A Wahiawā mother, Paige Ernest, could not afford the roughly $12,000 in annual tuition at Hoʻāla School until a $3,000 scholarship from a nonprofit made it possible to send her daughter there. That scholarship organization, ACE Scholarships, says it had to turn away nearly 300 other qualified lower-income families last year simply because there wasn't enough donor money to go around. Now a new federal program signed into law by President Donald Trump could pump fresh private dollars into scholarships like hers — but Hawaiʻi still hasn't decided whether to take part.
The Education Freedom Tax Credit, created under the One Big Beautiful Bill Act, allows individual taxpayers to claim a 100% dollar-for-dollar federal tax credit of up to $1,700 per year for donations to state-approved scholarship organizations, according to PYA, P.C. As Honolulu Civil Beat reports, Hawaiʻi was one of roughly 20 states that had not committed to the program as of late July, and Gov. Josh Green has not yet decided whether the state will opt in. The credit is set to launch nationwide on January 1, 2027, and unused credits can carry forward for up to five years.
Green initially said Hawaiʻi would not participate, per the Civil Beat report, but his office has since signaled the decision remains open. Makana McClellan, in an emailed statement cited by the outlet, said Green will consult with other state agencies once federal regulations are released. The U.S. Department of the Treasury has said it plans to issue those proposed rules by the end of September 2026, ahead of the program's official launch.
A Constitutional Roadblock
The central obstacle is Article X, Section 1 of the Hawaiʻi Constitution, which bars the appropriation of public funds for the support of sectarian or nonsectarian private schools, according to Ballotpedia. The state constitution states that public dollars cannot fund private education, and University of Hawaiʻi law professor Aviam Soifer said the key constitutional question is whether the state itself is involved in the transaction. Soifer said that state authorization and opting in could disqualify the program under Hawaiʻi's constitution, per the same Civil Beat report.
Program supporters point to the U.S. Supreme Court's 2011 ruling in Arizona Christian School Tuition Organization v. Winn, which found that tax credits for voluntary donations to scholarship organizations do not constitute public funds because the money never passes through a government treasury, according to Justia Law. Colin Moore, cited in the Civil Beat article, said the scholarship funds do not come from state coffers. State Rep. Diamond Garcia introduced a related resolution during the last legislative session and wrote a letter to Green asking him to approve Hawaiʻi's participation, but has not received a response, the outlet reports.
A Resolution That Died Without a Hearing
Garcia's push wasn't limited to a letter. He and six House co-sponsors introduced House Resolution 68 during the 2026 legislative session urging Green to opt Hawaiʻi into the program, but it died in committee in May 2026 without a public hearing, according to BillTrack50. The stall reflects a broader partisan split: as of July 2026, 31 states had opted in or signaled intent to join the program, with 11 state legislatures passing statutes this year to govern its administration, per Ballotpedia. Hawaiʻi remains among roughly 19 states, mostly led by Democratic governors, that have held off.
The Hawaiʻi State Teachers Association opposes the program, arguing the initiative subsidizes private schools with taxpayer dollars. Union president Osa Tui Jr. said the initiative acts as a backdoor voucher system funding private tuition and religious instruction, according to the Civil Beat report. The union has endorsed Green in the past two election cycles, and its political action committee contributed $1,000 to his campaign this year — a relationship opponents of the program have noted amid the governor's delay.
What Families Could Gain or Lose
The stakes for families are concrete. ʻIolani and Punahou charge over $32,000 in tuition this year, according to the outlet's reporting, and Catherine Toth Fox said a federal tax-credit scholarship likely would not have been enough to keep her son at Punahou, where tuition topped $31,000 when he attended; she ultimately transferred him to Nuʻuanu Elementary. By contrast, more modest private schools could see meaningful impact: Sacred Hearts Academy in Kaimukī, which partners with ACE Scholarships for a second year, provides scholarships ranging from roughly $3,000 to $4,000.
ACE Scholarships awarded 50 scholarships to students at Oʻahu schools last year while receiving nearly 300 qualified family applications it could not fund, per the Civil Beat report. Applicants to the program had an average household income of $17,615. The organization operates in 13 states including Hawaiʻi. Under the federal program's rules, a family of four in Honolulu could qualify with income up to $400,200, since eligibility is set at 300% of local area median gross income — a threshold that education researcher Marguerite Roza and an American Federation for Children analysis suggest would allow a broad swath of Hawaiʻi students to meet the financial requirements.
Public Schools Could Also Benefit
The program isn't limited to private school tuition. Scholarships can also cover books, uniforms, tutoring and after-school care, and public schools could use partnerships with scholarship organizations to cover field trips, club dues and tutoring, according to the Civil Beat article. Micah Hirokawa said he would serve public school students if Hawaiʻi opted into the tax credit, awarding scholarships to families with the greatest financial need at certain private schools. Nonprofits, not the state, would decide scholarship amounts and which student groups are eligible — including options such as students at private Catholic schools, homeless students or students in foster care.
Hawaiʻi's high private school enrollment rate — roughly 16% of students attended private schools last year, nearly double the national average of about 10% according to the National Center for Education Statistics — helps explain why the debate carries particular weight in the islands. Meanwhile, Hawaiʻi public schools spent $23,935 per student in combined state, local and federal funds during the 2024–2025 fiscal year, among the highest per-pupil figures in the country, per the Hawaii Department of Education. Public school funding is tied to enrollment, and some campuses have seen sharp declines — Honolulu's McKinley High School lost roughly 30% of its student population between the 2020–21 and 2025–26 school years, according to Honolulu Civil Beat.
The Money Could Simply Go Elsewhere
If Hawaiʻi doesn't opt in, taxpayers in the state could still claim the federal credit — but only by donating to scholarship organizations serving students outside Hawaiʻi. Brandy Ann Sato worries Hawaiʻi students may not benefit from local taxpayers' donations next year if the state stays on the sidelines, per the Civil Beat report. Diment Singh, whose family is not eligible for the scholarships under the income limits, said he still supports the program, calling education-earmarked donations a positive feature even as he acknowledged the $1,700 credit reduces federal revenues.
Before any Hawaiʻi student can use donated funds, the state must formally confirm participation and submit a list of approved scholarship organizations to the federal government. Green's office says that decision awaits the Treasury Department's forthcoming regulations, expected by the end of September. Until then, families like Ernest's — and the hundreds still on ACE Scholarships' waiting list — are left watching to see whether Hawaiʻi joins the other 31 states already moving toward the program's January 2027 launch.
