Brian Chilson
ALL SMILES: Gov. Sarah Sanders and Republican legislative leaders cheer the passage of Arkansas LEARNS this spring.

Imagine a Little Rock family, the Joneses, who are doing very well for themselves. They’re not quite in the top one percent in the state by income, but they’re closer than you might think. Mr. Jones is an associate dean at UAMS and Mrs. Jones is a lawyer — their combined income is around $300,000. They have two kids and own a beautiful house in the Heights. Life is good.

Both kids go to Episcopal Collegiate School, where the tuition is $15,010 for their daughter, in elementary school, and $17,900 for their son, in sixth grade. Those are fixed costs in their family budget. Every year, they spend $32,910 on tuition, not to mention other expenses related to the private school. That leaves them with a little less money to save, invest or spend on other stuff. For example, they’re eager to remodel their kitchen.

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Luckily for the Joneses, they are about to get a big monetary boost, thanks to Gov. Sarah Huckabee Sanders. One of the most dramatic material impacts of her new education law, Arkansas LEARNS, will be to shift taxpayer money into the pockets of rich families.

In a couple of years, LEARNS will gift the Joneses nearly $14,000 per year. The payments are called vouchers and they have to be used for private school tuition and expenses. But because that’s already a fixed cost for the Joneses, the net result will wind up being a major windfall for their bank account.

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For the Joneses — and for taxpayers, and the state budget — it amounts to the same thing as a juicy tax cut. Or a generous welfare check. This healthy boost to their after-tax disposable income, funded by the state’s taxpayers, is so generous that it’s roughly equal to the entire amount of annual state income tax the Joneses owe.

LEARNS is an education bill, but look closely and there is a hidden monetary bonus for the wealthy: For the Joneses, it is as if their state income tax liability was zeroed out to nothing. This is their reward for being wealthy enough to already send their kids to one of the state’s fanciest private schools. Families like the Joneses are arguably the law’s biggest winners. Happily, they might just be able to get around to that kitchen renovation a little sooner.

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LEARNS vouchers: Paid for by taxpayers, no targeting for low-income families

In the 2025-26 school year, when the law is fully phased in, all K-12 students in Arkansas will be eligible to apply for the LEARNS vouchers. That includes students already attending private school (or new students who would have gone to private school even without the vouchers), and such students will likely make up a large portion of voucher recipients. The vouchers will pay up to around $6,994 to cover the cost of private school tuition and certain other expenses in the 2025-26 school year, with the voucher amount likely rising incrementally in future years. (Funding is not unlimited and priority will be given to certain applicants.)

When policymakers design a benefit program (or what is sometimes called a welfare program), they can choose to target those benefits for lower-income people who are more in need. A targeted program tries to get more bang for its buck by putting its spending power exclusively toward providing benefits for certain people. For example, the government could try to determine people’s incomes, and then only provide the benefit to those below a certain line. This approach is called means testing, and conservatives often want more of it if there’s going to be any sort of benefit program at all. 

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Another approach is a universal program that provides benefits to everyone. You could think of the Medicaid expansion program as an example of a targeted benefit — only low-income people qualify for the benefit. Public education is an example of a universal benefit — everyone gets the benefit regardless of income. Universal programs can still be targeted, if policymakers do the equivalent of means testing on the tax side; a universal child tax credit, for example, that sends a check to every family could be paid for by a progressive tax designed to tax wealthier families the same amount they would have gotten from the benefit.

Arkansas LEARNS is a universal program that did not create any new corresponding “means testing” on the tax side. Because it involves significant sums of money for a good that many families would purchase with or without a subsidy (private school tuition), the law’s design amounts to a windfall for families who can already afford private school.

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Private school families and vouchers

Not all private school families are rich, and some rich families choose public schools. Be that as it may, it seems safe to assume that families who can afford thousands (or tens of thousands) of dollars in annual tuition tend to be better off.

LEARNS was sold as a lifeline for poor families stuck in failing public schools. But because the law is structured to offer the benefit to families already enrolled in private schools (or to high-income families who would have enrolled their students in private school for kindergarten even without the law), it could turn out that many or most of the applicants for vouchers have relatively higher incomes.

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In Arizona, the first state to offer vouchers to all students as a universal program, 78% of students who applied in the first year had not been enrolled in the public school system. Smaller voucher programs in New Hampshire and Wisconsin have had similar results. The figure in Arizona has fallen in the program’s second year, after an aggressive marketing campaign, but remains at around half of the participants. Arkansas’s new program is likely to see its share of non-public school students increase as the program opens up applications to all private school students in its third year.

Private school families might be more likely to take advantage of vouchers for a number of reasons. Those already enrolled in private schools are far more likely to be aware of the options and application process than those outside the private school system (simply acting in their own economic interest, presumably all or nearly all private school families will apply). Public school families may be reluctant to make a change if their children are already comfortable with their current schools. And even with the vouchers, private school tuition may be out of reach for many families. 

To take the example of the Joneses and Episcopal, while the family will get a spectacular deal from LEARNS vouchers, they’ll still pay at least $18,000 out of pocket, which is likely prohibitively expensive for lower-income families. Roughly two-thirds of the schools that are receiving vouchers this year currently charge tuition of more than $7,000 for at least some students, according to information from the state compiled by the Arkansas Advocate, with rate increases potentially coming as the program expands. At least 19 of the schools charge more than $9,000. 

“We are definitely concerned that families with lower incomes will be sidelined by the [voucher] program and that wealthier families whose children were already in private schools stand to benefit the most,” said Olivia Gardner, director of education policy for Arkansas Advocates for Children and Families. She pointed out that in Arizona, the average voucher is about $7,000, while the average cost of private school tuition in the state is now around $10,000.

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A school building in Phoenix, Arizona. (Creative Commons)

For whatever reason, unlike Arizona, the Arkansas Department of Education is not tracking whether students participating in the voucher program came from public schools or private schools. Without such tracking, it will be difficult to determine what’s really happening in Arkansas. One piece of data: Thus far, just 1% of voucher applicants this year — around fifty students in the entire state — are using the vouchers to leave F-rated public schools for private schools.

For those families who do move from public school to private school using a voucher, the benefit for them will be whatever they value about a private school education as opposed to what their children were getting in public schools. But they will not get the financial benefit that accrues to private school families. They are replacing a good — public school education — that was free. They don’t get the boost to their bank accounts. That’s only available to families wealthy enough to send their kids to private school even without the LEARNS voucher.

A de facto tax cut for the wealthy

When evaluating what a new government policy does, it’s easy to get lost in the flows of money in and out of the system — in this case, making a pit stop with third-party vendors for good measure (an outside company called ClassWallet is being paid by the state to handle the payment system). 

If you look at the way the state lays it out in a budget proposal, something labeled as a monetary benefit might wind up having the same final result as something labeled as a tax cut for all involved (likewise, a benefit cut can turn out to be functionally equivalent to a tax hike). Sometimes people get distracted by gross revenues or gross costs and miss what the actual net result is for the government or for taxpayers. 

Let’s look again at the Joneses, our family in the Heights. Remember, that $32,910 in tuition is locked in as a fixed annual expense. Once the LEARNS vouchers are available for their kids, that cost will be slashed, and suddenly they’ll have a lot more to spend on other stuff. For the sake of simplicity, we’ll say the vouchers are $7,000 per kid, just a bit more than what the actual voucher will likely be in 2025-26, and likely a bit less than it will be in future years.

Now, instead of spending nearly $33,000 on tuition for their two kids, they’ll spend just under $19,000. This is a good deal for the Joneses! They have $14,000 more in after-tax disposable income than they would without LEARNS. If the Joneses make $300,000 a year in net taxable income, that would be equivalent to reducing their taxes by a whopping 4.67% If you’re keeping score at home, under current state law, their state income tax liability is about $13,950 — so the Joneses wind up making out roughly as well from LEARNS as they would if they didn’t have to pay any state income tax at all. 

Or: A giant annual stimulus package for the wealthy

If you prefer, you can think of the LEARNS benefits as welfare payments, which is literally what they are. 

Imagine if the state simply sent stimulus checks of nearly $7,000 per kid to all parents of private school students in the state (or doled out the checks first-come, first-served to families who applied). 

Under LEARNS, for comparison: A school invoices a parent, the government pays a vendor, and the vendor pays the school. Under this hypothetical policy, the government would pay the parent, who would then pay the school. Follow the money: The structure would be different, but this would functionally be the very same policy we have now with LEARNS. Indeed, if you want to help private school parents with tuition, it might even be a more efficient way to do so. 

LEARNS backers want to tell a story about helping families in need. They’re not going to say, “Let’s hand out stimulus checks to rich families like candy!” But that’s what LEARNS does. 

You might say that LEARNS vouchers are not the same as a stimulus check because they must be spent on private school or other designated expenses. You can’t go buy a new designer dress with the vouchers. 

But because this is a cash benefit to pay for an item that certain families were going to pay for no matter what, it’s really no different than sending them checks. Cash is fungible. By applying the vouchers, they’ll have $14,000 more in their bank accounts, and they can do whatever they want with that money. 

State lawmakers may have concluded that universality was the best or smoothest or fairest way to implement this program, but for families already willing and able to pay for private school, it’s not a policy that has any impact on the education their children receive. It’s just a big, fat boost to their bank accounts.

Private schools may also get a windfall

While families like the Joneses will make out well either way, private schools may take a piece of their windfall if they raise tuition in response to the law. By doing so, they could access more state funds while still keeping families’ out-of-pocket costs lower. If a school raised tuition by $2,000 per student, for example, it could tell parents that if they get vouchers, they’ll still come out roughly $5,000 per student ahead.  

Some private schools in Florida and Iowa, for example, have raised tuition this year in response to new voucher programs, justifying the increases by pointing to the new public money available for parents.

If schools with tuitions above the voucher amount raise their rates, that will make the windfall for the Joneses and similar families a bit smaller. But it will also mean that private schools are soaking up additional money from the public — schools that many lower-income families won’t be able to afford even with the help of vouchers. 

Iowa is … already seeing private school tuition increase upwards of 30-40% according to local news reports,” Gardner said. “Over time what we are likely to see is that the families who were already able to pay for private school tuition will still be able to do so, at a subsidized price, and the families with low incomes, who were supposed to be the priority, will be left out.”

Republican administrations continue to look after rich families in Arkansas

Imagine if Gov. Sanders had proposed a policy like one of those described above: stimulus checks of nearly $7,000 per kid for all private school families or a massive special tax cut just for private school families. Even in deep-red Arkansas, it probably would have been politically dead in the water. It would be hard to sell the public on handing out giant welfare checks to rich families or slashing the taxes specifically of people who can already afford private school. 

But all of this stuff is in fact happening in the background of LEARNS. Depending on the circumstances, there will even be well-off families getting more back in vouchers than what they’re paying in state income and local property taxes combined. 

The LEARNS windfall for rich families won’t show up in any “tax” column in the state budget. We won’t get official budget projections with a breakdown of how much each income group is gaining from this new state benefit. And so the debate over LEARNS mostly proceeded without much discussion of the massive movement of taxpayer money to the pockets of wealthy families. 

Voucher proponents might argue private school families deserve a break since the state-and-local-funded public schools don’t have to educate their children. This would be a version of the grumbles you occasionally hear from childless homeowners frustrated with property taxes. Public education has long been considered a public good — a fundamental service open to all and funded by taxpayers, even those who don’t have children themselves or those who opt to instead pay for a bespoke educational experience for their kids. Increasingly, many in the conservative movement don’t see it that way.

But putting the underlying ideological questions aside, the fact remains that the policy shift implemented by LEARNS amounts to large stimulus checks being sent to a subset of taxpayers who almost certainly lean wealthy. In the case of families that would use private schools anyway, this represents a significant new cost to the state — a cost that these families used to pay themselves and will now be borne by all taxpayers.

Ever since Republicans took full political control in Arkansas, they have been focused on cutting taxes for the wealthy and corporations. For example, if the Joneses’ net taxable income is $300,000, tax cuts enacted in 2019 and 2022  have now slashed the Joneses’ taxes by more than $5,000 per year. By comparison, a family making $50,000 has seen their annual tax bill go down by less than $400 over the same period. (Someone making $1 million a year, meanwhile, got an annual tax cut of more than $19,000.)

In 2023, the legislature cut the top rate once again, saving the Joneses almost another $600 on this year’s taxes. On Aug. 28, legislative leaders and the governor announced the possibility of a special legislative session, potentially as soon as September, to reduce the top individual tax rate and the corporate tax rate even further. Such cuts would again skew heavily toward high-income Arkansans.

In addition to all of its changes to the education system in the state, LEARNS is a continuation of this trend, leaving many wealthy families with yet more money in their pockets. In Arkansas, it’s getting harder and harder to keep up with the Joneses.