New Mexico joins federal scholarship push as state school choice programs face uncertainty in Texas, North Carolina

New Mexico will join a federal education scholarship program, outgoing Democratic Gov. Michelle Lujan Grisham announced Nov. 4, as Democratic election gains in Texas and North Carolina set up new fights over state-funded school choice.

Lujan Grisham said in a press release that the Federal Scholarship Tax Credit (FSTC) program would provide new support for public education while helping taxpayers.

“At a time of diminishing federal investment in education, New Mexico must take advantage of every dollar we can to bolster public education and continue our state’s upward trajectory in literacy and student achievement,” Lujan Grisham said. “By participating in the FSTC, we will give New Mexico taxpayers the chance to keep some of their federal income taxes in New Mexico to support New Mexico students.”

Her announcement brings the number of states that have publicly committed to participating to 32. It also came shortly after Democrat Deb Haaland defeated Republican Gregg Hull in the state’s gubernatorial race Nov. 3.

Under the program’s proposed regulations, eligible taxpayers may claim an annual dollar-for-dollar nonrefundable federal income tax credit of up to $1,700, or $3,400 for married couples filing jointly, for qualifying cash donations to approved scholarship-granting organizations (SGOs).

The FSTC takes effect Jan. 1, 2027. States must submit their advance elections to participate by that date and their lists of qualifying SGOs by Feb. 15, 2027, to complete the process for the program’s first year. 

>> Married couples can claim $3,400 school scholarship tax credit under new Treasury rules <<

According to the Internal Revenue Service, 30 states had submitted advance elections to participate as of Oct. 22: Alabama, Alaska, Arkansas, Colorado, Florida, Georgia, Idaho, Indiana, Iowa, Kansas, Kentucky, Louisiana, Mississippi, Missouri, Montana, Nebraska, Nevada, New Hampshire, North Carolina, North Dakota, Ohio, Oklahoma, South Carolina, South Dakota, Tennessee, Texas, Utah, Virginia, West Virginia, and Wyoming. New York Gov. Kathy Hochul also announced Oct. 9 that her state would participate.

Children’s Scholarship Fund President and CEO Darla Romfo urged governors in states that have not opted in to act swiftly now that the midterms are over.

“There is no downside to moving forward on the FSTC since more than 90 percent of all children — including children attending public and public charter schools — would be eligible to use FSTC scholarships to fund educational expenses such as tuition, tutoring, afterschool programs, test prep, summer enhancement programs, and other educational services they might not otherwise be able to afford,” Romfo said in a press release emailed to Zeale News.

“FSTC scholarships would not take any funding away from existing K-12 education budgets. They would only add to the amount of funding available for schoolchildren.”

Romfo also noted that taxpayers can donate to an eligible organization in a participating state regardless of where they live, meaning they could help fund scholarships elsewhere while students in their own communities miss out on the program.

“The FSTC has the power to fundamentally transform the educational landscape, giving children the opportunity to flourish, but only if they live in a participating state,” she said, urging the states that have not yet opted in to announce their participation and ensure the FSTC “helps as many children as possible in its first year.”

State programs face new political challenges after midterms

While the federal program relies on tax credits for private donations, the programs facing political challenges in North Carolina and Texas draw on state appropriations.

In North Carolina, unofficial results showed Democrats winning control of the state House for the first time since 2010 and gaining seats in the Senate, according to the Carolina Journal. 

The results mean the Opportunity Scholarship program — which serves more than 104,000 students in the 2026-27 school year — will face a Democratic-controlled chamber for the first time since lawmakers created it in 2013. A Democratic House could seek to restrict the program’s funding during budget negotiations, according to the Journal.

In Texas, Democratic Gov.-elect Gina Hinojosa pledged to fire Education Commissioner Mike Morath and end the state’s Texas Education Freedom Accounts program, a $1 billion school choice initiative.

“We will work tirelessly to repair the damage of the Texas voucher scam and end an era in which our schools are sold for parts,” Hinojosa said of the school choice program in her victory speech. “This is a victory for the parents of Texas.”

Outgoing Republican Gov. Greg Abbott signed the program into law in May 2025. It has since awarded funding to more than 100,000 students. CatholicVote endorsed the plan in January 2025.

The program allows participating families to receive about $10,000 per student for approved private school expenses or about $2,000 per homeschooled student. Students with disabilities may qualify for higher amounts, up to $30,000 in some cases. 

>> Texas Catholic schools say tuition voucher program makes education accessible <<

American Federation for Children President and CEO Tommy Schultz, a Catholic and school choice advocate, said in an X post responding to Hinojosa’s announcement that 60% of the scholarships go to low-income families and 17% to families with children with disabilities.

Hinojosa is expected to take office Jan. 19, 2027. Because lawmakers established the program in state law, repealing it would require legislation passing both chambers.