Kansas school finance bill would give corporate tax breaks for private school scholarships

Is it a back-door attempt to funnel money to religious schools at the expense of taxpayers and public schools?

Or is it a helping hand for the state’s neediest students to get out of low-performing schools?

A new plan offers up to $10 million statewide in Kansas tax credits to entice businesses to donate money for scholarships that send the least affluent students to private schools.

The proposal chips away only a small fraction of the state’s $14 billion budget, but it reopens years of debate over whether public money should be diverted to private education.

Similar legislation failed in recent sessions of the Kansas Legislature. But this year, urged on by groups such as Americans for Prosperity and the Kansas Chamber of Commerce, conservatives revived the idea by attaching it to a school finance bill that lawmakers were under great pressure to pass.

The bill would become law with Gov. Sam Brownback’s signature. The Republican chief executive has talked highly of the school funding provisions but has not spoken about other new policies tucked into the legislation.

While tax credits aren’t vouchers that directly subsidize private schools, they do fire up the school choice debate.

Supporters see the program as a way to let parents have more control over where their kids go to school, especially those whose families’ incomes limit their ability to move to an area with better schools.

“You’re putting the parent back in the driver’s seat of their kid’s education,” said James Franko, policy director of the conservative-leaning Kansas Policy Institute.

Critics say the tax credits subsidize private education with money that could be used to make public schools better.

They see the tax credits draining public school enrollment as part of an effort to justify cuts in public education spending as the state slashes income taxes.

“It’s a bad idea,” said state Rep. Melissa Rooker, a Fairway Republican and a member of the House Education Committee. “I don’t think it has anything to do with the greater good of our public school system and the best interests of the children.”

The tax credits were part of a bill that sought to satisfy a state Supreme Court ruling that found an unconstitutional state spending disparity between rich and poor school districts.

Kansas’ plan is similar to those in 13 other states. The programs benefit more than 192,000 students nationally with donations totaling more than a half-billion dollars, according to the Alliance for School Choice.

The plans vary in many ways. Some states provide tax credits for corporations and individuals who contribute money to specific organizations that, in turn, dole out scholarships for students to attend private schools.

In Kansas, the tax breaks are limited to corporations, which could get up to a 70 percent credit for a donation made to a scholarship-granting organization. The tax credits are capped at $10 million statewide.

Students eligible for the scholarships — not exceeding $8,000 per year — are limited to those from low-income households attending one of the 99 lowest-performing schools in the state, many in urban areas like Kansas City.

Students could attend any nonpublic school providing education to elementary and secondary students.

David A. Smith, chief of staff for the Kansas City, Kan., school district, said offering tax breaks that siphon money from the treasury hurts education.

“By encouraging parents to move their children from public to private schools, this legislation takes money away from advancing the public good and transfers it to individuals to advance their own private interests,” Smith said in an email.

The Kansas Association of School Boards argues the credits effectively force one group of taxpayers to pay for other taxpayers to choose their schools.

In its analysis of the bill, the school boards association points out that the qualified schools spelled out in the bill are not required to be accredited, practice nondiscrimination, participate in state assessment tests or report student performance to the Kansas Board of Education.

“There is a concern this really opens the door to schools — whether they mean to or not — being able to choose students they want,” said Mark Tallman, lobbyist for the school boards association. “We don’t want public schools to be the choice of last resort.”

School choice supporters dismiss the idea of “cream skimming.”

Northwestern University professor David Figlio said scholarship programs targeting small groups of students tend to attract lower performers or students whose parents want them to have a religious education.

“The kids who tend to leave were the families that weren’t all that vested in the public schools or families whose kids were struggling in the public schools anyway,” said Figlio, who has studied such programs in Florida.

As chair of the House Education Committee, Republican state Rep. Kasha Kelley said critics focus too much on preserving educational institutions rather than helping kids. “Is it more important for a failing school to lose a few thousand dollars than for a student to gain an education?” she asked.

The tax credits are constitutional even if the students receiving the scholarship attend a religious school.

Three years ago, the U.S. Supreme Court threw out a challenge to a similar scholarship program in Arizona. The court ruled taxpayers couldn’t contest government programs that use tax breaks to direct money to religious activities.

The Arizona program is much broader than the Kansas tax breaks. It provides tax credits for corporations, individuals and families. Arizona’s corporate donations are capped at about $30 million a year. Last year, 111 corporations made 188 donations, including six donations each totaling more than $1 million.

Florida’s program is capped at $286 million. It serves nearly 60,000 students, of whom about 80 percent attend religious schools. More than two-thirds of the students who benefit from the Florida program are black or Hispanic.

In some parts of the country, scholarship programs have been attacked for not being transparent enough and for being vulnerable to families and politicians who try to game the system.

This month in Georgia, a group of parents claimed in a lawsuit that some taxpayers have made donations to the scholarship funds to benefit specific students in violation of the law.

The lawsuit also contends, among other things, that private schools receiving the scholarships can deny entrance based on admission standards hostile to gay students.

In Pennsylvania in 2012, The New York Times raised questions of favoritism when it found that two of the state’s largest scholarship organizations were controlled by lobbyists who asked lawmakers about which schools should get the scholarship money.

Kansas is trying to limit conflicts in its program. Relatives are barred from making scholarship donations that benefit family members. A scholarship can’t be provided to a student to attend a school that also employs someone with the scholarship-granting organization.

The scholarship organizations are also required to submit a report to the state detailing who receives the scholarships. They also must report how much they receive in donations and how much in scholarships they award.

“No program can protect against 100 percent of the bad actors 100 percent of the time,” said Franko of the Kansas Policy Institute. “The protections in this new program seem solid.”

This story was originally published April 19, 2014 at 8:49 PM with the headline "Kansas school finance bill would give corporate tax breaks for private school scholarships."