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ScholarshipTaxCredit
ProgramsintheUnitedStatesImplicationsforNewHampshire
JasonBedrick
January2012
THE JOSIAH
BARTLETTCenter for
PUBLIC
POLICY
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CONTENTS
EXECUTIVESUMMARY 2
I.OVERVIEW:SCHOLARSHIPTAXCREDITS 3
1.TAXCREDITSVS.VOUCHERS 4
IMPLEMENTATION 4
CONSTITUTIONALITY 5
2.PARENTALSATISFACTION 7
3.PUBLICSUPPORT 9
II.FISCALIMPACT 10
1.FISCALIMPACTINNEWHAMPSHIRE 10
2.FISCALIMPACTINOTHERSTATES 12
III.PROGRAMDESIGN 13
1.MEANS-TESTING 15
2.DISBURSEMENTREQUIREMENT 17
3.CORPORATECREDITS 19
4.FURTHERSUGGESTIONSFORPOLICYMAKERS 20
IV.CONCLUSION 22
ABOUTTHEAUTHOR 23
SOURCES 23
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EXECUTIVESUMMARY
Inthelastdecade,scholarshiptaxcreditprogramshaveexpandededucationalopportunitiesforhundredsofthousandsofstudentsineightstates,particularlythosefromlow-andmiddle-incomefamilies.
PartI:OverviewEightstatescurrentlyoperatescholarshiptaxcreditprograms.Programdesign,levelsoffundingandstudentparticipationvary.Scholarshiptaxcreditprogramsareonfirmconstitutionalground.Parentsofscholarshiprecipientsreporthighlevelsofsatisfaction.Amajorityofparentssupportsuchprograms. PartII:FiscalImpactUndereventhemostconservativeassumptions,theproposedscholarshiptaxcreditprogramwillaffectlessthanhalfofonepercentofthecurrentstatespendingonpubliceducation.Moreover,theprogramisdesignedtosavemoneybyreducingstatespendingmorethanthelossintaxrevenue.Scholarshiptaxcreditprogramsinseveralotherstatesreducetheirstateexpenditureswhileexpandingchoicesforfamilies.
PartIII:ProgramDesign Thissectionanalyzessurveydatafromscholarshiporganizations(SOs)participatingineducationtaxcreditprogramsinfivestatestounderstandtheimpactofdifferentprogramdesigns.Someofthemainfindingsinclude:Means-Testing:
Means-testingcanhelptargetfundstothetrulyneedy,thoughevidencesuggeststhatSOstargetlow-incomefamiliesevenwithoutameans-testingrequirement.
IncomecapsthataretoolowreducetheflexibilityofSOstoaddresstheneedsoffamilieswithexigentcircumstances(illness,specialneeds,jobloss,etc.).
DisbursementRequirement:
Scholarshiporganizationsrequiresomelevelofallowanceforadministrativecosts,especiallywhenstartingup.Overtime,mostspendlessthan10%onadministrativecosts.
Amoreliberaladministrativecostallowanceallowsforthecreationofmorescholarshiporganizations.Policymakersshouldconsidergreateradministrativecostallowancesfornewscholarshiporganizations.
CorporateCredits: Mostscholarshiporganizationsreportedhavinglittletonotroublesoliciting
donationsfrombusinesseswhenthetaxcreditswereworth90%ofthedonations.
Policymakersshouldbeabletoreducethetaxcreditpercentagesomewhatbelow90%withoutasignificantlynegativeimpactonfundraising.However,itisnotclearatwhichpointtherewouldbeanegativeeffect.
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I.OVERVIEW:SCHOLARSHIPTAXCREDITS
Acorporatescholarshiptaxcreditprogramexpandseducationalopportunitiesbycreatingapartnershipamongfamilies,scholarshiporganizationsandbusinesses.Theprogramgrantstaxcreditstocorporationsthatdonatetostate-approved,non-profit
scholarshiporganizations(SOs).TheSOsusethefundstograntscholarshipstofamiliesseekingalternativestotraditionalpublicschools.SincePennsylvaniacreatedthefirstcorporatescholarshiptaxcreditprogramin2001,sevenotherstateshavefollowedsuit,includingArizona,Florida,Georgia,Indiana,Iowa,OklahomaandRhodeIsland.
Figure1.
Whilesimilarinstructure,eachstatesscholarshiptaxcreditprogramisunique.AsshowninFigure1above,programsvarywidelywithregardtosizeandparticipation.Majordifferencesincludethevaryinglevelsoftaxcredits,mean-testing,scholarshipcaps,
programbudgetcaps,anddisbursementrequirements.ThesedifferencesarediscussedingreaterdetailinSectionIII. Scholarshiptaxcreditprogramsvarybystateinotherimportantwaysaswell,bothintermsofpolicydesignandimplementation.Differentstatespermitdifferenttypesofcorporationstodonate,andsomeevengrantindividualseligibilitytoreceivetaxcreditsfortheirdonations.Auditingandreportingrequirementsvaryinfrequencyanddetail.Arizonasscholarshipcapforsecondaryeducationishigherthanthecapforelementary
State StudentsParticipating
SchoolsScholarship
OrganizationsYear
Enacted
Arizona 4,215 325 17 2006
Florida 37,578 1,181 1 2001
Georgia 1,900 400 39 2008
Indiana N/A N/A 4 2009
Iowa 9,265 140 13 2006
Oklahoma N/A N/A N/A 2011
Pennsylvania 38,646 unknown 247 2001
RhodeIsland 460 54 5 2006
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education,bothofwhichautomaticallyincreaseby$100eachyear.ArizonaandFloridabothhaveseparateschoolchoiceprogramsforstudentswithspecialneeds,whileOklahomasnewly-enactedscholarshipprogramraisesthecapforstudentswithspecialneeds.ThoughRhodeIslandhasnospecialregulationsforstudentswithspecialneeds,oneofitsfivescholarshiporganizationscatersspecificallytothem.
1.TaxCreditsvs.Vouchers Likescholarshiptaxcreditprograms,vouchersprogramsexpandtheeducationaloptionsavailabletofamiliesbyprovidingfundingtoattendanassortmentofdifferentschools.However,therearekeydifferencesbetweenthetwoprogramsregardingfunding,administrationandeligibility.Voucherprogramsarecentrallyadministeredbythegovernment,whichusestaxdollarstoprovidefundingtostudentsunderuniformstandardsforeligibility.Bycontrast,ascholarshiptaxcreditprogramisadministeredbynon-profitscholarshiporganizations,whichutilizeprivatedonationsandhavetheprerogativetoestablishtheirownstandardsforeligibilitysolongastheycomplywith
statestandards.Thesedifferenceshaveimportantimplicationsregardingtheimplementationandconstitutionalityoftheprograms. Figure2.
Implementation Oneofthemajordifferencesbetweenvoucherprogramsandtaxcreditprogramsistheimplementation.Underavoucherprogram,governmentfundingfollowsthestudent,whethertoherassignedpublicschoolortoachosenindependentschool.Thegovernmentdecideshowmuchmoneyshouldfollowthestudent,oftenthroughmeans-testing.A
portionoftheallocatedfundsoftenremainsattheassignedpublicschool.Inthissense,vouchersresemblefoodstampsorsubsidizedhousingassistance,bothofwhicharegovernment-runprogramsthatgrantbeneficiariespublicfundstopurchaseprivategoods. Bycontrast,thegovernmentsroleintaxcreditprogramsismuchmorelimited.Non-profitscholarshiporganizationsraisefundsdirectlyfromcorporationsthenadministertheprogramthemselves.Thegovernmentgrantstaxcreditstothecorporationor,insomestates,toindividuals.Thisismoreakintotaxdeductionsforcharitablecontributionsthan
Program FundingMechanism Administration Eligibility
Scholarship
TaxCreditsPrivatedonations
Decentralized:
Administeredby
non-profits
Tailored:
Determinedby
scholarshiporgs
School
VouchersTaxrevenue
Centralized:
Administeredby
government
Uniform:
Determinedby
government
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tofoodstamps.Taxcreditsanddeductionsstimulatecharitablegivingbyreducingthedonorstaxburden.TheNewHampshireDepartmentofRevenueAdministrationalreadyofferstaxcreditsforcommunityprojects,1aswellasforresearchanddevelopment2andjobcreation.3
Experienceinotherstateshasillustratedthatdecentralizedadministrationproducesavarietyofpracticesregardingmission,eligibility,partnerschools,prioritizationofresources,andmore.Somescholarshiporganizationsmightworkwithadozenschools,whileothersmightpartnerwithregionalschoolsorschoolswithaparticularreligiousaffiliationorpedagogicalapproach(suchasMontessoriorWaldorf).Somewilltargetlow-incomefamilieswhileothersmightfocusonstudentswithspecialneeds.Whentherearemoreapplicantsthanscholarshipsavailable,scholarshiporganizationswilldifferoverprioritizingneed,merit,andotherconsiderations.Ascholarshiptaxcreditprogramallowsindividualscholarshiporganizationstodetermineandaddresstheneedsoftheircommunities.
Constitutionality
Bothscholarshiptaxcreditprogramsandvouchersareonfirmconstitutionalgroundatthefederallevel.InthelandmarkZelmanv.Simmons-Harrisdecisionin2002,theU.S.SupremeCourtruledthatstatesareconstitutionallypermittedtousestaterevenuetopayforstudentstoattendprivateschools,eveniftheyarereligiouslyaffiliated.ThisisakintopatientswhouseMedicareatCatholicMedicalCenter,foodstampsrecipientswhopurchaseChristmasdinner,orcitizensholdingBiblestudiesintheirfederally-subsidizedapartments.Thesegovernmentprogramsareconstitutionalwhentheyhaveavalidsecularpurposeandthefundsaredisbursedtoindividualrecipients,notdirectlytoreligiousorganizations.Anyinvolvementwithreligiousactivitiesororganizationsmustbethe
personaldecisionoftheaidrecipients.ChiefJusticeRehnquistwroteinthemajorityopinion:Theincidentaladvancementofareligiousmission,ortheperceivedendorsementofareligiousmessage,isreasonablyattributabletotheindividualaidrecipientsnotthegovernment,whoseroleendswiththedisbursementofbenefits.4
Scholarshiptaxcreditsarealsoonfirmconstitutionalgroundatthestatelevel.
However,itisuncertainhowvoucherswouldfareundertheNewHampshirestateconstitutionsso-calledBlaineamendmentwhichstates:nomoneyraisedbytaxationshalleverbegrantedorappliedfortheuseoftheschoolsorinstitutionsofanyreligioussectordenomination.5FormerNHStateSupremeCourtJusticeCharlesG.Douglas,IIImakesacompellingcasefortheconstitutionalityofagovernment-runscholarship
program,usingsimilarlogictotheU.S.SupremeCourtsdecisioninZelman.6Indeed,statesupremecourtsinOhio7andWisconsin8upheldtheirstatesvoucherprogramsasconstitutionalevenundertheirBlaineamendments.However,itisnotclearhowtheNewHampshirestatesupremecourt,asitiscurrentlycomposed,wouldruleonagovernment-runvoucherprogram.
Oneofthemajorbenefitsoftheproposedscholarshiptaxcreditprogramisthatthe
fundsneverenterthegovernmenttreasury.OtherstateswithBlaineamendments
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consideredthisimportantfeaturewhendecidinghowtoexpandeducationaloptions,especiallysinceArizonasstatesupremecourtupheldascholarshiptaxcreditprogram9afterpreviouslyrejectingavoucherprogram.Nostatesupremecourtshaveruledagainstscholarshiptaxcreditprograms.
Inthespringof2011,theU.S.SupremeCourtruledinArizonaChristianSchoolTuitionOrganizationv.Winnthattheplaintiffsdidnothavethelegalstandingtochallengetheconstitutionalityofasimilartaxcreditprogrambecausemoneyneverenteredthegovernmenttreasury.Writingforthemajority,JusticeKennedywrotethattheplaintiffsargumentimproperlyassumesthatincomeshouldbetreatedasifitweregovernmentpropertyevenifithasnotcomeintothetaxcollectorshands.10TheCourtrejectedthatpremisesinceitfindsnobasisinstandingjurisprudence.PrivatebankaccountscannotbeequatedwiththeArizonaStateTreasury.WhiletheNewHampshirestatesupremecourtisnotboundtoacceptthisrulingwithregardtothestateconstitution,theyshouldacceptthatthesamelogicappliestotaxcreditprogramsatanylevelofgovernment.
ImpactonFamilies:TheFerreFamily(Laconia)Heidi Ferre is a single mom raising two teenage boys, Christian and Nicholas. Bothattendedpublicschool,butHeidigrewconcernedwhenin8thgrade,ChristianwentfrombeinghonorrollstudenttoaDstudentinhalfasemester.Itdidntraiseanyredflagstoteachers,Heidiexplains,Hewasslippingthroughthecracks.Heidihadtroublegettinghimhelpandwassurprisedwhenhiscounselordidntknowhisname.Unlessyoureatroublestudent,astarathleteoranA+student,theydontknowwhoyouare.Heidi was even more concerned about the block scheduling system at Christiansassignedpublichighschool.Underthenewsystem,astudentmightgomorethanayear
without taking amath class, allowing their skills to atrophy in the meantime. ManyparentssuspectedthatthenewschedulingsystemcontributedtotherecentdeclineinstudentperformanceontheNewEnglandCommonAssessmentProgram(NECAP)exam.Moreover, Christian struggleswithAttentionDeficitHyperactivityDisorder,orADHD.The high schools method of block scheduling meant that students would take fourclasseseachdaythatlastedoneandahalfhours.ForastudentwithADHD,thatsjusttorture,explainsHeidi,Ithinkitwouldbehardforanadulttositthroughfourhour-and-a-halfmeetingseveryday.But it was more than concerns over academics that led Heidi to choose a differentschool.WhenChristianvisitedthehighschooltoshadow,hewasdisturbedbywhatthestudentstoldhim.Theysaid,Ifyoucangosomewhereelse,gosomewhereelse,says Christian.More shocking was when hewitnessed students dealing drugs in themiddleofclass.WhenIgothome,Itoldmymom,Idontwanttobesurroundedbythatstuff,Ijustcantgothere.(Continuedonnextpage.)
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2.ParentalSatisfaction
Oneimportantbenefitofeducationalchoiceprogramsisparentalsatisfaction.In2010,asurveycommissionedbytheFloridaDepartmentofEducationfoundthat75.1%offamiliesintheirscholarshiptaxcreditprogramsaidtheirschoolswereexcellentand20.3%saidtheyweregood,foracombinedapprovalratinggreaterthan95%.11A2009FriedmanFoundationstudywentfurther,askingscholarshiprecipientsabouttheirsatisfactionrelativetotheirpreviousexperienceinthepublicschoolsystem.Thereportfound:
80%oftheparentswere"verysatisfied"withtheacademicprogresstheirchildrenaremakingintheirchosenindependentschools,comparedto4%intheirpreviouspublicschools.
80%were"verysatisfied"withtheindividualattentiontheirchildrenreceivedattheirchosenschools,comparedto4%inpublicschools. 76%were"verysatisfied"withtheteacherqualityintheirchosenschools,comparedto
7%inpublicschools.
76%were"verysatisfied"withtheirchosenschools'responsivenesstotheirneeds,comparedto4%inpublicschools.
62%were"verysatisfied"withthestudentbehaviorintheirchosenschools,comparedto3%inpublicschools.12
ChristiannowattendsTiltonAcademy,asecularhighschoolwithadiversestudentbodyincludingchildrenfrom23statesand17countries.I likedtheirheadmasterandtheirsloganThePowerofPotential,saysHeidi,Tomethatsayssomuch.Ilookedatmysonandthought,Hehassomuchpotentialifsomeonecouldjustfinditandcultivateit.
HeidilikesthatChristiangetsalotofattention,bothinandoutofclass.Advisorsmeetwiththestudentsonaweeklybasis.Itsmorethanajobforalotoftheseteachers,itsalifestyle.HeearnedBsandCsinhisfirstterm,thenfacultyhelpedhimpullthemup.Thisyear,hemadethehonorroll.ChristianparticularlylikeshisEnglishteacher,thoughhehadnt liked thesubjectpreviously. Hemakes it interesting,hemakesmewant tolearnEnglish.Heidiisthrilledwiththechangesheswitnessed.[Christian]lovesschool.Hewantstobethereallthetime.Hesmuchmoreself-confidentnowthanheusedtobe.Hesmoremature,morededicated.He seesmorevalue inhis studies,and hesnot justdoing itbecausehehastodoit.
Payingthetuitionhasntbeeneasy.ItoldChristianbeforehewentthatIcouldonlydooneyear.ImadethisyearhappenIdontknowaboutnextyear.Thoughtheschoolofferedsomefinancialaid,thefamilyhashadtomakesacrificestocoverthedifference,includingusingmuchoftheirsavings.Itdbenicetohavesomeextrasupportasasingleparent, saysHeidi, In anotheryear, I haveanotherdecisiontomake.Unlesswegetsomehelp,IjustdontknowhowImgoingtodoit.
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Thatscholarshiprecipientsreportedsuchdivergentlevelsofsatisfactionregardingtheirpublicschoolandindependentschoolexperiencesshouldnotbeinterpretedasnecessarilyrepresentativeofparentsofpublicschoolstudentsingeneral.However,itclearlydemonstratesthatpublicschoolsarenotmeetingtheneedsofasegmentofthepopulation.
Evenwhensurveydataisnotavailable,thebehaviorofparentsindicatesademand
forscholarships.InPennsylvania,forexample,demandfortheprogramfarexceedsavailablescholarships.Overthelastdecade,asingleSO,theChildrensScholarshipFundPhiladelphia,hadover95,000applicationsforjust7,700scholarshipsawarded.13
Thereasonthatscholarshiprecipientsaresomuchmoresatisfiedissimple:when
givenmoreeducationoptions,familieshaveagreaterabilitytochoosetheprogramthatsrightforthem.Eventhebestschoolspublicorindependentcannotmeettheneedsof100%ofstudents.Familiesseekalternativeeducationoptionsforavarietyofreasons,includingacademics,discipline,classsize,specialneedsprograming,values,andmore.The
existingeducationsysteminNHassignsstudentstoschoolssolelyonthebasisontheirhomesgeographiclocation.Whenstatesempowerfamilieswithchoices,theychoosetheeducationthatbestmeetstheindividualneedsoftheirchildren.
ImpactonFamilies:TheBaronasFamily(Hopkinton)
Lee and VickyBaronasofHopkinton,NHhad two sons inpublic school. Their younger son,Matthew,thrivedsociallyandacademically,buttheirolderson,Peter,struggled.Inthirdgrade,hewasdiagnosedwithalearningdisabilityrelatedtodyslexia.Hewasbright,buthadextremedifficultydecodingreadingandencodinghisthoughtsintowriting.Thoughhedevouredbooksontapewithpassionandexpressedhimselfwellverbally,hisdyslexiaforcedhimto limitand
simplifyhiswritingtoonlyafractionofwhathewantedtoexpress.Peterreceivedassistancethroughspecialeducationclassesatschool,butbecausetheresourcesare finite and there is a wide range of demands for services, his parents had to constantlynegotiateandassertthemselvestogethimthespecialattentionandone-on-oneassistancethatheneeded.Weunderstoodtherewasonlysomuchfundingtogoaround,explainsLee,Butheneededit.Itwastherightthingtodo.Hisparentsalsopaidforoutsidetutoringtosupplementhiseducation.Worse, Peter was regularly bullied. A self-described geeky kid who preferred Star Wars,robotics,andsciencefictiontomainstreamsports,hewasatargetbothforhisinterestsandhislearningdisability.Histoughestyearwassixthgrade,whenbullieswouldfrequentlycallhim
names,stealhissupplies,andsometimesshovehimaround.Repeatedlyreportingtheincidentshadnoeffect.Hehadaparticularlytoughgroupinhisgrade,saysLee.Dreadingwhatthenextyearwouldhold for Peteratthegrade7-12public school,Lee andVickydecided tolook foralternatives.The next year, Peterenrolled in Shaker Road School, a small, secular independent school inConcordwithPre-Kthrough8thgrade.Runbyafamilyofeducatorswithadedicatedfaculty,theschoolhassmallclassessizessostudentsgetplentyofattention.Communityandrespectareas(Continuedonthenextpage.)
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3.PublicSupport
Publicsupportforschoolchoiceprograms,includingscholarshiptaxcredits,hasincreasedinrecentyears,particularlyamongparents.Thefollowingcharts(Figures3and4)employdatafromnationwidesurveysconductedbyHarvardUniversitysProgramofEducationPolicyandGovernancein2009,142010,15and2011.16Afteraskingaboutotherschoolchoiceprograms,thesurveysasked:Anotherproposalhasbeenmadetoofferataxcreditforindividualandcorporatedonationsthatpayforscholarshipstohelpparentssendtheirchildrentoprivateschools.Wouldyoufavororopposesuchaproposal?ResultsareshowninFigure3forthemostrecentyear.
Supportfortheproposalismorethandoubleoppositionamongthegeneralpopulace.Parentssupportscholarshiptaxcreditsbyafour-to-onemargin.Asshownin
Figure3
importantasgrades,saysLee,Therewerenobullies,soPetercouldfocusonhisacademics.Becauseofitssize,therewerefeweroptionsforspecialeducationstudentsatShaker,butthesmallclassesandindividualattentionfromtheteachersmadeupforthat.Peterthrived.Hejustblossomed. It was absolutelyawonderful thingto see.Heworked harder thanheever had,
earned excellentgrades,participatedin numerousextracurricularactivities, felt acceptedandrespectedbyhispeers,andtoldhisparentsthathelovedgoingtoschool.Payingtheyearlytuitionwasdifficult,butPeter'sgrandparentshelpedoutandLeeandVickydipped into Peters college fund. If he doesnt get through high school, hewont need thesecollege savings, they explained. Sources of tuitionassistance formiddle andhigh school areverylimited.Peterisfortunatethathisfamilywasabletoprovidehimwiththeeducationheneededinanenvironmentthatwassupportiveforhim,buttherearethousandsofstudentslikehiminNewHampshirewithmorelimitedoptions.AscholarshiptaxcreditprogramwouldhelpmorechildrenlikePetergettheeducationtheydeserve.
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Figure4,supporthasincreasedasoppositionhasdeclinedinrecentyears.(Note:Nodataisavailableforparentsin2009becausethesurveybeganseparatingparentsin2010.)
II.FISCALIMPACT
1.FiscalImpactinNewHampshire ScholarshiptaxcreditprogramshavesavedmoneyinotherstatesandHB1607is
designedtosavemoneyinNewHampshire.Thestatehasthepotentialtosavemoneyifthereductioninstatespendingoutweighsforgonerevenue.Moreover,ifstudentstransferfrompublicschoolstoindependentschoolsinsignificantnumbers,localschooldistrictscanreducetheirexpenses.Sinceschooldistrictrevenuesfromlocalsourcesdonotdeclinewithenrollment,districtshavethepotentialtosavemoneyaswell.
FurtherstudyisrequiredtodeterminetheprecisefiscalimpactonNewHampshire.However,whilethepreciseimpactisnotyetclear,itispossibletocomparerecentandprojectedstatespendingoneducationtothepotentiallyforgonerevenueresultingfromtheadoptionofascholarshiptaxcreditprogram.
TherevenueprojectionsforstatespendingonpublicschoolsinFigure5(nextpage)assumeaconstantgrowthof2.7%,theaverageofthethreepreviousfiscalyearsgrowth,minusthefullvalueofthetaxcredits.Taxcreditprojectionsforthescholarshiptaxcreditprogramassumedthemaximumgrowthallowedbytheproposedlegislation(HB1607-FN-Local,2012):25%growthperyear,withaninitialcapof$13.5millionintaxcredits(i.e.90%ofthe$15millionincredit-eligibledonations).Evenwithoutconsideringthepotentialsavings,itisclearthattheproposedscholarshiptaxcreditprogramwillhaveaminimalimpactontheoverallbudget.
General Parents General Parents General Parents
2009 2010 2011
Support 46% 50% 55% 50% 60%
Oppose 27% 22% 19% 21% 15%
0%
10%
20%
30%
40%
50%
60%
70%
NationalPublicOpinion
ofScholarshipTaxCreditPrograms
Figure4
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$0
$500
$1,000
$1,500
$2,000
$2,500
$3,000
$3,500
$2,552$2,590
$2,691$2,763
$2,838$2,901
$2,962$3,021
$3,077$3,127
$13.5 $16.9 $21.1 $26.4 $33.0
NHPublicSchoolSpendingvs.
EducationTaxCredits,inMillions
Public TaxCredits
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Furthermore,whiletheexactfiscalimpactisyetunknown,theprogramisdesignedtosavemoney.UnderHB1607,scholarshipsareworth$2,500onaverage,comparedwithanaverage$4,100instatespendingperpupil.17Sincemaximumadministrativeoverheadis10%ofdonations,theaveragespentperscholarshiprecipientwillbe$2,778underthemostconservativeestimates.Taxcreditsareworth90%ofdonations,thereforethestate
forgoes$2,500perscholarshiprecipient.Thismeansthatthestatesaves$1,600foreachscholarshiprecipientthatleavesthepublicschoolsystem.NewHampshiresavesmoneyifthepercentageofscholarshiprecipientsthatwouldotherwisehaveattendedpublicschoolsisgreaterthanorequaltothelossinstaterevenueperscholarshipdividedbytheaveragestatespendingperpupil,or61%.Sincethelegislationmandatesthatatleast70%ofscholarshiprecipientsbeswitchers,theprogramwillsavemoney.2.FiscalImpactinOtherStates
Whileeachstatefinanceseducationdifferently,itishelpfulforpolicymakerstoconsidertheimpactofagivenprogramonotherstateswhenconsideringtheadoptionofa
similarprogram.Thissectionexaminesthefiscalimpactofscholarshiptaxcreditprogramsonstatebudgetsinseveralstates,usingofficialstategovernmentreportswherepossible.ARIZONA
In2009,aneconomistfromBaylorUniversityreleasedanindependentstudyofthefiscalimpactofArizonasscholarshiptaxcreditprogram.Thestudydeterminedthatthestatesavesbetween$99.8millionand$241.5millionasaresultofitsscholarshiptaxcreditprogram.18Evenunderthestudysmostconservativeassumptions,thestatesavesnearlytwiceasmuchasthe$55.3millioninforgonerevenue.
FLORIDA
Inanofficialreportin2010,theFloridalegislaturesnonpartisanOfficeofProgramPolicyAnalysisandGovernmentAccountabilityestimatedthatSunshineStatetaxpayerssaved$32.6million,whichisapproximately$1.44instateeducationfundingforeverydollarlostincorporateincometaxrevenueduetocreditsforscholarshipcontributions.19WhileFloridasstategovernmentcollected$82.2millionlessintaxrevenueasaresultoftheprogram,thiswasmorethanoutweighedbythe$118.4millioninreducedexpenses.Thesefigureswereadjustedtoaccountforchildrenwhowouldhaveattendedprivateschoolanyway.
IOWA
ThefiscalimpactofIowasscholarshiptaxcreditprogramhasnotbeenstudiedinsufficientdetailbythestateorbyindependentanalyststowarrantstrongconclusions.TheIowaDepartmentofRevenuereportedin2009thatthereturnoninvestmentfortheprogramwasnotmeaningful.20However,thereportfailedtoestimatetheamountofmoneythestatesavedfromstudentsswitchingawayfrompublicschools.Iowasstategovernmentprovidesaminimumleveloffundingperpupilinpublicschools,plus
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additionalfundinginproperty-poordistricts.Consideringonlytheperpupilaid,Iowawouldsavemoneywhenthepercentageofscholarshiprecipientsthatwouldotherwisehaveattendedpublicschoolsisgreaterthanorequaltothelossinstaterevenueperscholarshipdividedbytheaveragestatespendingperpupil.
In2007(thelatestyearforwhichdataisavailable),Iowaawarded$4.9millionintaxcredits,whichtranslatedintoover$7.5millioninscholarshipsduetoIowas65%creditsfordonations.Thisfunded8,737studentsfromfamiliesearninglessthan300%ofthefederalpovertyline,thereforeaveragescholarshipswere$855andthelosttaxrevenueperscholarshipwas$555.75.AveragestateperpupilfundinginIowawas$6,497in2007,21thereforeIowawouldsavemoneyifatleast8.6%ofscholarshiprecipientswouldhaveotherwiseattendedpublicschool.Sincelow-incomefamiliesaretheleastlikelytobeabletoaffordindependentschooltuition,itislikelythattheIowascholarshiptaxprogramdidsavemoney.Savingswouldbeevengreateriflow-incomefamiliestendtoliveinproperty-poordistricts.However,estimatesofthemagnitudeofthesavingsarecurrentlyunavailable.
PENNSYLVANIA
A2011studybytheCommonwealthFoundationreportsthatPennsylvaniasaves$512millionayearasaresultofitsscholarshiptaxcreditprogram.22Thoughthestudydoesnottakeintoaccountstudentswhowouldhaveattendedindependentschoolsanyway,thereisstillverylikelysubstantialsavingssincetheaveragescholarshipsizeisonly$1,044,whichisfarbelowthe$14,300averagecost-per-childinKeystoneStatepublicschools.Moreover,asdiscussedinsectionIII-1below,amajorityofscholarshiprecipientsinPennsylvaniacomefromlow-incomehouseholds,whicharelesslikelytosendchildrentoindependentschoolswithoutassistance.
III.PROGRAMDESIGN
Scholarshiptaxcreditprogramsvaryindesignfromstatetostate.Inorderto
understandtheimpactofdifferentprogramdesigns,itisusefultoconsidertheexperienceofscholarshiporganizationsoperatinginmultiplestatesinvaryingregulatoryenvironments.Thissectionanalyzessurveydatafromscholarshiporganizationsparticipatingineducationtaxcreditprogramsinfivestates:Arizona,Georgia,Iowa,PennsylvaniaandRhodeIsland.OklahomaandIndianawereexcludedsincetheirprograms
arestillbeingimplemented.Floridassolescholarshiporganizationdidnotrespond.Responseratesinotherstatesvariedfrom10%to80%.*SincerespondentsmaynotberepresentativeofallSOsineachstate,thesurveydatashouldbeinterpretedcautiously.Nevertheless,suchsurveydataisusefulindrawinglessonsfromtheexperiencesofSOsoperatingindiverseenvironments.
*Responseratesvariedbystateasfollows:AZ:6/17(35%);GA:4/39(10%);IA:5/13(38%);PA:49/247(20%);RI:4/5(80%).
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Figure6.
StateScholarship
CapsAverage
ScholarshipsMeans-testing
Program
Cap
Corporate
Credits
Minimum
Disbursement
ArizonaK-8:$46009-12:$5,900
$2,158 185%ofFRL $10million 100%credit 90%
Florida
$4,106(maynotexceedprivateschool
costs,75%usedfor
tuition)
$4,011 185%ofFRL $175million 100%credit 97%
Georgia $9,437 unknown No $50million100%credit(upto75%of
taxliability)
90%
Indiana Nocap N/A 200%ofFRL $2.5million 50%credit 90%
Iowa Nocap $1,184 300%ofFRL $8.75million 65%credit 90%
Oklahoma
Greaterof:$5000or80%averagelocalcostperpupil;Specialneeds:
$25,000
N/A
300%ofFRL(orneeds
improvementdistrict)
$3.5million(50%
corporate/50%
individual)
50%creditupto
$100,000peryear
90%
Pennsylvania Nocap $1,044$50,000+$12,000per
child$44.6million
75%credit(90%iftwoconsecutive)
upto$300,000per
year
80%
RhodeIsland Nocap $2,248 250%ofFRL $1million
75%credit(90%iftwoconsecutive)upto$100,00
peryear
90%
Thesurveyaskedrespondentstosharetheirviewsabouttheimpactofseveralstate
policiesontheeffectivenessoftheirorganizationsincarryingouttheirmissions.Inparticular,thesurveyaskedabouttheimpactofmeans-testingrequirements,disbursementrequirements,andthepercentageofcorporatecontributionseligiblefortaxcredits.ThesurveyalsoaskedgeneralquestionsaboutwhichpoliciesorregulationstheSOswouldliketomodifyoreliminateandwhatadvicetheywouldgivepolicymakers.Figure6,above,
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providesabroadoverviewofthevariationamongkeycomponentsofthescholarshiptaxcreditprogramsineachstate.1.Means-Testing
Thegoalofascholarshiptaxcreditprogramistoexpandeducationalchoicesforfamilies.Wealthyfamiliesalreadyhavethefinancialabilitytosendtheirchildrentoindependentschoolsortomovetoatownorcitywithhighqualitypublicschools.Thosewhostandtogainthemostfromascholarshiptaxcreditprogramarethosewiththeleastmeans.However,asdiscussedbelow,incomecapsthataretoorestrictivemayunintentionallyexcludefinanciallystrugglingfamilies.
AllbutoneeducationtaxcreditprograminAmericarestrictseligibilityonthebasisofhouseholdincome.AsshowninFigure6,moststatesusethefederalfreeandreducedlunch(FRL)programasabenchmarkforpoverty,withmeans-testingcapsrangingfrom185%oftheFRLinArizonaandFloridato300%oftheFRLinIowaandOklahoma.Under
Pennsylvaniasprogram,childrenareeligibleforscholarshipsiftheirhouseholdincomesareunder$50,000,plus$12,000foreachschool-agedchildinthehome.Thedefinitionofhouseholdincomevariesacrossstates,butitgenerallydoesnotincludedisabilitypayments,workerscompensation,retirementpensions,publicassistanceorunemploymentcompensation.Scholarshiporganizationsaregenerallyauthorizedtodeveloptheirowneligibilityrequirementsinadditiontomeans-testingrequirements.
Respondentswereaskedwhethertheybelievedtheirstatesmeans-testingrequirementsweremuchtoohigh,somewhathigh,justright,somewhatlow,muchtoolow,orifthereshouldnotbeanymeans-testing.Raisingoreliminatingthecapwouldallowmorefamiliestoparticipate,whileloweringthecapwouldtargetfundingtowardthe
familieswithlowerincomes.
Despitestate-by-statevariationofmeans-testinglevels,amajorityof
respondentssupportedmaintainingtheirstatesstatusquo.(SeeFigure7,below.)Oftheremainder,mostsupportedraisingoreliminatingincomecapswithfewinfavorofmakingthemmorerestrictive.Theleveloftheincomecapdoesnotappeartoaffectsupportforraisingorloweringthecap.
OneIowarespondentsupportedraisingtheincomecapbecausetuitionthereisgrowingatafasterratethantheaverageincomeintheregion.However,anotherwasconcernedthatifthecapweretoohighthenpeoplewhocouldactuallypaytuitionwould
qualifyandthatwouldtakemoneyoutofthepocketsoffamilieswhotrulycan'taffordprivateeducation.
SeveralSOrespondentsinPAstatedthattheincomecapishighenoughtoallow
mostmiddleincomefamiliestoqualify.Others,however,notedregionaldisparities.Onerespondentcomplainedthatstatepolicymakerswerenotlookingatthemedianincomeforourregion.Whatmightbeconsideredmiddle-incomeinoneareacouldbelow-incomeinotherregions.
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Amongthosewhowishedtoeliminatemeans-testing,somecomplainedthatitis
difficulttogettheproperFAFSAforms.Anothernoted:Manyfamiliesmaketoomuchmoneytoqualifyforaidbutnotenoughtoaffordtosendtheirchildrento[anindependentschool].
InArizona,SOsmayonlydisbursecorporatedonationstostudentswhosehouseholdincomeisbelow185%ofFRL,howevertheyhavenomeans-testingrequirementforindividualdonations.Nevertheless,astudybyHarvardUniversitysProgramonEducationPolicyandGovernancefoundthattheprogramdisproportionatelybenefitedlow-incomefamiliesevenwithoutameans-testingrequirement.Morethantwo-thirdsofscholarshiprecipientsfamiliesearnedlessthan185%ofFRL(approximately$75,000forafamilyoffour).23Theseresultsshouldnotbesurprising,sincenon-profitorganizationsliketheSalvationArmyandToysforTotsalsoprovidefortheneedsoflow-incomefamilieswithoutagovernmentmandate.
Whiletargetinglow-incomefamiliesforaid,someSOstakeexigentcircumstances
intoconsideration.OneArizonaSOexplained:
Wemaygivetuitionaidtosomeonewhosefamilyincomeismorethanthe185%,butonlyiftherearemitigatingcircumstances,likehugemedicalbillsduetocancer,ortaxreturnincomeisover,butthefamilyearnerlosthisjobandhasnothadanyincomeformonths.Wecanalwayslookatparticularcircumstances.
0
5
10
15
20
25
3035
LowerCap StatusQuo RaiseCap Eliminate
Arizona 0 4 1 1
Iowa 1 1 2 0
Pennsylvania 7 23 11 4RhodeIsland 0 3 0 1
Means-TestingRequirementFigure7.
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Eveninstateswithmeans-testing,SOstendtograntscholarshipstofamilieswithincomeswellbelowtheincomecap.InFlorida,theaveragehouseholdincomeofscholarshiprecipientsis$25,971,only20%aboveFRL,thoughFloridascapis185%ofFRL.24InPennsylvaniathemajorityoffamiliesreceivingtaxcreditscholarshipshadfamilyincomesbelow$29,000,thoughthestateallowsafamilyoffourtoearnupto$74,000.25
2.DisbursementRequirement
Ideally,allofthefundsraisedwouldbedisbursedintheformofscholarships.
However,SOsincuradministrativeexpensesinordertofilloutallthepaperwork,raisefunds,fieldquestionsfromfamilies,conductaudits,etc.Inordertobalancethegoalofprovidingfinancialassistancewiththenecessityofadministrativeexpenses,stateshavesetvaryinglevelsofrequireddisbursement.
Moststatesrequirethatscholarshiporganizationsdisburseatleast90%oftheir
fundsintheformofscholarships,allowingonlyupto10%foradministrativecosts.Two
exceptionsarePennsylvania,whichallowsupto20%foradministrativecosts,andFlorida,whichallowsonlyupto3%.Thereisalsosometechnicalvariation,suchastheamountoffundsscholarshiporganizationsmayrolloverorcarryforwardintothefollowingfiscalyear,whichisbeyondthescopeofthispaper.Thesurveyaskedrespondentswhatleveltheybelievedthedisbursementpercentageshouldbe.
Thevastmajorityofrespondentsfavoredthestatusquofortherequireddisbursementlevel.(SeeFigure8,below.)Amongtheremainder,supporttiltedinfavorofhigherdisbursementrequirements,leavinglessmoneyforadministration.
Supportforraisingthedisbursementrequirementwasmorepronouncedin
Pennsylvania,whichhasthemostgenerousadministrativecostallowance.OnePArespondentwrote:Iunderstandsomeentitiesmayhavesomeexpenses,butthe20%allowanceseemsoverlygenerous.Yetsomeallowanceisneededduetostudentsnotattendingandothermattersbeyondourcontrol.A100%distributioncouldcreatesomeunintendedproblems.Nevertheless,eveninPAmostSOssupportedmaintainingthestatusquo.AnotherPArespondentwrote:The80%limitallowsamplefundsforadministrativeworkwhileatthesametimeensuringthattheprogram'sprimaryfocusremainsonprovidingassistancetofamiliesinneed.
KeyTakeaways:
Means-testingcanhelptargetfundstothetrulyneedy,thoughevidencesuggests that SOs target low-income families even without a means-
testingrequirement.
IncomecapsthataretoolowreducetheflexibilityofSOstoaddressthe
needsoffamilieswithexigentcircumstances(illness,specialneeds,jobloss,etc.).
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Severalorganizationsnotedthattheywereabletodisburse100%oftheirfundsas
scholarships,thoughmanywhodidsoweresupportedbyreligiousorganizations.Onesecularrespondentwrotethatthecurrentpercentageallowsforindependent[scholarshiporganizations].Loweringthepercentagecouldreducethenumberof[scholarshiporganizations]thatoperatewithoutthehelpofthereligiouscommunity.
ItappearslikelythatPennsylvaniasrelativelyliberaldisbursementrequirementis
onereasonwhyPennsylvaniahasthemostSOsofanystate,evenwhencontrollingforitssize.Pennsylvaniahas247SOscomparedwithGeorgias39,Arizonas17andFloridas
singleSO.Indeed,Floridasmeageradministrativecostallowance(3%)mayexplainitslackofSOs.AllowingmoreroomforadministrativecostsmayopenthedoorformoreSOstostartup,especiallysecularSOswithoutabuilt-inreligiouscommunityorfaith-basedinstitutionstoprovidecrucialfinancialandadministrativesupport.AsonePennsylvaniaSOwrote:Competitionbetweenorganizationsmeansthatfewtakethefull20%,butsomeneedthattogetstarted.Oneapproachmightbetoallow20%offundstobeforadministrationintheSOsfirstyearortwo,thendecreasetheallowanceto10%.
SomeSOssuggestedasliding-scalemodelforthedisbursementrequirement,based
ontheSOsamountofscholarshipdollars.Asscholarshiporganizationsgrow,economiesofscalemeanthatadministrativecostsbecomeproportionallysmaller.AsonePArespondentnoted:Thecoststooperatetheprogramaresimilarnomatterhowmuchrevenueswereceive.
Anotherconsiderationindeterminingthedisbursementlevelistheamountofregulation.OneIowaSOstatedthatthe10%allowanceforadministrationcostsisaworkablenumberbutcautionedthatoverheadincreaseswiththeexpansionofgovernmentrequirements,suchasincreasedpaperworkormandatoryaudits.AnArizona
05
101520253035
40
RaiseLevel StatusQuo LowerLevel Eliminate
Arizona 0 6 0 0
Georgia 0 4 0 0
Iowa 2 2 0 0
Pennsylvania 13 27 2 2
RhodeIsland 3 1 0 0
DisbursementRequirementFigure8.
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SOagreed:Alowerpercentagewouldbedifficulttoattaingiventheamountofreportingrequired.Whenpolicymakersconsideraddingorexpandingregulations,theyshouldalsoconsiderthefinancialimpactonSOsandadjusttheadministrativeallowanceaccordingly.
Finally,oneSOsuggestedreplacingthedisbursementrequirementwitha
requirementthateachSOpublishtheamounttheydisbursedversustheamountusedonadministrativecosts.
3.CorporateCredits
Anotherkeyfeatureofscholarshiptaxcreditprogramsisthepercentageof
corporatedonationseligiblefortaxcredits.Higherpercentagesmakeiteasierforscholarshiporganizationstoraisefundsbyreducingtheactualexpenseforbusinesses.Lowerpercentagesmitigateforgonetaxrevenue.Therightbalancewouldmaximizeoverallspendingoneducationbyincreasingprivatespendingasmuchaspossiblewhilereducingtaxrevenueaslittleaspossible.
Variationalsoexistsinthepercentageofcorporatedonationseligiblefortaxcredits.ArizonaandFloridagrantdollar-for-dollartaxcreditsuptotheentirecorporatetaxliability.Georgiaalsograntsdollar-for-dollarcredits,butonlyupto75%ofacorporationstaxliability.Iowaoffersa65%creditwhileIndianaandOklahomaoffertheleastat50%,witha$100,000annuallimitinthelatter.PennsylvaniaandRhodeIslandbothoffer75%creditsforasingle-yeardonation,butcorporationscanreceive90%creditsiftheypledgetodonatetwoconsecutiveyearswithlimitsof$300,000and$100,000respectively.
Onlystatesthatgrantcreditsforaportionofcorporatedonationsandwhichhaveoperatedtheprogramforseveralyearsweresurveyed.Sinceallfourrespondentsfrom
Iowawrotethatmostoralloftheirfundingcomesfromindividuals,notcorporations,alltheresponsesinthissectionarefromtheforty-ninePennsylvaniarespondents.Respondentswereaskedwhetherthepolicyofgrantingonlypartialcreditshinderstheirfundraisingabilitygreatly,somewhat,ornotatall?ItisimportanttonotethatmostcorporatedonorsinPennsylvaniapledgetodonatefortwoyears,hencetheyreceivea90%taxcredit.26
KeyTakeaways:
Scholarship organizations require some level of allowance for
administrative costs, especially when starting up. Over time, mostspendlessthan10%onadministrativecosts.
Amoreliberaladministrativecostallowanceallowsforthecreationofmorescholarshiporganizations.Policymakersshouldconsidergreater
administrativecostallowancesfornewscholarshiporganizations.
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Mostrespondentssaidthatthe
75%levelforcreditssomewhatnegativelyimpactedtheirfundraising,
followedby43%whoanswerednotatall.Justunder5%ofrespondents
answeredthatthecorporatetaxcreditcapgreatlyhinderstheirabilitytoraisefunds.(SeeFigure9.) Amongthosewhohadlittletroubleraisingfunds,mostemphasizedtheroleofthefederaltaxdeduction.AsoneSOwrote:Thecompaniesthatparticipatearewillingtomakethe10%donation.Theyareabletowritethe10%outofpocketcostoffontheirfederalreturnasthecontributionisbeingmadetoa501c3.Anothernoted:Inmyexperience,corporationsaresatisfiedwiththe
amounttheygetback.Ithinkwithasmallinvestmentthisallowsthemtobegoodcommunitypartnerswhilestillmakinggoodbusinessdecisions. TheexperienceinPennsylvaniaindicatesthatpolicymakerscansafelyreducethepercentageofcorporatedonationseligiblefortaxcreditstoatleast90%withoutexcessivelyburdeningbusinessesorscholarshiporganizations.Indeed,whenfederaldeductionsaretakenintoaccount,itmaybepracticaltodecreasethatpercentageevenfurther.However,cautionisadvisable.InthewordsofoneSO:Intheenvironmenttodayweneedhelpinopeningupthedoorstofundingsourcesnothinderthem.
4.FurtherSuggestionsforPolicymakers Oneofthefinalopen-endedquestionsinthesurveyaskedrespondentstoprovideanyadditionalsuggestionstheymighthaveforpolicymakers.Often,respondentswithinthesamestatewouldoffersimilarrecommendations,whichmaypointtospecificchallengesinthosestates.Forexample,manyPennsylvaniaSOswantedregulationstobestandardizedandclarified.SOswantedtostandardizeregulationsgoverningPre-KandK-12aswellasthedifferentreportingdatesfordifferentcorporationsrelativetothefirstcome,first
KeyTakeaways:
Most scholarship organizations reported having little to no trouble
solicitingdonations frombusinesseswhen thetax creditswereworth
90%ofthedonations.
Policymakers should be able to reduce the tax credit percentagesomewhat below 90% without a significantly negative impact on
fundraising. However, it is not clearat which point therewouldbea
negativeeffect.
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ScholarshipTaxCreditProgramsintheUnitedStates
servedpolicyontaxcredits.Additionally,thereissomeconfusionastowhichcorporationsareeligiblefortaxcreditsatall.
SeveralrespondentsfromArizonarequestedthatthestatepermitmoretypesof
corporationstodonate,suchasLLCs.Theyalsowantedtoraisetheoverallprogramcap.
Onewrote:[Wewouldlike]moreavailabilitytocorporatedonors.Wearestrugglingtogetthefundsweneed.Ourwaitinglistisgrowing.Raisingtheprogramcapwasacommonthemeacrossstates.Othercommentsincluded:
Iwouldjustliketoseemoremoneysetasideintermsoftaxcreditssothatprivateeducationiswithinreachformoreparents.(IA)
Regulationsdon'tseemtobehinderingourmission,justthecaponfundsavailableinthestatebudgettofundtheeducationaltaxcredit.Weareabletorecruitanumberofdonors.However,thedonorsarenotalwaysapprovedforfundingbythestateandthenthebusinessisnotabletoparticipate.(PA)
[The state should] raise the corporate donation cap to $500,000 from $300,000. (PA) Thestate-widecapontotalcontributionsinRhodeIslandisridiculouslylow.(RI)
ThecapisonemilliondollarsinRhodeIsland.
[Thereare]insufficientfundstomeettheneedsoffamilieswhochoosetosendtheirkidstooneofourschools.(RI)
Severalrespondentsemphasizedtheneedtorelievetheburdenofpaperworkfor
SOsanddonors.Onesuggestedswitchingfromannualtobiennialreportingtocutdownpaperwork.Anothersuggestedonlineapprovalfordonors,whichwouldreducepaperworkandallowapprovalsinrealtime.ThissentimentwasechoedbySOsthatwerefrustratedbyalackofcredits,especiallywhensomeclaimedcreditswereactuallynotbeingused.OneGeorgiaSOwrote:[Thereshouldbe]monthlyreconciliationofapproveddonationsfrom
actualdonations.SOsonlyreconcilethedonationsversustheapproveddonationsonceperyear,aftertheyearhasclosed.Reconcilingmonthlywillallowunusedcreditstogobackintothepooltobeusedbyotherdonors. OneGeorgiaSOwantedtoraiseindividualscholarshipcaps,particularlyforstudentswithspecialneedsandlow-incomehouseholds:
Weserveanumberofspecialneedsstudentswhorequireabitmorefundingthanwhatthenewcapwillprovide.Additionally,thenewcapwillmakeitmoredifficultforhigherpricedschoolstooffertaxcreditscholarshipstolowerincomefamiliesasthevariancebetweenthetuitionrateandthescholarshipcapamountwillputanenormousamountofpressureon
existingfinancialaidbudgetsforthoseschools.ManyofourhighertuitionschoolshaveutilizedtaxcreditscholarshipstoofferfamilieswithgreatneedanopportunitytoattendaschoolthatwouldneverhavebeenapossibilitywithoutanSOnon-cappedscholarship.Ithinkanaveragescholarshipawardcapisamorereasonablewaytogivealegislativebodythefeelingthattaxcreditscholarshipsaren'texceedingthepublicschoolcostofachild'seducation.
Othersuggestionsincluded:
Increasingschoolchoiceoptionsinareaswithfailingschools.(PA)
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Allowingindividualschoolstoincorporateasascholarshiporganization.(AZ) Allowingparentstocontributedirectlytotheirownchildren.(GA)
IV.CONCLUSION
Ascholarshiptaxcreditprogramhasthepotentialtoexpandeducationalopportunitiesforneedyfamilieswhilesavingmoney.Scholarshipprogramshaveaproventrackrecordofincreasingparentalsatisfactionandreducingthestrainonstatebudgets.Whendesigningascholarshiptaxcreditprogram,thereareoftencompetingvaluesandinterests.Policymakersshouldconsiderboththeexperienceofotherstatesandtheparticularneedsoftheirownstatewhendecidinghowtostructureascholarshipprogram.
ImpactonFamilies:TheNoletFamily(Hooksett)
BeforeBrandoncametoLibertyHarborAcademyinManchester,hewasatroublestudent. Hed shut down. He didnt care anymore about school, explains hismother,Sandy,whoraisedtheyoungestfourofhersevenchildrenbyherselfsinceher husband passed away in 2002, He was just turned off and they didnt doanything tomakehim interested inschool. Thoughhehad previouslyperformedwellacademically,thepublichighschoolBrandonattendedwantedtoputhiminaprogramforslowlearners.Hismotherhadotherideas.Brandonwas reluctantat first,but hismotherpersuaded him toat least visit theschool. At the endofthe tour, Brandon smiled and told hismother hewanted to
attendLibertyHarbor . Mysonlovesgoingthere!exclaimsSandy,Idonthavetofightwithhimtogetupatfiveoclockinthemorningtogotoschool.Andhesdoingextremelywellacademically!At Liberty Harbor, Brandon is in smaller classes with lots of personal attention.TeachersmakesurethatstudentslikeBrandonarealwayschallengingthemselves,without letting them become overwhelmed. Sandy is happy that there are highstandards for both academic achievement and behavior, with a focus on civicinvolvement.Ireallybelieveinthisschoolanditsbeenwonderfulformyfamily,saysSandy,I
think most people dont think they have a chance so they dont even go visit theschool.ItookthechancebecauseIjustfeltIneededtodosomething.Theymadeitpossibleformychildrentogotoschoolthere.BecauseIcertainlycouldnotaffordit.Likemany independent schools, Liberty Harbor offers tuition assistance to somestudents,butresourcesarelimited.TheNoletswerefortunatethatresourceswereavailableforBrandon,butthousandsoffamiliesarenotsofortunate.AscholarshiptaxcreditprogramwouldgivefamiliessimilartotheNoletstheabilitytochoosetheeducationthatsrightforthem.
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ABOUTTHEAUTHOR
JasonBedrickisaResearchFellowattheJosiahBartlettCenterforPublicPolicyandaformerstatelegislatorfromWindham,NH.HeisalsoaFellowattheTaubmanCenterforStateandLocalGovernmentatHarvardUniversitysJohnF.KennedySchoolofGovernment,whereheispursuingaMastersinPublicPolicy.
SOURCES
SourcesforChartsandTablesFigures1&6Arizona:
1)ArizonaDepartmentofRevenue.CorporateIncomeandInsurancePremiumTaxCreditsforContributingtoSchoolTuitionOrganizations:Reportfor2010.August4,2011.http://www.azdor.gov/Portals/0/Reports/2010-corporate-school-tax-credit-report.pdf2)TheFriedmanFoundationforEducationalChoice.SchoolChoicePrograms:AZ.http://www.edchoice.org/School-Choice/Programs/Corporate-Tax-Credits-for-School-Tuition-Organizations.aspx
Florida:
1)FloridaDepartmentofEducation.FloridaTaxCreditScholarshipProgram:November2011QuarterlyReport,November2011.http://www.floridaschoolchoice.org/Information/CTC/quarterly_reports.asp#20122)TheFriedmanFoundationforEducationalChoice.SchoolChoicePrograms:FL.http://www.edchoice.org/School-Choice/Programs/Florida-Tax-Credit-Scholarship-Program.aspx
Georgia:
1)GeorgiaDepartmentofEducation,GeorgiaPrivateSchoolTaxCreditforDonationstoStudentScholarshipOrganizations,http://public.doe.k12.ga.us/pea_policy.aspx?PageReq=PEAHB1133
2)TheFriedmanFoundationforEducationalChoice.SchoolChoicePrograms:GA.http://www.edchoice.org/School-Choice/Programs/Tax-Credits-for-Student-Scholarship-Organizations.aspx
Iowa:
1)Iowa.gov,http://www.iowa.gov/tax/1040EI/Line/06Line54.html
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ScholarshipTaxCreditProgramsintheUnitedStates
2)TheFriedmanFoundationforEducationalChoice.SchoolChoicePrograms:IA.http://www.edchoice.org/School-Choice/Programs/Tax-Credits-for-School-Tuition-Organizations.aspx
Indiana:
1)IndianaSchoolScholarshipTaxCreditPlan,http://www.inscholarshiptaxcredit.com/About.htm2)TheFriedmanFoundationforEducationalChoice.SchoolChoicePrograms:IN.http://www.edchoice.org/School-Choice/Programs/School-Scholarship-Tax-Credit-Program.aspx
Oklahoma:
1)OklahomaSenateBill969,http://www.oklegislature.gov/BillInfo.aspx?Bill=SB969
2)TheFriedmanFoundationforEducationalChoice.SchoolChoicePrograms:OK.http://www.edchoice.org/School-Choice/Programs/Oklahoma-Equal-Opportunity-Education-Scholarships.aspx
Pennsylvania:
1)PennsylvaniaDepartmentofCommunityandEconomicDevelopment.EducationalImprovementTaxCreditProgram,http://www.newpa.com/find-and-apply-for-funding/funding-and-program-finder/educational-improvement-tax-credit-program-eitc
2)TheFriedmanFoundationforEducationalChoice.SchoolChoicePrograms:PA.http://www.edchoice.org/School-Choice/Programs/Educational-Improvement-Tax-Credit-Program.aspx
RhodeIsland:
1)StateofRhodeIslandDepartmentofRevenue,DivisionofTaxationhttp://www.tax.ri.gov/Credits/index.php2)TheFriedmanFoundationforEducationalChoice.SchoolChoicePrograms:RI.http://www.edchoice.org/School-Choice/Programs/Corporate-Tax-Credits-for-Scholarship-Organizations.aspx
Figures3&4EducationNextPEPGSurvey2009ProgramonEducationPolicyandGovernance,HarvardUniversity,JohnF.KennedySchoolofGovernment.Fall2009.http://educationnext.org/files/pepg2009.pdf
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ScholarshipTaxCreditProgramsintheUnitedStates
EducationNextPEPGSurvey2010ProgramonEducationPolicyandGovernance,HarvardUniversity,JohnF.KennedySchoolofGovernment.Fall2010.http://educationnext.org/files/Complete_Survey_Results_2010.pdfEducationNextPEPGSurvey2011ProgramonEducationPolicyandGovernance,
HarvardUniversity,JohnF.KennedySchoolofGovernment.Fall2011.http://educationnext.org/files/EN-PEPG_Complete_Polling_Results_2011.pdfFigure5SourceforNHpublicschoolspending:NewHampshireDepartmentofEducation,StateSummaryRevenueandExpenditureofSchoolDistrictsforyears2007-08,2008-09,2009-10.http://www.education.nh.gov/data/financial.htm
EndNotes1NewHampshireDepartmentofRevenueAdministration,CommunityDevelopmentFinanceAuthority,TaxCreditProgram.http://www.nhcdfa.org/web/cdip/cdip_tax_credit.html2NewHampshireDepartmentofRevenueAdministration,ResearchandDevelopmentCredit.http://www.revenue.nh.gov/faq/dra_165.htm3NewHampshireDepartmentofRevenueAdministration,CoosCountyJobCreationTaxCredit.http://www.revenue.nh.gov/faq/dra_3000.htm4Zelmanv.Simmons-Harris,536US639(U.S.SupremeCourt2002)5NewHampshireStateConstitution,PartSecond,Article83.6Douglas,CharlesG.,III.TheConstitutionalityofSchoolChoiceinNewHampshireJosiahBartlettCenterforPublicPolicy,May4,2004.www.jbartlett.org/wp-content/uploads/2011/06/constitutionality05404.pdf7Simmons-Harrisv.Goff,711N.E.203(Ohio1999)8WarnerJacksonv.Benson97-0270(Wisconsin2002)9Kottermanv.Killian,972P.2d606(Arizona1999)10ArizonaChristianSchoolTuitionOrganizationv.Winn,Nos.09-987and09-991,UnitedStatesSupremeCourt,2011.
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11Figlio,David.EvaluationoftheFloridaTaxCreditScholarshipProgram:Participation,Compliance,TestScoresandParentalSatisfaction.UniversityofFlorida,June2010.12Forster,GregandChristianDAndrea.AnEmpiricalEvaluationoftheFloridaTaxCredit
ScholarshipProgram,FriedmanFoundationforEducationalChoice.August2009.13LeFevre,Andrew.ADecadeofSuccess:PennsylvaniasEducationImprovementTaxCredit,CommonwealthFoundation.PolicyBrief,Vol.23,No.8.August2011.14EducationNextPEPGSurvey2009ProgramonEducationPolicyandGovernance,HarvardUniversity,JohnF.KennedySchoolofGovernment.Fall2009.http://educationnext.org/files/pepg2009.pdf15EducationNextPEPGSurvey2010ProgramonEducationPolicyandGovernance,HarvardUniversity,JohnF.KennedySchoolofGovernment.Fall2010.
http://educationnext.org/files/Complete_Survey_Results_2010.pdf16EducationNextPEPGSurvey2011ProgramonEducationPolicyandGovernance,HarvardUniversity,JohnF.KennedySchoolofGovernment.Fall2011.http://educationnext.org/files/EN-PEPG_Complete_Polling_Results_2011.pdf17Adequacyspendingperpupilis$3,540,plusadjustmentfortheFreeandReducedLunchprogramandspecialeducationspending.TheNHDepartmentofEducationconfirmedthattheaveragestatespendingperpupilis$4,100.18North,CharlesM.EstimatingtheSavingstoArizonaTaxpayersofthePrivateSchool
TuitionTaxCredit,BaylorUniversity.November2009.http://www.azpolicy.org/sites/azpolicy.org/files/downloads/ArizonaSTOTaxCreditCMNorth.pdf19OfficeofProgramPolicyAnalysisandGovernmentAccountability.FloridaTaxCreditScholarshipProgram:FiscalYear2008-09FiscalImpact,March1,2010.20IowaDepartmentofRevenue.StateofIowaAgencyReportsonTaxCredits,2009.Pages93-6.http://www.iowafiscal.org/2009docs/StateIowaAgencyReportsTaxCreditsFinal.pdf21EducationFundingforIowaStudents:HistoricalFundingPerPupil,IowaState
Legislature,FiscalServicesDivisionhttp://staffweb.legis.state.ia.us/lfb/docs/k-12_ed/per_pupil/historical_per_pupil.pdf22LeFevre,Andrew.ADecadeofSuccess:PennsylvaniasEducationImprovementTaxCredit,CommonwealthFoundation.PolicyBrief,Vol.23,No.8.August2011.
8/3/2019 Scholarship Tax Credit Programs Analysis
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23Murray,Vicki,Ph.D.AnAnalysisofArizonaIndividualIncomeTax-creditScholarshipRecipientsFamilyIncome,2009-10SchoolYear.ProgramonEducationPolicyandGovernance.HarvardUniversitysJohnF.KennedySchoolofGovernment.Spring2011.24
StepUpforStudents,AfewfactsabouttheFloridaTaxCreditScholarship,http://www.stepupforstudents.org/NewsResearch/BasicProgramFacts25PennsylvaniaLegislativeBudgetandFinanceCommittee.PennsylvaniasTaxCreditPrograms,June2010.http://lbfc.legis.state.pa.us26ConfirmedinatelephoneconversationwithJimODonnell,DirectoroftheTaxCreditProgramatthePennsylvaniasDepartmentofCommunityandEconomicDevelopment,onNovember3,2011.