Making Opportunity Scholarships available to middle- and higher-income households doesn’t make it bad policy

• A new report finds only a small amount of Opportunity Scholarship Program (OSP) recipients in 2024–25 had been enrolled in public schools in the previous school year
• Critics charge that OSP subsidizes students from high-income households even though nearly six out of 10 recipients are from low- and middle-income households who receive significantly larger awards
• They ignore OSP’s priority to help low- and middle-income families and fail to recognize how a network of choice programs is developing and providing opportunity for many students stuck in public school systems that are inequitable, unaccountable, and failing

The growth of OSP highlights the inequities and inefficiencies in how North Carolina funds public schools.  Any real solution will have to remedy those problems. A new report from the State Board of Education finds that most students in the Opportunity Scholarship Program (OSP) in 2024–25 had not been enrolled in North Carolina public schools the previous year. Only 8.4 percent of students in 96 counties were classified as “prior public-school attendees.” For those students, the report found that the state awarded them $34.4 million in Opportunity Scholarships, whereas if they had stayed in public schools, the state would have allocated the school districts $44.5 million for them.

In other words, the Opportunity Scholarship Program saved North Carolina taxpayers about $10 million in education costs just for that cohort.

Table 1: Difference between scholarship grant award and average state per-pupil expenditure for opportunity scholarship recipients enrolled in NC public schools, Fall 2023-24

Semester Received	Number of Students	Total Scholarship $ Awarded	Average State Per-Pupil Expenditure (PPE)	Difference Between Scholarship and State PPE
Fall or Full Year	5,955	$34,374,870	$44,467,533	$10,092,663
Spring Only	755	$1,967,473	$5,637,781

Source: State Board of Education

The 2023 budget bill (see Section 7.82) said it is “the intent of the General Assembly to reinvest in the public schools any savings realized by the state each year, beginning in the 2025–26 school year, because of the transfer of a student from a public school unit to a nonpublic school where the student accepts an opportunity scholarship grant award that is less than one hundred percent (100%) of the average State per pupil allocation for average daily membership for a student in a public school unit.”

Whether the differential will be reinvested this year is yet to be determined. Ten million dollars is only about eight-hundredths of one percent of the $11.86 billion that the General Assembly appropriated to the public schools in 2024–25.

Nevertheless, this finding has upset many opponents of the state’s largest school choice program. They contend that OSP is subsidizing those who are already in private schools and therefore taking money from the public schools.

Is OSP merely a subsidy for the wealthy? A glance at OSP awards by household income tier shows the flaws with that argument.

According to North Carolina State Education Assistance Authority (NCSEAA), as of February 3, nearly 80,000 OSP recipients (new and returning) had applied for the 2025–26 academic year. Well over half (58 percent, nearly six out of 10) were in the lower two income tiers, as the following table shows.

Table 2: Opportunity Scholarship award amounts and number of recipients, by household income tier

	Tier I	Tier II	Tier III	Tier IV
Household income range*	Less than $57,720	$57,720 to $115,440	$115,440 to $259,750	More than $259,750 or failed to report
Average OSP award	$7,468	$6,722	$4,480	$3,360
Number of OSP awards	23,711	22,211	22,408	11,445
Percentage of all awards	30%	28%	28%	14%

*Award amount and income calculated for family of four. Data from North Carolina State Education Assistance Authority.

Based on the graph, 30 percent of recipients received the full scholarship amount of $7,468, being in the lowest household income tier. In the next lowest tier, a slightly smaller percentage (28 percent) received scholarships valued at $6,722 dollars. Those lower income tiers (I and II) comprised 58 percent of all OSP recipients, while the higher income tiers (III and IV) comprised only 42 percent, and their awards were lower ($4,480 for the 28 percent in Tier III, and only $3,360 for the 14 percent in Tier IV).

So the idea that OSP is a subsidy for the rich reflects confused thinking.

Only 14 percent of OSP recipients are in Tier IV. It’s the highest-income tier, but it’s also the tier for applicants who fail to report household income. How many applicants do that? It’s a good question, and it could even mean there are significantly fewer high-income recipients than reported.

OSP critics say the fact that 42 percent of OSP awards are in higher-income households is a sign that the program is not working. I disagree. One reason is that middle- and higher-income families are usually more informed about government programs. As time passes, however, and the knowledge about OSP spreads, I expect the number of lower-income applicants to grow significantly.

There are many shortcomings to the current system for funding public schools in North Carolina. My colleague Kaitlyn Shepherd and I document many of them in “Funding our Future.” North Carolina is one of only a few states still using a Resource Allocation Model, a complex, unaccountable system known to treat students and school districts unfairly, instead of a student-based funding model.

Public schools have been sold as the best vehicle for merging economically, demographically, and culturally diverse communities and propelling democracy forward. The evidence suggests that is not working anymore.

Part of that is rooted in our national obsession with equality of outcomes. While we profess the pledge toward equity, we have a school finance system where some subsidies are acceptable, while others are not. To dismiss subsidies out-of-hand as the report does is to ignore economic reality and the roots of many of our current problems.

But let’s get back to vouchers.

Truth be told, the school choice movement and the quest for better educational opportunity have been fueled by the reality that the very system created to bring about equality and access to education opportunity undermines both. Opportunity Scholarships, charter schools, and Education Savings Accounts are some of the means created to remedy those shortcomings.

Pointing out that vouchers may benefit high-income families ignores OSP’s priority to help low- and middle-income families. It also fails to recognize how a network of choice programs is developing and providing opportunity for many students stuck in public school systems that are inequitable, unaccountable, and failing. Critics who focus on subsidies for high-income families seem unable or unwilling to critique the current system and address the question: Shouldn’t all children have access to a quality school that best meets their needs?

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