529s now for K-12 too
by Jonathan Small
President of the Oklahoma Council of Public Affairs (OCPA)
Since 2015, annual taxes and other revenue taken from Oklahomans by the state’s Republican-controlled government has increased by $1.1 billion.
By contrast, Republicans at the national level have cut taxes. The 2017 Tax Cuts and Jobs Act, signed into law by President Donald Trump just days before Christmas, has been great news for job growth and for Oklahomans’ take-home pay.
But taxes aren’t the only issue on which national officials delivered recently while state officials fell short. Consider school choice.
The Oklahoma Legislature hiked taxes for government-run schools this year without demanding any reforms. Meanwhile, the Trump tax bill expanded the use of college savings plans, known as 529 accounts, to include tuition for private schools at the K-12 level. And why shouldn’t we treat basic education as just as important as higher education?
Oklahoma is among the majority of states in which contributions to 529 accounts qualify for a state income tax deduction. In those states, both federal and state tax policies incentivize saving for educational costs.
The Oklahoma 529 College Savings Plan announced on April 3, 2018, that “effective January 1, 2018, distributions for tuition in connection with enrollment or attendance at an elementary or secondary public, private, or religious school are Oklahoma and federal income tax free up to a maximum of $10,000 of distributions for such tuition expenses per taxable year per Beneficiary from all 529 Plans.”
529 holdings today are roughly $275 billion. That’s a lot of money parents have sacrificed to provide for higher education. Now, parents can create a 529 account upon the birth of a child and start saving for K-12 tuition as well.
Moreover, U.S. Sen. Ted Cruz, R-Texas, introduced legislation last month that would expand school choice even further, broadening 529 eligibility to include home-school expenses.
It’s no secret that Oklahomans want educational options. A recent statewide survey commissioned by the Oklahoma Council of Public Affairs and conducted by Cor Strategies (margin of error: plus/minus 4.37 percent) asked 502 likely Oklahoma voters what type of school they would select for their own children if financial costs and transportation were of no concern.
While 49 percent said they would choose a traditional public school, 36 percent said they would choose a private or parochial school. Eight percent would opt for home-schooling and 8 percent for a charter school.
Oklahoma policymakers should take note: political leaders must enact policies that empower parents and expand options for students.
Jonathan Small serves as president of the Oklahoma Council of Public Affairs.