Tuesday, April 9, 2019

Pro or Con: Scholarship Tax Credit Programs

The Opportunity Scholarship Act, LB670, is pending a vote by the Nebraska State Legislature again.  I say "again" because they have been running versions of this legislation up the flagpole for years.  Basically it is a program where a tax credit would be given to those who donated to a scholarship fund for use in qualifying private schools in the state.  A distinction needs to be made that this is not a tax deduction.  Tax deductions are already allowed for charitable donations to scholarship funds.


Catholic schools would be the primary beneficiaries of this program, though there are Protestant and secular private schools which would also be eligible to participate.  I can see both sides of the issue.  Of course it would be a boon to the Catholic schools of the state.  Our archdiocese is promoting it pretty intensely, to a degree I am uncomfortable with. I hesitate to say that, since our kids attended Catholic schools part of the time, and now my grandchildren attend one. However there are existing tuition assistance programs; it is pretty easy to get a reduced rate based on a sliding scale for income.  Parents also get credit for volunteering in the schools.
Those opposed to the bill say that the public schools are the proper venue for public funds; that people are free to send their children to private schools, but that the state is not obligated to fund them.
Those supporting the bill say that it would take no funds away from the public schools. I find that argument a bit disingenuous. Public funds are, to a degree, a zero sum thing.  There are different revenue streams, but in the end, the budget has to balance (in fact that is a legal requirement in our state). In Nebraska, as in many other states, the public schools are supported by property taxes.  This includes property taxes on farms and ranches.  Many people feel, with some justification, that the burden for funding public education falls disproportionately on those involved in agriculture. It seems likely to me that money taken out of the common pot for scholarship tax credits would only increase the pressure on property taxes.
I am in favor of both private and public schools.  Competition is a good thing; there shouldn't be a monopoly.  It keeps both systems aiming for high quality. The archdiocese is promoting LB670 as a boon for economically disadvantaged students. And maybe it would be.  But it also seems to be encroaching on the separation of church and state.
The Catholic Democrats of Nebraska and the archdiocese representative have been in a rather heated discussion over this issue.
I am pretty sure that the bill won't pass at this time. Due to the flooding, this state will have less money from income taxes coming in. They will have to do more with less. The timing isn't favorable for any additional outflow in the budget.
Many states already have scholarship tax credit programs. Do any of you live in states which have one?  If so, how has it worked out?


36 comments:

  1. Yes, Illinois has had this for a few years.

    FWIW, I'm opposed to denying public funding to Catholic schools, or other private schools that have demonstrated competence in primary education. A number of other nations in the developed world (Canada, various European countries) either subsidize or completely support religious and religious-heritage schools. That the US draws this bright funding line between secular/public and religious/ private schools is itself a manifestation of anti-Catholic bigotry, hearkening back to the days when the education establishment was concurrent with the Protestant Mainline. In union states like Illinois, that essential bigotry was traditionally supplemented by labor-movement rhetoric whose main theme is that unionized public school teachers should have a monopoly on educating children.

    Note that, when we think (properly) of religious-heritage schools like Catholic schools as schools that, morally, should be supported by state funds, then the argument that this tax credit "takes away funding" from public schools is seen to be specious, because the state and its citizens are obligated to support, from the public coffers, *all schools*, whether or not religion is taught there, and whether or not they were organized by a local school board. If there is a state legal or constitutional requirement that the budget be balanced, then the implication is that the state needs to generate revenue (presumably from taxes) to cover the costs of all schools, public and so-called private.

    One outcome of such a program is that Catholic school teachers could be paid a just wage, just like their brethren in public schools, for many of whom the classroom outcomes aren't as good as they are for Catholic schools.

    In Illinois, the large urban school districts with significant populations of children from poor families (Chicago, Rockford, Elgin, Springfield, Peoria et al) have comparatively bad educational outcomes. Catholic and other private schools are a lifeline for families who wish their children to receive a good education in a safe and disciplined environment. I don't know of a Catholic school system anywhere that is flush with funds. This tax credit scheme is one way to help parents afford good education - something about which, in too many places, the state is negligent.

    ReplyDelete
  2. We have this backdoor tax support for Catholic and private schools in Florida. We have a Lottery that was sold as providing money to "enhance" public education by providing for in-school and after-school programs unavailable under the usual tax budget. And we have something most other states don't have -- equity, in which rich counties pay more in property taxes and poorer counties pay less in property tax but have money from other sources added to their school budgets so there is something like "equity" in per-student spending.

    And most public schools still stink. And Catholic schools are still closing. And the public schools with rich parents have "enhancements," and public schools with kids on the free-lunch program don't.

    Money is fungible, and the money that the Lottery brings in offsets the tax money that used to go to schools and now is reduced under a succession of tax cuts under Republican governance. With all that fiddling around we've done, we still say "Thank God for Mississippi so Florida can't be last."

    If, if, if Florida ever paid for the public education it is mandated by the Constitution to provide, I might support tax support for private schools. Still, state interests would be up against paying for things like the New York Jewish schools that discourage vaccinations and to hell with everyone else, that's how THEY worship G-d. In all honesty, all of these dodges in Florida have worked to make the rich richer and the poor gasp for air -- with a heavy dose of sanctimony thrown in. The folks who run things don't give a hoot about poor schools. Or Catholic schools. They give a few bucks to buy off people, but send their kids to the schools the folks who run things control, public or private.

    ReplyDelete
  3. I don't think public funds should be spent on sectarian education that doesn't take all comers and that teaches that cavemen had pet dinosaurs like Fred Flintstone, that the Lord alone is in charge of climate change, that girls must not tantalize boys by wearing form-fitting attire, that homosexuals are disordered, and that those who don't accept Jaysus as their personal etc. will fry in hell.

    If you want your kid to have an education comprised of alternative facts, hunky dory, but I ain't payin'.

    ReplyDelete
    Replies
    1. Jean, I'm with you on most of your list. Regarding the girls and form-fitting attire: my recollection was that it was more a question of how low the neckline and how high the skirt was. At any rate, I think school uniforms are required in some public schools as well. I don't have an issue with it. Nor in a workplace setting, for that matter.

      Delete
  4. This comment has been removed by the author.

    ReplyDelete
  5. Question for Jim P, since Illinois has had the scholarship tax credit program for several years, have their been any statistical studies on an increase in the number of disadvantaged students attending Catholic schools?

    ReplyDelete
    Replies
    1. Katherine - I haven't run across any results as to the impact of the scholarship tax credit program on Catholic schools in Illinois. In the Chicago Archdiocese (and probably even more so in other dioceses in Illinois), it's probably more a question of simply keeping Catholic schools afloat and open.

      FWIW - the town where I lived during my high school years, Rockford, IL, which also is the seat of a diocese, has an East Side and a West Side (it's bisected by the Rock River). In my day, the West Side, which includes the city's predominantly African American neighborhoods, had five Catholic elementary schools. If I'm not mistaken, starting in the next school year, none of the five will still be open, including the school for the cathedral. I am certain that the decision to close schools and consolidate them on the east side of the river, was made only when there were no other options, but it's still a terrible statement - sort of a stark sign of abandonment, even if that's not the intent - that the Catholic church in that city no longer has an education presence in the African American communities.

      When I get a chance, I'll look around and see if I can find any metrics on the tax credit impact of the program in Illinois.

      Delete
  6. Here is the other problem with tax-supported private schools: The local Catholic high school (tuition currently $15,000) gets some support now, but when my #3 son went there the tuition was $3,000 and public support was only a gleam in Jeb Bush's eye. Tax support doesn't reduce tuition. It encourages increasing tuition because parents are no longer paying the full amount.

    Follow the dollars. Them as has gets more.

    ReplyDelete
    Replies
    1. When I attended Catholic grade school as a child, the tuition was $50 a year. Of course it was staffed by religious sisters who were paid a stipend of $75 a month. Times have changed, one shouldn't have to take a vow of poverty to teach in a Catholic school.
      I know that the tuition is less in the Catholic schools attached to parishes than in secular private schools, or in the Catholic "prep" schools. This is because they are to a degree subsidized by the archdiocese. I would hope the subsidy wouldn't be reduced because of increased money coming in to the schools from the tax credits.

      Delete
    2. The way it usually works is this: You are paying $100 in tuition now. But the law passes, and now the state pays $75. Which allows the school to raise tuition to $175, since that is no more than you were paying. It's win-win (except for the poor parent who is paying taxes to get that $75 for his kid in the public school and the $75 for your kid in the $175 school. But who cares about that parent?

      In the pretense of school integration, we established a magnet school for brains in a non-white area. All the bright kids in the county now are dropped off there. That means all the other schools lose their area's best and brightest. But, not all the rich kids are brainy. So we established another magnet school for the otherwise-brilliant, which brilliance is expressed through "the arts." And who gets into that one? The kids who started dance lessons at age 3 and piano at age 5. And whose kids are those? Give you a clue: Their last names are in the local news a lot as they open new offices or expand their businesses.

      Delete
    3. So we tried bussing, back in the day. That didn't work out, either. And the magnet schools just draw the kids who are going to be alright anyway. If we're trying to educate kids out of poverty, we still haven't figured out how to do it.

      Delete
    4. All of the Catholic schools around here grant scholarships and have reduced-tuition programs. I expect that very few, maybe none, would turn away a family because of inability to pay.

      FWIW, I believe tuition at the Catholic high school I attended was $400/year when I started in 1975. It's not quite $15K a year now (although the Catholic high school where I live now is in that neighborhood), but it's close enough. By the mid '70s, there were a few religious sisters and some diocesan priests teaching at the school, but it was mostly lay teachers. I doubt $400/year (for the first student; there was a sliding scale for additional students from the same family) would have covered much even of the pittance the teachers were paid back then; the remainder was, I believe, subsidized by the parishes from whence the students came, as well as the usual fundraisers. All those parish subsidies presumably are long gone. The church doesn't have piles of money stashed away anywhere, as far as I can tell.

      Delete
  7. As long as sectarian schools can discriminate against the kids of gay parents and don't have to follow EEOC rules for hiring teachers (they favor Catholics over others), they shouldn't get public money.

    Also, they ought not to have different tuition rates for Catholics and non if they get public funds.

    There is also an argument to be made that public funds and oversight will water down the sectarian teaching.

    ReplyDelete
    Replies
    1. Jean, I'm sure you're right that, if my dream were to come true and the government was to belly up and pay for Catholic schools as it should, there would be various strings attached, perhaps some along the lines of what you're suggesting. The Catholic schools would have to figure out which they can live with and whether they want to participate. Undoubtedly, the courts would need to sort out which strings are entitled to a religious exemption and which aren't.

      Delete
  8. I'm with Jean 100%. No tax money for religious schools for the reasons she notes and a few more besides.

    ReplyDelete
  9. Jim, if the government subsidized Catholic schools, it would have to subsidize ALL sectarian schools. If tribalism is a problem in our society--a premise you seem to agree with--wouldn't an array of sectarian schools contribute to that tribalism?

    If Catholic schools are such a great asset to the community, consumers will figure out a way to keep them open. If I thought there was one in my area, I would happily contribute!

    ReplyDelete
    Replies
    1. And since we consider religious freedom important, operating religious schools string-free means being careful about accepting public funds.
      When I was a kid, my family spent three years in New Mexico. There was an agreement at the time (I don't know if it is still in effect) that the state furnished textbooks such as math books which were not religious in content. That seemed to work out well. In our town there are some sports, such as a swim team, which the public and private schools collaborate on. That type of resource sharing builds community rather than division.

      Delete
    2. "if the government subsidized Catholic schools, it would have to subsidize ALL sectarian schools."

      ... unless there are compelling reasons not to. Teaching creationism as science would strike me as a compelling reason not to.

      Roughly speaking, Catholic schools = "Everything taught in public schools, only better in a lot of places, plus religious instruction."

      One possibility for funding (which I think exists in real life in some other countries) would be, "The public funds the everything-taught-in-public-schools portion. The church funds the religious instruction."

      Delete
    3. ... and I'd add that creationism has been known to be taught as science in some communities, in the public schools. Putting the word "public" in front of the school is not a guarantee even that actual education is being delivered, much less that good quality education is being delivered.

      Delete
    4. "If tribalism is a problem in our society--a premise you seem to agree with--wouldn't an array of sectarian schools contribute to that tribalism?"

      No, I don't think it would. I think that because division in our society doesn't line up along sectarian-education lines. Some people who attended public schools are on the left side of the division, while others who attended public schools are on the right side. Some who attended Catholic schools are on the left side, others on the right.

      If you want to make an argument that the primary division in our country is economic, and that division is fed by public school systems insofar as not all public schools are created equal, I'd definitely be open to that argument.

      Delete
    5. I guess I am trying (and failing) to expand the argument beyond what's good for Catholic schools and to suggest that a plethora of sectarian schools--from Amish grammar schools to yeshivas--funded by the public does not necessarily contribute to the common good or the improvement of education generally. No one has, so far, persuaded me that funding sectarian education will do so.

      Religious schools are not required to pay taxes. They are free from the interference of publicly elected officials. They are free to incorporate their beliefs into the curriculum. They may discriminate when selecting students and hiring teachers. They may select their own textbooks and library acquisitions.

      To ensure the health and safety of children, private schools usually receive bus, crossing guard, and meal services. Private school students may also take advantage of public school extra-curricular activities.

      I think all those benefits extended to religious schools fulfills our national obligation to religious freedom.

      I see no benefit to society in general to support sectarian education more than that.

      Delete
    6. Jean, I apologize for not sufficiently acknowledging your concerns about sectarian schools. I share some of those concerns. I don't think Catholic schools are risky in this respect, and I daresay I've harped enough on that point.

      Delete
    7. No need apologize, and thank you for taking my point.

      My experience with Catholic schools specifically (and the college students who graduated from them) is that they are a mixed bag, no better or worse academically than publics taken as a whole. They vary widely.

      Delete
  10. In the original post, Katherine described the Nebraska proposal:

    "Basically it is a program where a tax credit would be given to those who donated to a scholarship fund for use in qualifying private schools in the state."

    That's pretty close to how it works in Illinois today. The donor donates money to a Scholarship Granting Organization (SGO). The SGO, from what I can tell, aggregates the donations from donors, and then distributes the funds as scholarships to qualifying students who attend qualifying schools. I mention "qualifying students" because it seems the scholarships are only available to students from low-income households (defined as a household whose income is less than $72,900/year - which may not seem that low, but it's where the bar is set). When the donor donates, s/he can earmark the funds for students who attend particular schools or school systems (such as the schools of the Archdiocese of Chicago).

    In return for the donation, the donor can claim a state tax credit (which reduces the amount s/he owes the state in income taxes) for 75% of the donation. In other words, if I donate $100 to an SGO, earmarked for the school my kids attended, I can pay $75 less on my state income taxes.

    The total amount that the state permits to go into the scholarship funds each year (all of the SGOs added together) is $100 million. It sounds like a lot of money, and in fact I'm sure it's a huge help to Catholic and other private schools and their families. But, to keep the numbers nice and round, Illinois' annual state education budget is $10 billion. When you consider that Illinois' primary school education budget is about 17% of its overall budget, you can see that the effect of the program on Illinois education funding is comparatively minuscule - presumably a good deal less than one half of one percent of overall spending.

    The whole process - donate to an organization which in turn gives a scholarship to a student who goes to a particular school - sounds a little Rube Goldbergian; it would seem simpler to just give directly to the school. But this way, the state can regulate to ensure that the funds go to low-income families.

    I haven't found info yet quantifying the impact of the program on private schools, but I'll keep poking around.

    ReplyDelete
    Replies
    1. Btw, I don't know if this was the intent, but it strikes me that the tax credit formula I described in my previous comment - donate $100, claim a $75 tax credit - comes pretty close to one of the approaches to state funding that I described earlier, whereby the government would pay for the non-religious education (which even in a Catholic school consumes most of the daily classroom time), with the school paying for the religious education. If 25% of the time at a Catholic school is spent on religious instructions and activities, then this tax credit scheme seems to match up pretty well. To be sure, the state isn't really paying the school directly, but it's sort of an "implied payment" or opportunity cost, in that the state is forgoing revenue that is being redirected elsewhere.

      Delete
    2. Jim, Let me try to get this straight. 1. States raise taxes for purposes decided upon by the Legislature. 2. But if you don't like what the elected Legislature wants to do with the taxes it raises, you can give your money to what you do want to do. If you do, you get to withhold most of what you give, and the duly elected Legislature doesn't get that much for the purposes it voted for.

      OK. Why doesn't that apply to men who would rather support their barber or women their hairdresser than to pay for, oh, say, police protection for visiting dignitaries? Each time I give my barber $16 + $4 tip, I can exempt $15 from my taxes because I prefer my hair to Donald Trump's? Is that really a plan?

      Delete
    3. Actually I have a better idea. I wish I could get a tax credit on my federal taxes, to be taken off the ICE and Homeland security budget, for funds I donate to (for instance) Jean's Angry Aunties and Abuelas charity.
      That reminds me, the Ides of April is looming. We already got our $18 back from the feds: must remember to mail our much bigger amount to the state.

      Delete
    4. "Jim, Let me try to get this straight. 1. States raise taxes for purposes decided upon by the Legislature. 2. But if you don't like what the elected Legislature wants to do with the taxes it raises, you can give your money to what you do want to do. If you do, you get to withhold most of what you give, and the duly elected Legislature doesn't get that much for the purposes it voted for."

      Tom, the same legislature also approved this tax credit scheme, so apparently it also approves of this private money being redirected to private schools, even if it causes an imperceptible dent in state revenues.

      Delete
    5. Katherine, congratulations on your federal income tax refund. I'll take personal credit for providing it to you. No thank you note necessary. :-)

      Delete
    6. Raber is an independent contractor, so we just sent in our $750. They don't tax our SS. Yet.

      Tax time always bring out my libertarian leanings. It's not the money, but what the ginks in the Trump administration are spending it on.

      Sometimes I think the government should just set up Go Fund Me pages for its various departments. Then they tell us what we owe (minus contributions to 501C3 orgs), and we get to allot it as we wish.

      Delete
    7. Wow. Jean. That's scarier than socialism.

      Delete
    8. I have much scarier ideas, Stanley. I just keep those ones under wraps. :-)

      Delete
    9. "Tom, the same legislature also approved this tax credit scheme, so apparently it also approves of this private money being redirected to private schools, even if it causes an imperceptible dent in state revenues."

      Jim,Good comeback. But have you noticed that since we had the Tea Party, legislators at both the state and federal levels, no longer can handle hard issues? In this case and others, they abdicate their main duty of getting and spending so it can be done by those with enough money to handle, or have their "people" handle, the public's business That is both constitutionally and fiscally bad practice.

      Delete
    10. Tom - yes. Although I am sure Florida politics are more plagued by Tea Party excesses than Illinois is - Republicans in Illinois are essentially powerless at the state level. There aren't even any elected reps anymore, at either a national or state level, from my suburban area.

      One item of abdicating government duty, which appears to be bipartisan, is the regrettable practice of "outsourcing" government functions to private companies. Chicago sold the rights to its parking meters to a private firm, who put their own parking meters on the streets, raised the rates, and now collect all the money. I believe the original deal called for the contractor to pay Chicago a one-time lump sum at the beginning of the contract, and then the contractor gets to keep all the parking revenue for the remainder of the contract, which runs for many years - decades, even. That one-time lump sum payment allowed Mayor Daley to claim he had a balanced budget. But all in all it was a terrible deal for the city. I believe, when Mayor Emanuel came into office, he renegotiated the deal to allow the city to capture some of the ongoing parking meter revenue.

      I believe the city (I think that was the entity) also sold the rights to Skyway toll revenue for a similar front-loaded deal. (For readers: the Skyway is the leg of US Interstate 90, which is a toll road for most of its run through Illinois, that runs from the South Side of Chicago to the Indiana border).

      Delete
    11. A few years back the state of Nebraska tried to save a few bucks by outsourcing the child welfare system, which included foster care. It failed spectacularly (who would have thought!) Now the state is again in charge and has more or less gotten things in order. You can't outsource things that are your duty to carry out.

      Delete
    12. Yeah, down here in no-income-taxland, we privatize anything that moves, or at least anything that moves and might be profitable for friends of the governor. Like prisons, a/k/a three scandals a week.

      But that goes way back. Florida's Turnpike (NOT "the" Florida Turnpike), known in some areas as the Ronald Reagan Turnpike, was built by the state years ago as a toll road -- except in its northernmost extension where it is free. The anomaly is due to a gang of north Florida Democrats, known as "the pork chop gang," who liked the idea of the road but not of making their constituents pay for it. And so it is a toll road, except at the top.

      But, Jim, I have to wonder how a city can sell a road that was paid for with 90% federal dollars. Surely someone went to prison for that?

      Delete