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Proposed State Tax Credits Could Help Send More Louisville Students To Private Schools

J. Tyler Franklin

Families seeking financial aid to send their children to private schools could benefit from a bill now in the Kentucky state house. Critics of the proposal say it is a substitute for school vouchers in disguise and could reduce tax dollars available to fund public schools.

Thousands of students in the greater Louisville area are currently on a waiting list for scholarships from local nonprofit School Choice Scholarships to help pay for private school tuition. Eighth grader Jaden Sexton was once one of them.

By fourth grade, Jaden was struggling in reading and math and was diagnosed with attention-deficit/hyperactivity disorder. His parents wanted to send him to a school that was especially prepared to serve his learning differences. They found Meredith-Dunn School, which exclusively teaches children with learning disabilities, but Jaden’s father Robert Sexton said tuition at the private school was out of reach.

“It was just heart-stopping,” said Robert Sexton. “This was a specialized program, but how am I going to find a way to pay for this program?”

Now Jaden receives a $2,000 scholarship from School Choice Scholarships that supplements financial aid he receives from his school. Sexton applies the scholarship toward his son’s more than $13,000 tuition.

“With that, it was able to cut the payment that I had to make about in half, which still is daunting,” Sexton said. “But, you know, it was something that was actually doable, with picking up a second job.”

Sexton took another job at Bob Evans and works seven days a week to pay for his son’s education. School Choice Scholarships’ president Heather Huddleston said many other families are also looking for ways to pay for private education.

“This year, we have about 400 [students] on scholarship, and about 6,000 on our waiting list,” Huddleston said, for a scholarship that is open only to kindergarten through eighth graders in Jefferson and Oldham Counties.

Tax Credits For Donations Grow Scholarship Nonprofits

House Bill 205, introduced earlier this month, would give donors a tax credit if they donate to organizations that grant scholarships for qualifying students to attend K-12 private schools. The scholarships must benefit students who come from low-income families, have a disability, or are in foster care. If the proposal becomes law, several organizations would stand to benefit, including School Choice Scholarships. Huddleston said it would boost the nonprofit’s capacity to grant more scholarships.

“In other states where there have been tax credit programs like this, the private source donations have increased dramatically,” Huddleston said.

Huddleston said that means the nonprofit could eliminate its waiting list, and possibly expand its services to other counties or ages.

What Would The Tax Credit Mean For Future State Revenue?

Opponents of the bill say it would decrease tax revenue Kentucky needs for other essential public services, including public education. The proposed incentive is a 95 percent tax credit, meaning that any donor who gives $1,000 and claims the credit would reduce their final state tax bill by $950. This is a more significant tax break than an itemized charitable deduction, which reduces a donor’s taxable income.

The current House bill filed by Majority Floor Leader John “Bam” Carney and others is a second attempt to pass the measure. When state senators filed a similar bill last year proposing a smaller 90 percent tax credit, the state’sLegislative Research Commission estimated it could cost Kentucky’s coffers $21 million in its first full year of implementation. Supporters of scholarship tax credits say that number doesn’t reflect the money the state would save on the cost to educate students who move from public to private schools. Public school advocates oppose the measure.

“Any amount of money that would go to tax credits is more than our Commonwealth can afford,” said Stephanie Winkler, president of the Kentucky Education Association.

Winkler calls the bill a “backdoor school voucher” measure. Voucher programs in 14 other states, including Indiana, give students scholarships funded directly by the state to attend private schools. The Kentucky state constitution prohibits spending tax revenue on non-public schools, and is widely interpreted as rendering school vouchers unconstitutional in the Commonwealth.

Liz Schlemmer is WFPL's Education and Learning Reporter.