A Kentucky public school district signed an agreement with an SGO so its own students can get §25F scholarships

Update, October 1, 2026: the regulations released October 1 leave the expense list to separate section 530 guidance that Treasury calls a high priority, so the covered expenses listed above are still pending. The proposed rules also make anyone who takes part in selecting scholarship recipients, and that person's family, disqualified persons who cannot receive scholarships, which bears on agreements like Russell County's, where the district recommends recipients. How the disqualified-person rule works.

A Kentucky public school district has formally signed on to the federal Education Freedom Tax Credit (§25F). According to reporting by Denise Shoulders in the News-Democrat & Leader, published September 24, the Logan County Schools board approved a memorandum of understanding with the Kentucky Education Fund to take part in Kentucky's Scholarship Granting Organization program. The fund, which Secretary of State Michael Adams's office approved in August, will serve as the independent administrator for the district, so Logan County can participate without running an SGO of its own.

The agreement is aimed at the district's own students. The paper lists the expenses that may be covered for public-school students, pending final federal guidance: instructional materials, fees, tutoring, academic testing, dual-enrollment costs, technology, and educational therapies for students with disabilities. Superintendent Dan Costellow framed the decision as a matter of stewardship: “One of our responsibilities is to look for every appropriate opportunity to bring additional resources to Logan County Schools and support our students without placing unnecessary costs on the district.” He added that “this partnership gives us another way to connect outside funding with the needs of individual students and families,” and that “good stewardship means not only managing the resources we already have responsibly, but also seeking new resources that can benefit our schools and our community.”

The structure is the part other districts will want to study. A school district is a unit of government, not a 501(c)(3) public charity, so it cannot be an SGO itself. It can work through an organization that is one, and that is what Logan County did. The statute makes this workable because a §25F scholarship follows the student, not the school. An eligible student is one whose household income does not exceed 300% of area median gross income and who is eligible to enroll in a public elementary or secondary school, and qualified expenses borrow the Coverdell list, which covers tutoring, books, computer equipment, and special-needs services alongside tuition. Our guide to what §25F allows for public-school students walks through it.

This is the pitch the Kentucky Education Fund has been making since it launched. Its adviser, Will Hodges, a former superintendent, told Kentucky Public Radio in a story published September 21 that the question for donors comes down to whether they “want to send their tax dollars to Washington D.C. or do they want to send it to their local school,” and the fund is one of eight organizations that have declared SGO intent in Kentucky. Logan County's agreement puts that pitch into a signed document. It comes in a state that joined the program when the legislature overrode Gov. Andy Beshear's veto of House Bill 1, whose opponents argued it would pull money away from public schools.

Two cautions. First, the list of covered expenses is explicitly subject to federal guidance, and the rules that will settle how far non-tuition expenses can go are still under White House review. Second, nothing flows until donations begin on January 1, 2027. A donor can claim a credit of up to $1,700, and a credit larger than the donor's tax liability can be carried forward for up to five years. How much reaches Logan County students will depend on how many donors choose the fund and direct their giving toward the district.

Logan County is not alone. At its September 21 meeting, the Russell County Board of Education approved a one-year memorandum of understanding with the same Kentucky Education Fund, according to a summary of the board’s recorded meeting. The division of labor matches: the fund runs the donation portal, applications, and reporting, while the district verifies student eligibility and recommends recipients. The fund may keep up to 10% of donations for administration and expects to use about 8.5% in its first year, and the agreement renews each year unless either side ends it in writing. Two districts in one week, working through the same statewide SGO, suggests the partnership model is becoming the default route for Kentucky public schools.

For a Kentucky district weighing the same move, the options are a partnership like this one or a district education foundation that files its own SGO declaration with the Secretary of State before the list goes to Treasury on January 1. Track the state on our Kentucky page, see who else is forming in the SGO directory, and if a foundation is the route, work through formation with the free SGO builder.