Battle brews over tax breaks for private school scholarships

Battle brews over tax breaks for private school scholarships

Battle brews over tax breaks for private school scholarships

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A battle is brewing over a bill seeking tax credits for Nebraska residents who donate to groups that award scholarships to private school students.

LINCOLN, Nebraska — A battle is brewing over a bill seeking tax credits for Nebraska residents who donate to groups that award scholarships to private school students.

The measure set for legislative debate is certain to open a rift among lawmakers, who have rejected similar proposals in the past even though most other states already subsidize private or charter schools.

Supporters say the Nebraska bill would help low-income families who otherwise can’t afford private schools, but the public-school advocates argue it would rob the state of revenue that could help public-school students.

“There are certain kids who don’t do well in their current school,” said Sen. Lou Ann Linehan, the bill’s sponsor. “It doesn’t mean it’s not a good school. But we have a lot of kids whose parents can’t afford tuition at private schools, even if it might be the best fit for them.”

Opponents say Nebraska should focus on funding for public schools, including small, rural districts that don’t receive state equalization aid because they’re flush with valuable farmland. Owners of that land are now shouldering a major share of the burden through property taxes, even though farm incomes have fallen sharply in recent years.

“Public dollars should to go public schools,” said Jack Moles, executive director of the Nebraska Rural Community Schools Association and a former school superintendent. “When we can’t get state equalization funding for every school district, why would we put money toward private schools?”

The bill would allow donors to claim a dollar-for-dollar tax credit on contributions made to organizations that offer private-school scholarships. If it passes, the bill would allow donors to reduce their income tax liability by as much as half.

The state would offer a maximum of $10 million in tax credits in 2020, but that amount would grow each year if 90 percent of the money is claimed. Critics say that cost could easily balloon to more than $90 million in a decade, and Linehan acknowledged the cap may need to be lowered to fit into a tight state budget.

To qualify for a scholarship, students would have to come from a family that earns no more than two times the maximum income required to get federal reduced-price lunch benefits — about $93,000 for a family of four. Lower-income families would get priority.

Nebraska is one of seven states that don’t offer charter schools, according to the National Conference of State Legislatures, and 18 states provide tax credits that resemble the legislative proposal. Nebraska as one of four states that don’t allow alternatives to traditional public schools, along with North Dakota, Vermont and West Virginia.

Many private, religious schools already offer financial assistance to those who need it, but the bill would further ease the burden on families, said Tom Venzor, executive director or the Nebraska Catholic Conference.

“Every single child in Nebraska deserves to go to a school that best serves their needs, regardless of their income,” he said.

Venzor said existing scholarships have helped parents who would otherwise need to take a second job to afford private schooling, thus allowing them to spend more time with their children.

Venzor said demand for private schools has outpaced the scholarship money that’s currently available.

The measure could indirectly save the state money by reducing the number of children who are educated in public schools, he said, and the savings could be funneled into public schools. A 2017 analysis of Iowa’s tax credit program by the state Department of Revenue concluded that it has saved the state money each year since it became available in 2007.

For instance, the study estimated that 30 percent of private school students who received financial aid through the program in the 2016-17 school year would have gone to a public school if the tax credit didn’t exist. Based on that estimate, the department said those students’ decision to go to a private school reduced the state’s education costs by $24.6 million. Iowa spent a total of $12 million on tax credits that year, resulting in a net savings of $12.6 million.

“It’s ultimately a win-win for the states that adopt them,” Venzor said. “We don’t believe they hurt public schools.”

Opponents say it’s highly unlikely the bill would save Nebraska money because most school expenses, such as teachers and building maintenance, are fixed. If a handful of students left for a private education, public schools would still have to cover those costs.

They also note that public schools can’t discriminate against students for any reason, but private schools are free to reject students based on religion, special education needs, sexual orientation, gender identity and other characteristics.

The union representing Nebraska public school teachers said it makes no sense to divert money into private-school scholarships when the state is struggling financially and ranks 47th nationally in the percentage of state funding that goes to K-12 education.

“As far as we’re concerned, it’s the camel’s nose under the tent to try to get public money to private schools,” said Maddie Fennell, executive director of the Nebraska State Education Association.

Fennell said the state’s low ranking is largely to blame for the state’s high property taxes and argued the bill would worsen the situation. She noted that a lack of state funding and stagnant educator salaries have led to teacher walkouts in states like Arizona, California, Oklahoma and West Virginia.

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