household incomes at or below 300% of area median gross income (WHEREAS clause 4)The 90% spending requirement and audit burden may disproportionately disadvantage small, community-based scholarship organizations without existing financial infrastructure, potentially consolidating the market toward larger, well-funded nonprofits or for-profit providers.
Business & EmploymentLean peopleRef: Requires scholarship organizations to meet federal accountability standards, including annual financial audits, public reporting, income verification, and spending at least 90% of funds directly on student scholarships (WHEREAS clauses 9, 12); Authorizes use of scholarship funds for tutoring, special education services, educational therapies, curriculum materials, technology, and other qualified K-12 expenses (WHEREAS clauses 2, 10)The $1,700 cap is indexed to federal tax liability, meaning only taxpayers with sufficient federal tax liability (i.e., higher earners) can fully utilize the credit—lower-income families with little or no federal tax liability may not benefit despite being eligible to receive scholarships.
FinancialLean peopleRef: Allows individual taxpayers to direct up to $1,700 in federal tax credits annually toward scholarships (WHEREAS clauses 3, 5); Fiscal impact: $732 million in annual federal funds (WHEREAS clauses 6, 11)While no direct state cost is incurred, implementation requires administrative coordination (e.g., vetting organizations, reporting to IRS), which may strain local offices or require temporary staffing—costs likely borne by local government staff without dedicated funding.
Local GovernmentLean peopleRef: Requires the governor to identify and submit a list of qualified scholarship-granting organizations by January 1, 2027 (WHEREAS clause 7); Participation is voluntary and requires state action (WHEREAS clauses 7, 11)The program does not address systemic underfunding of public schools or special education—instead, it may accelerate分流 of resources from public school systems to private providers, potentially weakening public school infrastructure and long-term public safety outcomes tied to stable, well-resourced schools.
Public SafetyPeopleRef: Fiscal impact: No state cost; leverages $732 million in annual federal funds (WHEREAS clauses 6, 11); Authorizes use of scholarship funds for tutoring, special education services, educational therapies, curriculum materials, technology, and other qualified K-12 expenses (WHEREAS clauses 2, 10)
Who Is Most Affected
Families earning up to 300% AMGI may gain access to tutoring, special education services, and technology—especially helpful for those whose public schools lack resources. However, families just above the income cap (e.g., $110K–$120K in high-cost areas) are excluded, and lower-income families with little federal tax liability may not benefit from the tax credit mechanism.
Large, well-established scholarship organizations with audit-ready financial systems stand to gain funding and scale. Smaller, community-based or faith-based groups may struggle with compliance costs (audits, reporting), potentially reducing diversity of providers or consolidating the sector.
Students with disabilities, learning differences, or from under-resourced schools benefit most from access to therapies, assistive tech, and tutoring. However, students in high-performing public schools may see fewer systemic improvements if resources分流 to private providers.
The state avoids fiscal liability and gains federal funds, but may face administrative burdens (e.g., vetting organizations, IRS reporting). Public school districts may experience indirect pressure as some students use scholarships to exit public schools, potentially affecting per-pupil funding formulas.
Public school districts may lose students and associated per-pupil funding to scholarship recipients using private providers, potentially straining budgets and reducing capacity to serve remaining students—especially in districts already under-resourced.