Jefferson County Public Schools is closed on Wednesday, for the second time in a week, as educators rally in Frankfort to protest several pending pieces of legislation.
There are three specific bills drawing concerns: HB 525, which would remake the board that manages teacher pensions; SB 250, which only affects JCPS and would give the district’s superintendent more power, including to appoint principals, without the approval of a district school council; and HB 205, which would allow for scholarship tax credits.
This latter bill is especially controversial. Earlier this week, superintendents statewide condemned the bill. Powerful lawmakers support it, from Kentucky House Speaker David Osborne to Governor Matt Bevin, who is poised to sign the plan if it passes.
The General Assembly is running out of time to pass legislation, but House Bill 205, could still move forward. Alternatively, lawmakers could insert its provisions in another bill.
Are you curious why this school choice measure is so controversial? Here are some key questions and answers about the potential effects of these scholarship tax credits.
What is a scholarship tax credit?
These tax credits create an incentive for taxpayers to donate to nonprofits that grant scholarships to help K-12 students attend private schools. Under House Bill 205, donors could subtract 95 to 97 percent of the value of their donation — up to one million dollars per year — from the bottom line of their state tax bill. That’s a nearly dollar-for-dollar subtraction from a donor’s tax obligation.
How much would the scholarship tax credit cost Kentucky?
The credit could affect the total amount of taxes Kentucky collects to fund state services, at a time when pension debt is also putting pressure on the state budget.
The non-partisan Legislative Research Commission estimates House Bill 205 would cost the state $21 million in lost revenue in its first full year of implementation.
That number could go up in future years. Kentucky’s proposed tax credit is set to expand by 25 percent each year, as long as the state awards 90 percent of the credits available. If that happens, the LRC estimates the credit could cost Kentucky $50 million a year after it has been in place several years.
The pro-school choice policy group EdChoice argues that cost estimate does not account for how much the state could save on the expense of educating students who move from public to private schools. For example, the Florida legislature’s nonpartisan budget analysts estimated in 2010 the state saved $1.44 for every dollar of revenue lost by a similar tax credit.
But superintendents say any loss in revenue and enrollment could put a pinch on public school budgets. They say their fixed costs won’t change even if their schools lose a small percentage of students to private schools. School districts would be expected to maintain the same facilities, services and support staff, but with less funding from the state.
Who will benefit from these tax credits?
Children from low-income families who want to attend private schools will benefit, because the measure is expected to grow nonprofits that offer scholarships to eligible students.
Parents whose children receive these scholarships testified before a House committee Tuesday. The families described how their children — several of whom had learning disabilities or childhood trauma — thrived in private schools that catered to their specific needs. Six thousand students are on one Louisville nonprofit’s waitlist to receive scholarships.
Who is opposed?
The state’s largest teacher lobbyist, the Kentucky Education Association; the nonpartisan education advocate The Prichard Committee; the grassroots teacher group Kentucky 120 Strong; and many Kentucky superintendents have come out against the bill.
How do the proposed scholarship tax credits compare with those in other states?
Eighteen other states have scholarship tax credit programs, and nationwide they help send more students to private schools than vouchers do. EdChoice’s policy director Jason Bedrick says the size of Kentucky’s proposal, capped at $25 million its first year, is “somewhere in the middle of the pack.”
The fact that Kentucky’s proposed tax credit is set to expand makes it similar to tax credit scholarships in Arizona and Florida, which also have built-in mechanisms for growth if donations hit the annual cap.
“They’ve been hitting their caps pretty much every year, and now Florida [has grown to] about $873 million,” Bedrick said, explaining that growth occurred over 18 years.
Why do opponents call scholarship tax credits “backdoor school vouchers?”
Another thing Kentucky has in common with Arizona and many other states where scholarships tax credits have passed: our state constitutions ban spending public dollars on religious schools.
That means Kentucky cannot pass laws to enact school vouchers — which spend tax money directly to help students attend private schools, many of which are religious. These tax credits allow donors to do the spending, and then pay about that much less in state taxes.