At least four public school districts have created scholarship granting organizations to offset full-day kindergarten costs, with Nordonia Hills providing 50 students full scholarships this year.Patti Sapone | NJ Advance Media for NJ.com
COLUMBUS, Ohio — A little-known tax credit program that rewards Ohioans for donating to private school scholarship funds has cost the state more than $80 million in revenue since 2021 — and now a handful of public school districts are using the same mechanism to help families pay for full-day kindergarten.
Scholarship Granting Organizations, or SGOs, are nonprofits that collect donations and distribute tuition scholarships to low- and middle-income students, mostly at private schools. Donors receive a dollar-for-dollar Ohio income tax credit — up to $750 for individuals and $1,500 for married couples filing jointly.
The General Assembly created SGOs in the 2021 state budget. That year, seven SGOs existed. Today there are 74, and the number is growing.
The program is dominated by private schools. The Angel Scholarship Fund, affiliated with the Catholic Diocese of Cleveland, has raised $19.6 million since 2022, helping families at 108 schools and distributing 10,866 scholarships last year.
According to an Ohio Department of Taxation report, the credits reduced state General Revenue Fund income by $21 million in fiscal year 2024, $23.1 million in fiscal year 2025 and an estimated $24.3 million in the current fiscal year. For perspective, SGO tax breaks amount to roughly 0.05% of the state’s projected $44.4 billion in General Revenue Fund spending this fiscal year.
Gov. Mike DeWine said the program gives residents a way to invest in young people while reducing their tax bills but added: “We’re always going to look at this from the point of view of how much money this is costing the state.”
How the credits work
The credit is nonrefundable and matched dollar-for-dollar up to the cap. Students may receive scholarships if their families earn up to 300% of the federal poverty level — $99,000 for a family of four. Ohio law requires SGOs to prioritize low-income students.
The Center for Christian Virtue, a conservative Columbus-based policy organization, was instrumental in lobbying the legislature to create the program. Its Ohio Christian Education Network ministry distributed more than 3,000 scholarships this year.
“Every student in the state ought to be able to have a schooling option that matches their needs,” said Troy McIntosh, director of the network.
Public schools enter the game
State records show three SGOs are now collecting donations for public schools: Nordonia Hills City School District, Hudson City School District and Three Rivers Local School District — near Cincinnati. Aurora City School District in Portage County launched an SGO in December but has not yet appeared on the state’s official list.
Although public schools cannot charge tuition, Ohio law permits districts to charge for full-day kindergarten as long as they offer a half-day option at no cost. Each of the public SGOs is using donations to provide families scholarships covering that cost.
The idea originated with Chad M. Lahrmer, a certified public accountant who serves on the Nordonia Hills school board. While preparing tax returns in March 2023, he noticed a surge of SGO donations flowing to private schools.
“It kind of annoyed me,” Lahrmer said. “And I said, ‘There’s got to be a way we can make this work for Nordonia, for the public school.’”
He reviewed the SGO statute, found no language barring public schools from participating, and registered the Nordonia Hills Scholarship Granting Organization as a nonprofit. He received no pushback from state officials.
In its first partial year, the SGO raised $14,000. The second year it raised $95,000. Nordonia Hills charges $2,900 for full-day kindergarten, and the SGO has helped offset that cost for dozens of families.
“For this current group of kindergartners at Nordonia, the SGO paid $222,000 of tuition,” Lahrmer said. “We were able to give 50 students full scholarships, full payment. We gave eight students half payments. And then every remaining student got $500 off their tuition.”
State revenue covers only 16% of Nordonia Hills’ budget, compared with a statewide average of 37%. Lahrmer said he sometimes finds it unfair that public schools must fundraise when the Ohio Constitution requires the legislature to fund public education.
“I’m worried about the direction of vouchers. I’m worried about the direction of SGOs,” he said. “We only charge for kindergarten, so no matter what we raise as a public school, it’s going to be nowhere near the amount that the private schools are raising.”
Debate over the program’s impact
Critics argue SGOs are effectively another voucher — redirecting public money to private education on top of the roughly $1 billion Ohio already spends annually on its five voucher programs.
“I think these tax credits are just another voucher-like scheme that benefits students who are already enrolled in private schools,” said Jeff Wensing, president of the Ohio Education Association.
In the most recent two-year state budget, lawmakers gave public school districts the smallest funding increase in a decade while allocating proportionally larger increases to charter schools and private school vouchers. More than 300 public school districts are currently suing the state over vouchers, arguing they are unconstitutional.
Supporters say public schools are right to take advantage of the program. “I have taken the position that at least in states that have opted into this, public schools should be doing everything they can to make some dollars off this,” said Joshua Cowen, a Michigan State University education professor and author of “The Privateers: How Billionaires Created a Culture War and Sold School Vouchers.”
Colleen Hroncich, a policy analyst at the Cato Institute, noted that Ohio’s SGO law does not explicitly limit scholarships to private schools. “If there are districts taking advantage of it, that makes sense,” she said.
What comes next
The One Big Beautiful Bill Act, signed by President Donald Trump, creates a federal income tax credit of up to $1,700 for married couples filing jointly who donate to SGOs, beginning in 2027. Legal and accounting questions remain about how the federal and state eligibility standards will align, and state law may need to change to resolve conflicts between the two.
Cowen said the coming federal credit will accelerate SGO growth nationwide and urged public schools to think broadly about how to use the funds — for sports fees, after-school activities and beyond.
“The Cleveland Federation of Teachers, they should think about starting an SGO and saying, ‘Let’s play this game, too,’” he said.
