scholarship tax credits

Win for School Choice in Georgia

Lost in all the commotion over the U.S. Supreme Court’s several decisions today is another important decision with ramifications for school choice. The Georgia Supreme Court unanimously ruled in Gaddy v. Georgia Department of Revenue that plaintiffs had no standing to challenge the state’s tax-credit scholarship program because the scholarship funds are private funds, not a government expenditure:

We also reject the assertion that plaintiffs have standing because these tax credits actually amount to unconstitutional expenditures of tax revenues or public funds. The statutes that govern the Program demonstrate that only private funds, and not public revenue, are used.

The program allows donors to receive tax credits in return for contributions to qualified nonprofit scholarship organizations that help families send their children to the schools of their choice. Plaintiffs asserted that the program violated Georgia’s Blaine Amendment, which prohibits the state from giving public funds to religious schools. However, as we explained in our amicus brief, no public funds are involved. “Taxpayers choose to donate voluntarily using their own private funds and receive a tax credit for the amount of the donation; no money ever enters or leaves the treasury.” Neither does the state direct where the funds are used. “The state exercises no control over which scholarship organizations donors choose to support, which students receive scholarships, or at which schools parents choose to use the scholarships.” The Georgia Supreme Court agreed:

Individuals and corporations chose the [scholarship organizations] to which they wish to direct contributions; these private [scholarship organizations] select the student recipients of the scholarships they award; and the students and their parents decide whether to use their scholarships at religious or other private schools. The State controls none of these decisions. Nor does it control the contributed funds or the educational entities that ultimately receive the funds.

“Today’s victory has secured Georgia parents’ right to continue choosing the best education for their children,” stated Erica Smith, an attorney for the Institute for Justice, which represented scholarship parents in the Gaddy case. “This Court correctly recognized that government should promote educational opportunity and choice, not limit it as the plaintiffs proposed.” 

National School Choice Week Roundup

This week is National School Choice Week, the annual celebration of policies that empower families to choose the education that best meets the individual needs of their children. There have already been several important school choice developments this year, not all of them positive. Below is a roundup of the good, the bad, and the ugly.

Florida expands its education savings account program

It will be hard to top 2015 (the Year of Educational Choice), but 2016 has already seen a flurry of legislative activity. Last week, Florida Governor Rick Scott signed legislation expanding the number of students with special needs who can receive education savings accounts. The bill also renamed the Personal Learning Scholarship Accounts to honor their legislative champion, Senator Andy Gardiner. 

The Year of Educational Choice: Final Tally

This is the seventh and likely final entry in a series on the expansion of educational choice policies in 2015. As I noted at the outset, the Wall Street Journal declared 2011 “The Year of School Choice” after 13 states enacted new school choice laws or expanded existing ones. As of my last update in late September, 15 states had adopted 21 new or expanded educational choice programs, including three education savings account laws, clearly making 2015 the “Year of Educational Choice.” As I wrote previously:

ESAs represent a move from school choice to educational choice because families can use ESA funds to pay for a lot more than just private school tuition. Parents can use the ESA funds for tutors, textbooks, homeschool curricula, online classes, educational therapy, and more. They can also save unused funds for future educational expenses, including college.

Readers will find a complete tally of the new and expanded programs at the bottom of this post, as well as a list of anti-school-choice lawsuits decided in 2015 or still pending.

Lawmakers across the nation are already beginning to consider educational choice proposals for the 2016 legislative session, including Maryland, OklahomaSouth Dakota, TennesseeTexas, and several others, but Florida will likely be the first state to expand choice next year. 

Preserving Scholarship Organization Autonomy

Over at the EdChoice Blog today, Robert Enlow of the Friedman Foundation for Educational Choice, Lindsey Burke of the Heritage Foundation, and I argue that the government should not force nonprofit scholarship-granting organizations (SGOs) to check their values at the door as a precondition of participating in scholarship tax credit programs, as some groups have recently proposed in Georgia. In addition to violating core American principles, such as freedom of conscience, the proposed regulation would also reduce SGO effectiveness and jeopardize the financial support for tax-credit scholarships, which is certainly not in the best interest of the children who rely on them. The policy is not only unwise, it is also unnecessary:

A Solution in Search of a Problem

Last week, Georgia Governor Nathan Deal’s Education Reform Commission released its draft recommendations for improving and expanding the state’s school choice programs. While some of the commission’s proposed changes are meritorious, the commission failed to recommend expanding the state’s highly popular, nearly universal scholarship tax credit (STC), instead proposing that the state create a new STC that is highly regulated and much more limited in scope.

The commission’s two proposed changes to the existing STC (having the Department of Revenue count actual contributions against the tax credit cap rather than mere pledges and changing the start date for claiming credits) would make it easier for scholarship organizations to raise funds. The commission also explored the possibility of converting the STC into an education savings account (possibly still funded through tax credits, though the report is not clear about that), enabling families to use the scholarship funds for a variety of educational goods and services beyond private school tuition along the lines of what I described in my testimony before the commission in May. 

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