Simplified: The Sioux Falls School Board on Monday formally approved an official scholarship granting organization affiliated with South Dakota's largest school district. It's a way for the district to take advantage of a new federal tax credit for scholarship granting organizations as part of President Donald Trump's "One Big Beautiful Bill."

Why it matters

  • Tax-credit scholarships are nothing new to South Dakota, which established the Partners in Education program in 2016. That program allows certain businesses to give money for scholarships at private schools instead of paying taxes to the state's general fund.
  • What's different about this new program, though, is that it's not limited to kids at private schools. Tax credits are awarded for contributions to any "scholarship granting organization," or SGO. And, instead of siphoning tax funds from the state's pool of cash, this program pulls from federal income taxes.
  • The Sioux Falls School District Federal Tax Credit Scholarship Fund was formally established by Bob Sittig on Monday, per Secretary of State records. Sittig, who retired as Baltic's superintendent in 2023, is running the new private fund.
  • Board members formally recognized it as the official SGO of the district Monday evening, though there are still many unanswered questions about how scholarships will be awarded for Sioux Falls students, as well as what services those funds can cover.
"The federal government needs to send out a lot more information on this," Sittig told board members Monday night.

Tell me more

According to this very helpful explainer from Education Week, there are a lot of unknowns nationwide about how these new tax-credit scholarships will work in practice.

  • It's unclear, for example, exactly what the funds can be used for – particularly in a public school setting where students aren't paying tuition.
  • Some examples, Sittig said, could be using the scholarships for before- and after-school care, tutoring, technology, special services, and perhaps even to offset the costs of dual-credit courses for high schoolers.
"It doesn’t cover operations of the school district or teacher pay," Board Member Nan Kelly said Monday. "Those are things that we still need to cover to run a school district."

What we do know is that individuals can receive a federal income tax credit for up to $1,700 for money they give to an SGO, and that married couples who file jointly can receive a credit for up to $3,400.

  • We also know that scholarships can go to any family who makes less than 300% of the area median income. That means if your household income is less than $336,000 annually, your kids would qualify for scholarships. The federal treasury estimates that 90 to 95% of kids live in households that would qualify, per data shared with board members.

It's not that you're paying less money overall, district leaders stressed Monday. Rather, it's money that would've previously gone to the federal government via income tax will now stay with local scholarship granting organizations.

What happens next?

Contributions toward the tax-credit scholarships can be made starting Jan. 1. You can sign up for the Sioux Falls School District's email list to be notified when more information is available.

  • But it'll take awhile before any scholarships are awarded.
"We really don’t anticipate any scholarships until the end of the next school year," Sittig said. "We’re really focusing on the contribution end of it."