Just in time for Christmas, Governor Bob Ferguson released his Proposed 2026 Supplemental Budget—complete with nearly $81 million in K-12 education cuts. For Washington students and schools, it feels more like a lump of coal than a gift. But what if there really were a Christmas miracle waiting to be unwrapped—one that costs taxpayers nothing and could deliver hundreds of millions of dollars to our schools?
The Budget Reality: $81 Million in Education Cuts
The governor proposes cuts to education totaling $147 million, including nearly $81 million in reductions to the following K-12 and early education programs (p. 23):
- $25.1 million: Local Effort Assistance (LEA) payments for school districts located in “property poor” areas
- $21.1 million: annual school bus replacement payments
- $19.5 million: removing 1,816 Transition to Kindergarten program slots
- $14 million: Running Start program for high school students earning college credits
- $1 million: the Beginning Educator Support Team grant program
- $695,000: statewide programs administered by the Office of the Superintendent of Public Instruction
- $405,000 million [sic]: Next Level Leaders academy for school principals and administrators
The Millionaire’s Tax: A Long Shot at Best
Yet Gov. Ferguson insists he wants “more K through 12 funding to bolster Washington student access to a world class education.” That is why, in part, he supports the “millionaire’s tax” (see transcript at 00:22:25.807).
Under Gov. Ferguson’s income tax plan, those earning $1 million or more annually would be taxed at 9.9 percent. He claims less than one half of 1 percent of Washingtonians would be affected yet taxing them would generate more than $3 billion annually. Details of the plan have yet to be worked out (see transcript at 00:18:42.672 -00:19:45.384; and 00: 27:53.728).
It’s unclear, for example, just how much income tax money K-12 education would actually get—or when. The “proceeds from a millionaire’s tax won’t come in until approximately 2029,” Gov. Ferguson acknowledges, adding, “and that’s, just to be clear, even if adopted in this upcoming legislative session” (Emphasis added. See transcript at 00:17:49.807; cf. 00:02:00.608 and 00:45:45.856).
Even if the income tax is enacted during the upcoming 60-day legislative session, schools shouldn’t bank on a 2029 windfall. “[T]here will be a [court] challenge for sure,” Gov. Ferguson admits, “and ultimately [the income tax will] go before the voters for determination, I have zero doubt about that” (see transcript at 00:45:25.376).
Despite the governor’s stated optimism about Washingtonians approving this latest plan, voters have rejected income tax proposals10 times since 1934. There’s no good reason to believe the 11th time will be the charm.
Thankfully, there’s a better way to fund education that costs taxpayers and the state nothing.
Federal Tax-Credit Scholarships for K-12 Educational Expenses: A Better Way Forward
Here’s the Christmas miracle Gov. Ferguson seems to be overlooking: The Federal Tax-Credit Scholarship (FTCS) program for K-12 educational expenses. This program could conservatively generate tens, even hundreds of millions of dollars annually for Washington schools starting in 2027. Best of all, the program costs taxpayers and the state nothing because it’s paid for entirely with our federal tax dollars.
Under the FTCS program, Washington taxpayers who donate to nonprofit Scholarship Granting Organizations (SGOs) receive a dollar-for-dollar federal tax credit up to $1,700. SGOs pool the donations and distribute scholarships to eligible students (from families earning up to 300 percent of area median income). Students use their scholarships for qualified K-12 educational expenses at their schools, including:
- Fees, books, supplies, tutoring, and special education services.
- Transportation, supplementary items and services (including extended-day programs), room and board, uniforms, and tuition.
- Computer technology, equipment, Internet access, and related services.
Public school districts can create their own SGOs or partner with existing ones, giving them direct control over how scholarship funds support their students. No state bureaucracy, no new administrative burden—just additional resources flowing directly to students and their schools.
Conservative estimates based on a mere 1 percent participation rate among Washington taxpayers show the program could generate over $24 million annually for K-12 education. A 30 percent participation rate would generate $732 million annually.
One Simple Action Required
One, and only one, simple action is required: Gov. Ferguson must opt Washington into the program by January 1, 2027.
Last summer he said, “I’ve directed my team to analyze whether we can use these funds in a way that benefits public school students.” Thankfully, the federal statute already answers this concern: district public school students are written into the program as intended beneficiaries, right alongside those attending public charter and private schools.
What’s more, former U.S. Education Secretary Arne Duncan—who served under President Barack Obama—spoke directly to the governor’s concern last month when he publicly endorsed the FTCS program. Opting into the program “unlocks these resources for students in their state” Duncan explained, adding:
Some Democratic leaders have hesitated, however, worried that the program could be seen as undermining public schools, since private scholarships are also eligible. But that misses the point. Opting in doesn’t take a single dollar from state education budgets. It simply opens the door to new, private donations, at no cost to taxpayers, that can support students in public and nonpublic settings alike. That’s why opting in isn’t just defensible; it’s a no-brainer.
What’s At Stake for Washington Schools
The stakes for inaction couldn’t be higher. Washington faces a $2.3 billion budget shortfall and Gov. Ferguson is proposing steep cuts and tax increases (see transcript at 00:04:56.711). If Gov. Ferguson does not opt Washington into the FTCS program, Washington taxpayers still qualify for the $1,700 federal tax credit—but they can only donate to SGOs in states that have opted in. This means Washington students and schools would forfeit hundreds of millions of dollars each year.
“There is nothing more important than providing for our children’s future,” according to Gov. Ferguson (see transcript at 00:22:33.567). He’s exactly right.
And perhaps here’s the real Christmas message: sometimes the best gifts of all are the ones we almost overlook. The FTCS program sits waiting, wrapped and ready, requiring just one signature to deliver hundreds of millions of dollars to Washington students and their schools—at zero cost to taxpayers.
Maybe a Christmas miracle on 34th Street isn’t so far-fetched after all. It just takes Gov. Ferguson opting Washington into the federal tax-credit scholarship program before January 1, 2027. That’s one New Year’s resolution worth making—and keeping.