Mo. Considers Tax Credit for Scholarships

Published July 1, 2006

A plan to create tax credits for individuals and businesses that contribute money to K-12 scholarship organizations was introduced in both chambers of the Missouri General Assembly this spring, where it reached the House floor with a favorable vote from the Education Committee.

The Senate held several hearings on the bill, but it was not brought to a vote by May 12, the last day of the 2006 session.

State Sen. Lu Ann Ridgeway (R-Smithville) introduced S.B. 962, and in the lower chamber, House Speaker Pro Tem Carl Bearden (R-Saint Charles) introduced its companion bill, H.B. 1783. Both would have given up to $40 million in credits against state taxes due for individuals and corporations making contributions to tuition scholarship organizations. The tax credit would be for 100 percent of the amount donated, though taxpayers could not take advantage of the credit if they also claimed the contribution as a deduction on their federal tax filing.

Both versions required that the scholarships be given only to students with poor academic performance–a 2.5 grade point average or below–in the St. Louis, Kansas City, or Wellston school districts. The St. Louis and Kansas City school districts are by far the largest in the state, serving a combined total of 850,000 students, or about 8 percent of the students statewide. The Wellston district–a small district with 600 students, just outside St. Louis–is currently supervised by a special administrative board appointed by the state Board of Education because of its poor academic performance.

Creating Opportunities

In addition to attending those school districts, the student’s family would have to have an income near the federal poverty level to be eligible for the scholarship. A student could use the scholarship to attend a private or public school.

The House version would have created the Betty L. Thompson Scholarship Program. Thompson, a former Democratic state representative, had advocated increased educational opportunities for urban students during her tenure in the state House. The House plan set the level for eligibility at 135 percent of the amount for receiving reduced-price lunches under the National School Lunch Act.

The House bill had 22 co-sponsors in addition to Bearden, including Rep. Theodore Hoskins (D-Berkeley), chairman of the Missouri House’s Black Caucus. This set Hoskins in opposition to the state’s chapter of the National Association for the Advancement of Colored People (NAACP), as well as the Kansas City, St. Louis, and Jefferson City chapters–all of which were part of the People for Public Schools coalition, which opposed H.B. 1783. The NAACP did not return calls seeking comment.

After a March 13 hearing, the House Special Committee on Urban Issues voted 7-3 to send the bill to the House floor for a full vote.

The Senate version, known as the Missouri Student Success Scholarship Tax Credit Program, set the income eligibility at 185 percent of the income level for the free and reduced-price lunch program. The Senate Education Committee held a hearing on the bill on February 21, but no votes were taken.

Helping Students

“We have to do something for students in those districts,” said Ridgeway, explaining why she introduced the measure. “There is a total lack of compassion for students in those underperforming and failing schools, and this bill could give some of those students an alternative.”

Ridgeway said critics of the proposal were “school-minded and not child-minded.” She said she wasn’t surprised the bill didn’t pass this session.

“It was not possible to pass at this time,” Ridgeway said, but added, “absolutely, I will re-introduce” the bill in future sessions of the legislature.

To enable the proposal to pass in the future, Ridgeway said, “We have grassroots work that must be done, especially in Kansas City.”

Taking from Public Schools?

“We think this scheme will divert public money to private schools,” said Brent Ghan, a spokesman for the Missouri School Board Association (MSBA). He contends using tax credits is “an indirect use of state money.”

Ghan said the MSBA opposed the bill because it would be a violation of the state’s constitution. The MSBA’s Web site cites two sections of Article I of the Missouri Constitution that prohibit public funding of religion. The MSBA also cites Article IX, Section 8, as prohibiting the public funding of private schools.

Ghan said it is bad public policy to support private schools, which he said are not fully accountable to the public. He also said the state cannot afford to divert $40 million from its treasury because of its current budget crunch.

Giving Choices

But Victor Wendl, president of Citizens for Educational Freedom–an advocacy group based in Clayton, Missouri–said tax credits are more akin to giving someone a choice between two restaurants: The food might be more pleasing at one, but the total spent on the meal is about the same.

“A tax credit scholarship relieves the burden of educating a student from a public school,” Wendl said. “And it helps a parent to freely choose a school.”

Three states–Arizona, Florida, and Pennsylvania–currently give tax credits for donations to tuition scholarship organizations. Arizona’s Supreme Court has ruled its tax credit program is not a violation of the state’s constitutional provision prohibiting public money from being used for private education.

Michael Coulter ([email protected]) teaches political science at Grove City College in Pennsylvania.