Montana Creates Tax Credit Scholarship Program Without Governor’s Signature

Published May 12, 2015

Montana became the 28th state to enact tax credit scholarship legislation in early May, as Senate Bill 410, a pilot tax credit scholarship program, passed into law. The school choice legislation became law without Gov. Steve Bullock’s (D) signature.

SB 410 creates a pilot program, which provides income-tax credits for donations of up to $150. Parents can use the scholarships created for private K–12 education or “innovative educational programs” at traditional public schools.

Scholarship organizations will not receive state funds and students may not receive scholarships exceeding 50 percent of average state per-pupil funding. There will be a $3 million cap on total tax credits allowed in the first year of the program with potential for growth in following years.

Groundbreaking Legislation

Initially passed by a vote of 27–23 in the Montana Senate, SB 410 underwent multiple votes and amendments before final adoption by the House and Senate on April 28, where it received bipartisan support.

The bill had a 10-day period in which Bullock could sign or veto it. During this period, Bullock’s press person stated the governor was undecided on SB 410.

Once the bill passed, the governor provided a press statement stating, “Senate Bill 410 creates a tax credit that allows Montanans to invest $150 in innovative programs in their local public schools or scholarship organizations. While I am concerned about using public resources for private education, I am supportive of the provisions of the bill that allow taxpayers to direct money to build upon innovative programming in local public schools. Because SB 410 does not divert or reduce state funding for public schools, I am deferring to the legislature and allowing the bill to become law.”

Testing, Financial Caveats

Financial projections and funding concerns were a large part of the debate regarding SB 410, says the bill’s sponsor state Sen. Llew Jones (R-Conrad).

“I’m all about school opportunity and allowing [public and private schools] to be equal,” Jones said, explaining the funding allowed through the tax credit program is the same for the private schools as it is for the traditional public schools.

“Both sides are capped at exactly $3 million, but with 10 percent that can shift or grow,” said Jones. “So it allows the sides to grow as they earn it … nothing is unequal between the two. This is all about student opportunity and [allowing] the taxpayer to choose.”

Participating schools must administer a nationally norm-referenced test, provide test results to parents, and, starting in eighth grade, provide test results to the Montana Department of Public Instruction.

“We kept the requirement on the private side as minimal as possible but within that framework of equality,” Jones said.

Powerful Sponsorship

Proponents of the bill say the legislation succeeded because of strong sponsorship and support from rural schools.

The Montana Rural Education Association (MREA), which represents nearly all of the 417 districts in the state below the top seven largely populated districts, backed SB 410. MREA Executive Director Dave Puyear provided input during drafting and testified in favor of the measure.

“Sen. Llew Jones is extremely highly regarded in Montana,” Puyear said.

Reaching out to rural school communities was very important for the legislation’s success, says Jones.

“The school lobby is actually split on the concept,” Jones said. “A lot of these small communities are extremely supportive of their local schools because they recognize them as their own school … In the past, [legislators] have painted all schools with the same brush. On the [National Assessment of Educational Progress], Montana normally ranks in the top five in the country so the public schools have huge local control, huge community participation, and are good little schools.”

The Montana Family Foundation offered its support late in the session, when the chance of passage became more evident.

“We put our weight behind it as the sponsor got it to the point where it would probably pass and drummed up some grassroots support,” said Bowen Greenwood, communications director at Montana Family Foundation. “Families in Montana are really looking to have more options for the parents of their children.”

Maximizing Taxpayer Dollars

Puyear says he’s confident many donations will be made to the newly created tax credit scholarship program.

“[Many rural communities] passionately [support] their schools, so we think they will meet that challenge and we’ll see a pretty significant level of contributions,” Puyear said. “In our society and our times, maybe it’s a good thing for all of us, for taxpayers to value the level of service they’re getting from their schools, whether it’s public or private.

“We don’t look at it so much as a tax credit,” said Puyear. “It’s a way for taxpayers and citizens to direct their taxes. We like the concept. We’re not intimidated by it, and we think our rural and small schools across the state will do really well dealing with taxpayers and options and opportunities.”

“Obviously this is a big step,” Greenwood said. “We have been enthusiastic about this bill for a long time. We’d like to see a larger credit than this in the bill but we still consider it a victory.”

Ashley Bateman ([email protected]) writes from Alexandria, Virginia.

Image by Brad Flickinger.