We asked five school choice proponents to offer their advice on what the forthcoming regulations from the Department of the Treasury on the new federal scholarship tax credit should be. Our five-part series continues today with an essay by Robert Luebke.

I am a long-time fan of school choice. It produces better student outcomes and propels improvements in systems resistant to reform. I am not a fan of scholarships tax credits. They undermine federalism, which gave rise to the school choice landscape. Scholarship tax credit programs tend to grow slowly, and they are accessed least by those who need them most.

Can school choice and tax credits be effectively wed in the federal scholarship tax credit legislation recently enacted by the Trump administration? In North Carolina, where I live, that prospect has produced both excitement—for the chance to turbocharge the choice movement—and apprehension. Dancing with federal bureaucracy risks overregulation and unraveling years of gains. The real question is: Can an admittedly imperfect vehicle, the scholarship tax credit, be improved to produce genuine gains for families and states? If federal regulations devolve power to the states and honor federalism, it’s possible. Three recommendations may help get us there.

Give states maximum flexibility. Scholarship tax credits threaten other choice programs. North Carolina’s largest school choice program, the Opportunity Scholarship, provides vouchers for private-school tuition to 80,000 students. Another program provides parents with Education Savings Accounts to help with the expenses of special needs students. Will federally sponsored scholarship tax credit expand these programs or compete with them? I believe regulators must underscore the primacy of state authority and provide the flexibility to administer existing programs. States must also be allowed to create a tax credit program for district and charter schools that assist students with tutoring, testing, or other services. This flexibility is only possible when regulations respect state authority to administer their programs. Without these actions, federal regulations continue to grow and school choice programs are undermined.

Empower states to add eligibility and accountability requirements. State officials charged with administering programs must have the authority to write the rules for the programs they operate. Does the state want a program focused on students from lower-income households or a universal program? States must also be able to decide accountability requirements, testing requirements, and metrics to assess academic progress for schools that enroll scholarship students. Minus this authority, federal regulators with less knowledge of the local landscape fill the gap.

Protect religious freedom and institutional autonomy. Approximately 70 percent of children enrolled in North Carolina’s largest school choice program attend church-related schools. For this program to keep thriving, regulations must protect the principles of religious freedom and institutional autonomy. Religious freedom guarantees the rights of individuals to practice their religion. Institutional autonomy ensures that religious schools can administer schools in ways consistent with their values and mission. Federal regulations must honor both and keep schools free of federal entanglements. Without these protections, school choice becomes no choice.

Improve requirements for opting in. States that elect to participate in the federal scholarship tax credit must present to the Treasury Department a list of scholarship-granting organizations that meet the requirements of the program. According to the legislation, the choice “shall be made by the Governor of the state or by such other individual, agency, or entity as designated under state law to make such elections.” In the first week of August, the North Carolina General Assembly approved an opt-in bill. It was vetoed by Governor Josh Stein. Is legislation necessary to opt in, or can opting in be an executive action of the governor or state agency? Who decides?

Also confusing is the requirement that opting in occur annually. Doing so makes the program more sensitive to political winds. Yes, the annual option may make choice a possibility where it hasn’t moved forward legislatively. That is good. However, a change in political parties may result in stop-and-start participation that would be disastrous for children and for the ability to raise funds.

One remedy might be to lengthen the participation period for states. Requiring the opt-in renewal every three, five, or seven years would encourage more stability and lessen the threat of lawsuits that would contribute to delays.

Scholarships tax credits offer the opportunity to significantly expand school choice. With that hope comes formidable threats of overregulation, dependence on the federal government, and an undermining of the system of federalism that helped to create school choice programs in 33 states. The recommendations discussed here, I believe, can counter these trends and put us on a more intelligent path forward, where federalism and school choice can help all children flourish.

Robert Luebke is director of the Center for Effective Education at the John Locke Foundation.