On Thursday, by a vote of 32 to 12 the South Carolina Senate granted a second reading to a new school choice proposal aimed at addressing the needs of students underserved by the public school system. S.62 would utilize state lottery funds to create a K-12 scholarship program, addressing the constitutional concerns raised by the South Carolina Supreme Court in a prior ruling.
Background
In September 2024, the South Carolina Supreme Court ruled that the Education Scholarship Trust Fund (ESTF) program violated Article XI, Section 4 of the S.C. Constitution, often referred to as the "Blaine Amendment." This section states:
“No money shall be paid from public funds nor shall the credit of the State or any of its political subdivisions be used for the direct benefit of any religious or other private educational institution.”
The court's primary issue with the ESTF program was its incorrect interpretation of what constitutes a "direct benefit" to private educational institutions. This decision left nearly 3,000 children who had been participating in the ESTF program without a path forward. S.62 aims to resolve this issue and expand educational opportunities for these students and others.
Bill Summary
S.62 establishes a scholarship fund for K-12 students, funded by state lottery revenue. Under the bill’s most recent version, scholarships from the new K-12 Education Lottery Scholarship Fund would be awarded in amounts equal to 90% of the average per-pupil funding from state sources for the previous academic year.
These funds, which would be administered by the S.C. Department of Education, could be used for a range of qualifying educational expenses, including:
- Tuition and fees for attendance at a nonprofit education service provider.
- Textbooks, curriculum, and instructional materials, including supplemental or online instruction.
- Tutoring services approved by the department.
- Computer hardware or technological devices primarily for educational needs, subject to approval.
- Tuition and fees for an approved nonpublic online education provider or course.
- Fees for national norm-referenced examinations, advanced placement exams, and industry certification exams.
- Examinations related to college or university admission.
- Educational services for students with disabilities, including occupational, behavioral, physical, and speech-language therapies.
(not exhaustive list)
The program phases in eligibility based on income:
- 2025-26: Families earning up to 300% of the federal poverty level; participation capped at 10,000 students.
- 2026-27: Families earning up to 400% of the federal poverty level; participation capped at 15,000 students.
Priority will be given to the nearly 3,000 students who were part of the former ESTF program.
Additionally, the bill includes a section directing the State Department of Education (DOE) to develop model policy for interdistrict transfers. Districts aren’t required to adopt the DOE policy but must have an interdistrict policy in place within 120 days of creation of the model policy.
On the Senate floor, lawmakers removed a provision from the bill that would have expanded eligibility in the 2027-28 school year to families earning up to 600% of the federal poverty level, while maintaining the 15,000-student cap. The removal of this section means S.62 falls short of being a truly universal school choice bill.
An earlier version of the bill included a controversial provision in Section 7, Subsection F, requiring students participating in an online education program to physically attend their local public school at least once per semester for a “mandatory wellness check.” This provision was removed from the bill, which SCPC supported.
The Case for Constitutionality
The program outlined in S.62 is designed to withstand constitutional scrutiny. In Durham v. McLeod (1972), the South Carolina Supreme Court held that scholarships provided to students did not constitute a direct benefit to the institutions they chose to attend. The court reasoned that the primary beneficiary of the scholarship is the student, not the institution.
Additionally, South Carolina's lottery funds are currently used to support scholarships for both public and private institutions of higher education. Allocating lottery funds for K-12 scholarships aligns with existing practices, making S.62 consistent with established precedent.
Recommendations
While we believe S.62 is constitutionally defensible, its reliance on lottery funds raises concerns. Unlike the previous ESTF program, S.62 introduces funding volatility. Lottery revenue, which is generated through voluntary participation, typically fluctuates more annually compared to other state revenue sources, potentially affecting the number of students who can participate.
Based on independent SCPC research and discussions with experts from EdChoice, a leading school-choice research organization, no other state currently funds a K-12 ESA or voucher program using lottery revenue.
Furthermore, S.62 does not meet SCPC’s definition of universal school choice because of its proposed enrollment caps and income restrictions. Ideally, the state should reinstate the original ESTF program and seek, in response to an expected legal challenge, a favorable ruling from a recently reconfigured state Supreme Court headed by a new chief justice.
Additionally, the Senate should closely examine S.50 (Academic Choice in Education - ACE), a refiled version of the 2023 ACE bill, which SCPC supported then and supports now. This bill would establish a tax-credit scholarship program. The ACE program proposal is currently limited to families with an income at or below twice the federal poverty level.
We believe the Senate should pass both S.62 and S.50 to maximize parental and student choice. Although S.62 falls just short of universality, it does advance school choice in South Carolina. The House now has an opportunity to pursue a full universal program, by removing income restrictions and enrollment caps to achieve maximum participation.