Kentucky State Capitol

Kentucky State Capitol

LOUISVILLE, Ky. (WDRB) -- School-choice advocates are entering next year’s legislative session with renewed hope that Kentucky soon will have a scholarship tax credit program thanks to continuing support from House Republican leaders and better procedural timing.

But opponents, primarily organizations tied to the state’s public education system, say Kentucky can’t afford to hand back millions of dollars in tax money given the harsh budgetary landscape that will welcome lawmakers back to Frankfort Jan. 7 as they craft the next two-year spending plan.

Officials with EdChoice Kentucky, a primary supporter of scholarship tax credits, say next year’s bill won’t change much from this year’s House Bill 205, which would have allowed donors to scholarship-granting organizations to recoup up to 95% of their contributions through tax breaks capped at $1 million per person. Those organizations would have offered scholarships for private-school tuition for students in families who earn up to 200% of the limit for free and reduced-price lunch eligibility or for students in the state’s foster care system.

House Speaker David Osborne, whose office did not respond to a request for comment Friday, was among three House Republican leaders who co-sponsored HB 205. 

The program, had HB 205 become law this year, would have been in effect from Jan. 1, 2019, until Jan. 1, 2024, and started with a $25 million limit on tax credits that grew with demand. If at least 90% of the limit on tax credits had been awarded to donors in a fiscal year, the bill called for that cap to increase by 25% in the next year.

The Legislative Research Commission estimated that if the scholarship tax credit program’s thresholds rose by 25% each year, it could have cost the state $209 million through June 30, 2025, according to a fiscal analysis of HB 205.

The bill floundered this year, in part, because House leaders believed it needed at least 60 votes to pass. Revenue bills need at least three-fifths support in odd-year sessions.

But that threshold isn’t required during budget sessions, giving EdChoice Kentucky President Charles Leis hope that a similar measure will pass when lawmakers convene next year.

Leis has said he expects a bill to be filed again next year based on his conversations with House Republican leaders. Andrew Vandiver, associate director of the Catholic Conference of Kentucky, called the support of House GOP leadership "crucial" for a scholarship tax credit bill's chance of success.

For Leis and other supporters, scholarship tax credits are one way to give more families chances to attend private schools that might better serve the needs of their children.

“This is all about the kids and putting the students first,” Leis said. “I know it’s really emotionally charged in Frankfort about these kinds of things, but we just have to keep persisting on it and convince legislators that it’s the right thing to do.”

Leis contends that public school districts won’t suffer financially if scholarship tax credits ultimately become law next year. School leaders have said their per-pupil funding from the state would drop with fewer students, but Leis says they’ll ultimately save money by not spending money to teach those who go to private schools through a scholarship tax credit program.

EdChoice Kentucky estimates that a scholarship tax credit program would affect between 6,000 and 7,000 students, or about 1% of K-12 enrollment across the state, in its first year “if we raise all the money,” Leis said.

“The districts routinely have more than 1% variation in enrollment, so our position is that this is not going to be disruptive,” he said. “There’s no question that if a child switches, they do not get the (Support Education Excellence in Kentucky) funding the following year, but they also don’t incur the cost of educating the child.”

But Eric Kennedy, government relations director with the Kentucky School Boards Association, says slowly chipping away at districts’ enrollments will gradually put more funding responsibilities on the backs of local taxpayers.

“When anyone says that, very respectfully, that shows a lack of understand of what it really takes to operate a school system,” Kennedy said.

“You don’t save money on a teacher’s salary if only one or two kids, especially of different ages or different grades, leave,” he said. “You don’t have less square footage to heat or cool. There’s almost no cost savings, but there’s an immediate reduction in the state’s support to operate the school.”

KSBA isn’t just opposed to scholarship tax credits. In fact, it’s calling for a completely moratorium on any new tax expenditures by the state and for many already on the books to be phased out as Kentucky faces “a dreadful financial situation,” Kennedy said.

Other education-oriented groups also oppose scholarship tax credits, such as the Kentucky Education Association and the Kentucky Association of School Superintendents.

Superintendents throughout the state, in fact, held multiple news conferences across Kentucky denouncing scholarship tax credits the day before HB 205 was heard in the House Appropriations and Revenue Committee, which did not vote on the legislation. 

Funding is central to their opposition.

KEA is looking for lawmakers to restore past K-12 cuts like textbook funding and professional development; give school employees $2,000 annual raises; and pay for school safety initiatives passed into law this year, President Eddie Campbell has said. The School Facilities Construction Commission estimated in a recent report that districts’ unmet facility needs have hit $6.9 billion, which marks a new all-time high, according to Kennedy.

Kentucky lawmakers are expected to face difficult financial decisions in upcoming budget talks.

John Chilton, budget director for former Gov. Matt Bevin, estimated a $1.1 billion budget deficit for the upcoming biennium, largely because of growing expenses in areas like Medicaid, corrections and pensions. The Consensus Forecasting Group, which sets revenue estimates that legislators use to write a two-year budget, predicted tepid growth of $353 million over the next two fiscal years.

“We shouldn’t be giving away more revenue than we take in,” Campbell said.

The contentious debate swirling around scholarship tax credits in Kentucky comes at a time of legal and political uncertainty.

The U.S. Supreme Court is scheduled to hear arguments Jan. 22 on whether state constitutions can specifically prohibit religious schools from participating in such state-affiliated programs. The case originated in Montana, where the state Supreme Court ultimately struck down the entire scholarship tax program there based on a constitutional provision that public funds can’t support religious schools.

Based on a 2017 U.S. Supreme Court ruling in favor of a church preschool in Missouri that was kept from a state-administered playground safety program, Vandiver expects the high court will ultimately side with school-choice supporters in the Montana case.

“It’s really an opportunity for the Supreme Court to make abundantly clear that scholarship tax credits are constitutional and a state can’t prohibit them based on their state Constitution,” Vandiver said. “I feel very confident that we’re going to end up winning that case.”

Both he and Leis expect the measure will get bipartisan support. Vandiver noted than former Democratic Rep. Tommy Thompson of Owensboro filed a similar scholarship tax credit bill in 2016 and was one of eight Democrats who signed on as sponsors.

"Families want this type of program," he said. "... I think that's finally coming through to the legislature."

But voting for a scholarship tax credit bill could bring some risk for state lawmakers in 2020, when all members of the House and half of the Senate will be on ballots across Kentucky.

Nema Brewer — a co-founder of KY 120 United, a grassroots education group that sprung to prominence as protesting teachers forced district closures during the 2018 session — says supporters of a scholarship tax credit bill in the General Assembly can expect political ramifications in 2020.

“We fulfilled our promise to bounce Bevin,” she said. “...We’re going after some certain seats this time around. We’re going to focus a little bit more, and we’re going to be watching this voucher vote.”

Vandiver and other school-choice advocates bristle at references to scholarship tax credits as vouchers, which generally allow families to use public education funding toward private-school tuition.

“I think it’s misleading because a voucher program is publicly funded,” Vandiver said. “...A scholarship tax credit program would just provide funding so that those organizations can reach more families.”

Regardless, moving a scholarship tax credit bill “would not be smiled upon” by teachers and other public education supporters next year, Brewer said.

“I think you would see some action,” she said when asked about the possibility of “sick outs” next year. “I’m not sure exactly right now what that action would be, but you could probably bet your hind end that you’ll see something.”

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