For the first time, Kentuckians will be able to direct some of their tax dollars toward private or homeschool education. Starting Jan. 1, Kentuckians can get a one-for-one tax credit on up to $1,700 worth of donations to state groups that give out scholarships. Now, groups that want to grant those scholarships are lining up for approval.
Kentucky lawmakers who voted to opt-into a federal tax credit to fund K-12 scholarships said it would support both rural and urban areas, public and private schools. Organizations hoping to distribute the scholarships fueled by the federal credit are filing with the state.
Over the veto of Democratic Gov. Andy Beshear, the Republican-controlled legislature pushed through the new federal tax credit, which will allow Kentuckians to redirect their federal tax dollars toward scholarship funds that can pay for tuition, supplies, tutoring and other educational expenses for Kentucky kids.
Eight organizations have declared to the Kentucky secretary of state that they intend to be a scholarship granting organization, or SGO, once that federal credit begins. The majority of those eight groups will dedicate funds to paying for the private and religious education of Kentucky students, including through two out-of-state organizations which will set up Kentucky-specific scholarships, Kentucky Public Radio learned through open records requests.
They range from longstanding nonprofits like the Catholic Education Foundation based in Louisville to the newly incorporated Southeastern Kentucky Faith-Based Scholarship Fund.
All students’ whose household income is no more than 300% of the area median gross income are eligible. One SGO estimated that’s roughly 90% of Kentucky students.
But some of the applicants say they intend to give scholarships to students receiving a public education alongside private and homeschool students. The newly-formed Kentucky Education Foundation, currently led by the state’s 15 area development district directors, is working with public and private partners.
“It really comes down to a matter: do those employees want to send their tax dollars to Washington D.C. or do they want to send it to their local school?”said Will Hodges with the newly created education fund. “Most people are going to choose to send it to their local school.”
Hodges, a former public school superintendent and teacher, said he wants to bring more money into Kentucky education overall. The foundation is still working on specifics, including how donors can specify a region or type of school they want their scholarship to fund. He also discussed the beginnings of a plan to allow public school employees to set up automatic payroll deductions for the $1,700 tax credit.
“We feel confident with our model that we'll be able to raise funds in the rural areas as well through marketing and advertising,” Hodges said.
Special Education Lifeline, a nonprofit formed in 2024, also applied to be a scholarship granting organization. The Greenup County-based organization already advocates for students with special needs in public schools, but the nonprofit’s leaders said they want to expand to support students with and without disabilities.
Angela Pannuti, president of Special Education Lifeline and mother of a public school student with special needs, said she hopes this pivot will help students pay for all the extras: extracurriculars, adaptive equipment, musical instruments.
“We wanted to make sure that our kids in this area — if somebody wanted to donate, that we could also get the funds in an area that we know needs it,” Pannuti said.
Initiatives to redirect public funds toward private education have had a rocky history in Kentucky. The Republican-controlled legislature has tried several times to create publicly funded charter schools and state tax incentives, but none have gotten past the Kentucky Supreme Court. The fight culminated in a proposed constitutional amendment, voted down by Kentucky voters in every county in 2024.
While many Republicans champion “school choice” measures as a way to improve student outcomes, Democrats and some rural Republicans say public schools still serve the vast majority of Kentucky students, and pulling resources away won’t improve them.
Pannuti said she isn’t interested in getting involved in the politics of the tax credit, but underlined that public schools are the only ones required by law to serve students with special needs and disabilities.
“At the center of it is children with disabilities and the families that are navigating that. And by and large that occurs in the public school,” Pannuti said.
KCEOC Community Action Partnership in southeastern Kentucky also applied to be an SGO. Currently, it provides a broad range of largely state-funded services including Head Start, weatherization, senior centers and more. State funds cannot fund K-12 education outside of the public school system, and it’s not immediately clear how money funnelled through the tax incentive would operate within KCEOC’s broader mission.
The organization’s president, Paul Dole, who signed his name on the SGO paperwork, was not immediately available to comment.
