It has turned out to be the perfect under-the-radar technique to shift the tuition costs of nearly all private school students over to the taxpayers.
I am referring to taxpayer subsidized Scholarship Granting Organization scholarships for private school tuition. In Indiana law, they are called "School Scholarships", while vouchers are officially called "Choice Scholarships."
It has worked like this:
Established by the General Assembly in 2009, Scholarship Granting Organizations use public tax money to offer 50% tax credits to all taxpayers who donate to the SGO. The SGO then uses the donations to give scholarships to private school students for tuition. Under the law, these students can be students that have always gone to private schools as long as family income is $85,000 or less.
Under the law, private school students who receive an SGO scholarship, even those who have never even tried public schools, are eligible for a Choice Scholarship from the voucher program in the following school year.
This two year process from SGO scholarship to choice scholarship is now the leading path to voucher eligibility. It promises to soon provide a state funded voucher for every private school student with family income up to $85,000. The cost of vouchers in 2014-15 was $115 million.
Now in the new budget, the Governor and the House want to automatically increase the state subsidy for tax credit SGO scholarships, providing plenty of money for Scholarship Granting Organizations in perpetuity.
No other voucher expansion bill need ever be passed. This under-the-radar program will expand vouchers to nearly all current private school students with no further legislation.
The budget is now in the hands of the Senate. Let your Senators know that giving Scholarship Granting Organizations unlimited funding is not wise public policy. Their funding should be curtailed and they should be held more accountable for the tax funds they have received.
Unlimited Expansion of Scholarship Granting Organization Tax Credits
All that SGO's and voucher proponents need for unlimited expansion of vouchers is an unlimited supply of tax credits to give to donors. That is exactly what the budgets proposed by the Governor and the House have provided.
On page 103 of the House budget (HB 1001) is the so-called escalator clause for permanent increases:
"In state fiscal year 2016-2017 and in each state fiscal year thereafter, the maximum total amount of tax credits awarded under this chapter is the greater of:
(1) 120% of the amount of tax credits awarded in the previous state fiscal year; orIn other words, if the SGOs successfully get $25 million in donations and give out $12.5 million in tax credits, the next year they could give out $15 million, a 20% increase. The year after that, they could give out $18 million, another 20% increase.
(2) $12,500,000. "
The House budget thus gives SGO tax credits a 20% increase to fund private school tuition while giving public schools a 2.3% increase in the school funding formula.
Let the Senators know that this is a step in the wrong direction.
Past Use of Tax Credits for SGO Scholarships
The non-partisan Legislative Services Agency has chronicled the following figures showing tax credits claimed annually since the SGO tax credit was established: (Fiscal Note on HB 1001, Jan. 16, 2015)
Tax Year...................Total Amount Claimed
2010 ............................$0.2 Million
2011 ............................$1.4 Million
2012 ............................$2.4 Million
2013 ............................$3.4 Million
Then in the LSA fiscal note on HB 1001 dated March 4, 2015, LSA writes that "as of Feb. 13, 2015, $6.4 million in credits have been claimed in FY 2015."
Clearly the cost to state taxpayers is rising quickly as this path to using public tax money to fund private school tuition catches on among high income taxpayers. This is the most generous tax credit in the Indiana tax code, having no cap whatsoever on what individuals can give in order to take 50% off of their Indiana tax payment.
Let Senators, especially Senators on the Senate Appropriations Committee, know that this under-the-radar funding for private school tuition scholarships is undermining public funding for public schools. Let them know that SGO tax credits should not be given a $5 million raise and an unlimited escalator in the new budget.
It is time to act. The Senate budget is to be announced this Thursday, April 9th. Make your voice heard today on this point to stop the expansion of vouchers.
Once again, an easy way to contact members of the committee is to go to the Indiana General Assembly website and click on Committees, then on Standing Committees, and then on the name of the committee. The pictures of committee members appear on the left. As you click on each picture, an email form comes up that you can use to register your concerns with each member.
Thanks for your strong advocacy for public education!
Vic Smith email@example.com
“Vic’s Statehouse Notes” and ICPE received one of three Excellence in Media Awards presented by Delta Kappa Gamma Society International, an organization of over 85,000 women educators in seventeen countries. The award was presented on July 30, 2014 during the Delta Kappa Gamma International Convention held in Indianapolis. Thank you Delta Kappa Gamma!
ICPE has worked since 2011 to promote public education in the Statehouse and oppose the privatization of schools. We need your membership to help support the ICPE lobbying efforts. Joel Hand will again be our ICPE lobbyist in the Statehouse. Many have renewed their memberships already, and we thank you! If you have not done so since July 1, the start of our new membership year, we urge you to renew now.
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Some readers have asked about my background in Indiana public schools. Thanks for asking! Here is a brief bio:
I am a lifelong Hoosier and began teaching in 1969. I served as a social studies teacher, curriculum developer, state research and evaluation consultant, state social studies consultant, district social studies supervisor, assistant principal, principal, educational association staff member, and adjunct university professor. I worked for Garrett-Keyser-Butler Schools, the Indiana University Social Studies Development Center, the Indiana Department of Education, the Indianapolis Public Schools, IUPUI, and the Indiana Urban Schools Association, from which I retired as Associate Director in 2009. I hold three degrees: B.A. in Ed., Ball State University, 1969; M.S. in Ed., Indiana University, 1972; and Ed.D., Indiana University, 1977, along with a Teacher’s Life License and a Superintendent’s License, 1998. In 2013 I was honored to receive a Distinguished Alumni Award from the IU School of Education, and in 2014 I was honored to be named to the Teacher Education Hall of Fame by the Association for Teacher Education – Indiana.