Nevada’s Governor Brian Sandoval has seen his school choice bill, which will give tax credits to businesses that donate to scholarship programs for children to attend private schools, given the final go-ahead from the legislature. The bill, which is a part of the governor’s ambitious education agenda, will clear the way for $10.5 million in tax credits during the next two year budget cycle. After that time, the total credits will increase 10% per year.
The Las Vegas Review-Journal’s Sandra Chereb reports the bill was approved by the Senate with 11 Republicans voting for the potential law and nine Democrats voting “nay.” The bill now goes to the governor for his signature.
“This is a great day for students across Nevada,” Sandoval said. “The creation of Opportunity Scholarships ensures that all children, regardless of financial ability, will have the opportunity to attend a school that best suits their needs.”
Republicans believe that parents should have a choice on where they send their children to school. Democrats, however, say the bill takes money from the state general fund and lessens the amount of money left for public schools. When a business donates to the Nevada Educational Choice Scholarship Program it receives credits against “modified business taxes assessed on payroll.” The Assembly passed the bill earlier with a vote of 25-17 along party lines.
The scholarships will be aimed at children in families with income not more than 300% of the poverty level. Democrats said the income requirement was too high and ended up being a subsidy for wealthy families to send their children to private and religiously-based schools. Republicans countered by pointing out that a single mom with two kids who is making $60,000 a year would be one of the best candidates as far as eligibility. This person, they emphasized, is not wealthy.
Democrats feel the bill does not target the lowest-income families. They add that the measure diverts money that might benefit public education, according to Michele Rindels of the Associated Press.
“It serves as a tax break for wealthier families as opposed to an opportunity for lower-income families to attend private school,” said Sen. Aaron Ford (D-Las Vegas), who said a threshold of 185 percent of the poverty level would be more appropriate.
The scholarships are really vouchers, according to Democrats, but state Superintendent Dale Erquiaga disagrees. He says the money for the scholarships will not come from state educational funds, which is how vouchers are funded. The tax credit would yield money that would never reach state accounts.
On the Friedman Foundation for Educational Choice Blog, Michael Chartier breaks down Nevada’s tax-credit scholarship bill. He writes that the Friedman Foundation predicted Nevada would create a new school choice program this year and explained how the student funding process works:
A business contacts the Department of Taxation for approval to receive the tax credit. The scholarship granting organization (SGO) will accept the donation and provide documentation to the donor to allow for a credit to be received against the Modified Business Tax. The credit will equal 100% of the donor’s contribution. The cap on total tax credits will be $5 million with a 110% escalator for each subsequent year.
Scholarships cannot exceed $7,775, and that number will be indexed to the consumer price index. When goods get more expensive, the scholarship amount will rise in response. SGOs must: be a certified 501(c)3; not own or operate a private school in the state; not spend more than 5% of its donations on the administration of the funds; not limit gifts to a single school or specific pupils; keep records in conformance to the educational environment of the student.