Kentucky lawmakers have introduced twin bills to promote school choice, although critics believe it is another blow to sufficient resources for public education
Both House Bill 134, sponsored by state Rep. John Carney, R-Taylorsville, and Senate Bill 36, sponsored by State Sen. Ralph Alvarado, R-Winchester, would establish scholarship tax credit programs that allows individuals or businesses to receive a tax credit from state taxes when they contribute to scholarship-granting organizations providing private school tuition assistance for low- and middle-income students.
Similar legislation that they sponsored in 2017 failed.
Carney, chair of the House Education Committee, and Alvarado, R-Winchester, who represents part of Fayette County, say they are trying again because they want to give families more choices for their children’s education.
According to the legislation, scholarship tax credits would provide more choices in education for students from low- and middle-income families and students in Kentucky’s foster care program and help special needs children get the services they need. Scholarships could be used for tuition, and basic educational needs, at a non-public school of the family’s choice.
Developmentally disabled students would also be eligible to use the scholarships for either non-public school tuition or needed educational services such as occupational therapy, physical therapy or speech therapy. All foster children would be eligible for the scholarships regardless of family income.
“We’re trying to help students of need if families feel like they are not receiving the services they need in a traditional school,” said Carney, a former public school teacher who coordinates programs for Taylor County schools.
“It’s children who otherwise would not have an opportunity,” Alvarado said. “It is meant for underprivileged children and children with disabilities.”
Fayette County school board members recently said in a legislative priority document that they were against tuition tax credits. The Kentucky Education Association is against the legislation, said its president Stephanie Winkler.
Winkler thinks that options such as scholarship tax credits, vouchers and education savings accounts “rob public schools of vital funding and resources.”
“We simply cannot afford to fund two different education systems- one private and one public-on the taxpayer's dime,” she said.
Under the legislation, Alvarado said in a September 2017 blog on the Ed Choice Kentucky website, scholarship-granting organizations would be established as a 501(c)(3) non-profit and distribute at least 90 percent of tax credit eligible contributions to student scholarships. The rest of the contributions would be used for administrative purposes. Contributions could not be designated for a specific student.
Scholarships would be awarded on a needs-basis. Students would be eligible to receive a scholarship if their family’s income does not exceed 200 percent of the guidelines needed to qualify for the reduced-price lunch program. Carney said that for most families, it would mean they could not earn more than approximately $88,000 per year. Developmentally-disabled students will be eligible if their family’s income does not exceed 250 percent of the guidelines needed to qualify for the reduced-price lunch program.
Alvarado has said the tax credit program will be capped at $25 million in the first year and will increase by 25 percent the following year if 90 percent of the tax credit is used in the first year.
An opposing blog on the Kentucky Center for Economic Policy website said the bills would allow a state return of 90 cents for every dollar donated in the Senate version and 95 cents for every dollar given in the House version. but that’s only part of the subsidy, because some wealthy donors would also be eligible for federal tax breaks that mean they can actually make money off their donations.
The blog said due to recent federal tax law changes, some wealthy taxpayers would be able to make money through a loophole created by the Senate proposal.
The New York Times in May reported that the AASA, a national school superintendents association, and “the liberal-leaning “Institute on Taxation and Economic Policy examined programs in 17 states that send more than $1 billion a year to private schools via tuition tax credits, and concluded that private schools were benefiting from a “federally sanctioned voucher tax shelter” for wealthy taxpayers. Arizona is among the states where problems have been reported with scholarship tax credits, according to other news reports.
Alvarado told the Herald-Leader that his legislation would be revised to fix any potential loophole and that Carney’s bill doesn’t include the loophole.
As of January 2017, 17 states offered scholarship tax credits, according to the National Conference of State Legislatures website. Carney said Kentucky needs as much private money invested in its education system as possible, whether its for K-12 public schools or private schools“so that we can have as many resources as possible.”
Carney said recently he thinks the legislation has a chance in the 2018 General Assembly. “A lot of it’s going to be dependent upon on how the budget comes out and of course a lot of that is predicated on the pension reform plan.”
“I don’t want to ...take necessary funds from traditional K-12 schools,” said Carney.”We need to properly fund K-12 public education.”
The Kentucky Center for Economic Policy said a fiscal note on a similar bill filed last year set the cost to the state at $76.3 million by the sixth year. But Alvarado said Friday he thought the legislation could save the state money because private money is used for the students education.
“It’s just a simple transfer of resources over to private schools at the same time we are looking at cuts to our public schools,” said Jason Bailey, Executive Director of the Kentucky Center for Economic Policy,who also opposes the bills.
But the Catholic Conference of Kentucky “strongly supports Scholarship Tax Credit legislation, “ said spokesman Andrew Vandiver. “A Scholarship Tax Credit program will increase need based assistance for students who desire to attend non-public elementary and high schools. This legislation provides students with the opportunity to access the classroom that best suits their needs. We are proud to be part of a diverse coalition supporting equal educational opportunity for Kentucky families.”