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Kentucky Lawmakers Revive Proposal To Create Scholarship Tax Credit Program

J. Tyler Franklin

Kentucky lawmakers are once again considering a controversial measure that would use a tax credit program to send low- and middle-income students to private schools. Lawmakers in both the House and the Senate have filed identical bills to create the Scholarship Tax Credit Program.

Scholarship tax credit programs are already in 18 states, including in neighboring Indiana, according to the national pro-school choice nonprofit EdChoice. Kentucky’s proposed Scholarship Tax Credit Program would create scholarship funds to send low and middle-income students to private school. Students would have to meet one or more of the following requirements to be eligible for a scholarship:

Taxpayers who donate to scholarship funds would get 95 percent of their donation back in the form of a tax credit. Put simply, it lets taxpayers fund private school scholarships instead of paying their full income tax. Both bills cap the program at $25 million.

Sen. Ralph Alvarado (R-Winchester), who is sponsoring one of the measures, said the program will help more families afford private school tuition.

“It basically gives kids, I think, kids from a different socioeconomic status the same choice and options that a lot of our wealthy families have in our state,” Alvarado said.

Opponents include the Kentucky School Boards Association (KBSA) and the Kentucky Education Association (KEA). They say the program would funnel away much-needed tax dollars from public schools. 

“I think some of those advocating for scholarship tax credits are claiming that some of our public schools are failing,” KBSA spokesman Josh Shoulta said. “And if they feel that our public schools are declining, then the last thing we want to do is eliminate revenues from an already strapped education budget.”

Shoulta said schools have been struggling financially, and pointed to reports showing state funding has not kept up with inflation. A March 2019 report from the Center on Budget and Priorities found Kentucky’s per-student spending is still 13 percent below what it was in 2008, adjusting for inflation.

The new bills are similar to legislation Alvarado filed in previous years. Last year’s attempt to create a scholarship tax credit program drew the ire of many of the state’s public school teachers, including the grassroots teacher advocacy group KY120 United. The proposal was on a list of measures that prompted mass teacher “sick-outs,” and failed to gain enough support from lawmakers.

Advocates for scholarship tax credits say they’re feeling better about getting the measure passed this year.

“I feel optimistic about it,” EdChoice Kentucky President Charles Leis said, noting that during a budget year, bills with a cost attached to them need fewer votes to pass. 

Those opposed are also optimistic that the momentum against scholarship tax credits will continue this year, even though the target of much of their ire, former Gov. Matt Bevin, is gone.

“The last four years have shown educators how much they need to be involved in the political process,” KEA president Eddie Campbell said. 

The Senate bill is in the appropriations and revenue committee. The House bill has yet to be assigned a committee.

Jess Clark is LPMs Education and Learning Reporter. Email Jess at jclark@lpm.org.

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