BRIEF: School Choice in the States, January 2019

LEGISLATION AND LITIGATION

Arizona

In Arizona, legislators have filed a large number of bills that would affect the existing educational choice policies, including several that seek to improve or expand the Empowerment Scholarship Accounts program:

• SB 1395 would improve the administration of the Empowerment Scholarship Account Program. The bill would clarify eligibility for students living within the attendance boundary of a low-performing district school; clarify that students are eligible to receive an ESA to enroll in kindergarten until the age of seven; clarify the categories of eligible expenditures, including workbooks, flashcards, reading books, manipulatives and tuition and fees at career and technical education schools. The bill would also require ESA students to annually take nationally a norm-referenced exam of their family’s choice with results reported to their parents. Certain students with disabilities are exempt from this requirement. Schools with more than 50 ESA students enrolled would be required to publicize the aggregate results of the exams.
• SB 1396 would expand eligibility for the Empowerment Scholarship Account Program to children from low- and middle-income families.
• HB 2022 and SB 1320 would move the state’s Empowerment Scholarship Account Program to the office of the state treasurer and authorize the treasurer to contract with a third-party vendor to administer the program.
• HB 2474 would expand eligibility for the Empowerment Scholarship Account Program to students who have been bullied or abused.

In addition, several bills seek to curb educational choice:

• SB 1168 seeks to restrict Arizona’s tax-credit scholarship programs in the following ways:
  – Would cut the STO administrative allowance in half, making it difficult for STOs to retain the staff necessary to raise scholarship funds, process applications, assist applicant families and award scholarships.
  – Would reduce the growth of the corporate tax-credit scholarship program from 20 percent annually to 2 percent or inflation. This would inhibit the ability of school tuition organizations (STOs) to keep up with the demand for scholarships.
  – Would restrict eligibility for corporate scholarships to families earning no more than 133 percent of the federal poverty line (about $33,400 for a family of four). This change would exclude tens of thousands of struggling families from the scholarship program.
• HB 2185 would reduce the growth of the corporate STO program from 20 percent annually to 2 percent or inflation. This would inhibit the ability of STOs to keep up with the demand for scholarships.
• HB 2250 would require two-thirds of scholarships to be awarded to children from families earning less than 185 percent of the federal poverty line (about $46,400 for a family of four). This would prevent tens of thousands of struggling families from receiving scholarships.
• HB 2251 would eliminate the automatic growth of the corporate cap. Due to inflation, this would have the net effect of shrinking the program over time.
• HB 2252 would exclude students with special needs who received a Lexie’s Law scholarship from subsequently also qualifying for corporate STO scholarships. This would reduce the level of support STOs could offer students with special needs.
• HB 2254 would cap the aggregate amount STO tax credits to no more than 1 percent of the total amount the legislature appropriates from the state general fund in a given fiscal year. This would effectively repeal the automatic 20 percent growth after FY 2019.
• HB 2255 would create a complex mechanism to limit the growth of the STO tax credits, thereby reducing scholarship funds available to struggling families.
• HB 2256 would cut the STO administrative allowance in half, with similar effects as SB 1168.
• HB 2324 would limit the growth of or potentially shrink the corporate STO tax credits by tying them to appropriations for the school facilities board and department of education.

Colorado

The Colorado House of Representatives introduced HB 19-112, which would create Child Safety Accounts. These accounts would serve as education savings accounts (ESAs) for students who are victims of a “safety incident” at a public or charter school. Eligible expenses include private school tuition, tutoring, transportation, therapy and higher education tuition. The accounts are funded at the state per-pupil revenue amount. The bill also creates an income tax credit for parents of Child Safety Accounts students to pay for expenses greater than the ESA amount. The bill has been assigned to the State, Veterans and Military Affairs Committee.

Colorado’s house also introduced HB 19-1151, an act establishing Special Education Opportunity Scholarships. This voucher program would be limited to 750 students and could be utilized for multiple uses in addition to tuition, including school district services, speech-language pathologists and specialized instructional services. Three non-profits would administer the program for students with various special needs, including an autism spectrum disorder, a serious emotional disability, an intellectual disability, a speech or language impairment or a traumatic brain injury. Students must also have been previously enrolled in public school or be new to Colorado. This bill was also introduced in the house’s State, Veterans and Military Affairs Committee.

Connecticut

Connecticut introduced a trio of ESA-related bills. These include HB 5171, an ESA study and task force bill; SB 574, an ESA task force bill that would create the Prudence Crandall Safety and Learning Initiative; and HB 5784, a bill that would create an ESA. All three bills have been referred to their respective committees.

Indiana

HB 1675, a bill that would create both an ESA and a tax credit-funded ESA, was introduced. It is currently awaiting a hearing in the House Education Committee.

HB 154, a bill that would create a completely universal ESA program, was introduced and referred to the House Education Committee. It has not received a hearing yet.

Iowa

House File 12, which would repeal a slew of tax credits in the state, including the School Tuition Organization tax credit, was introduced and referred to Ways and Means. It is currently waiting for a subcommittee hearing.

Senate File 28, a bill that would create an education savings grant, was introduced and referred to the Senate Education Committee. It is currently waiting for a subcommittee hearing.

Maryland

Maryland’s FY 2020 budget bill, introduced by the Speaker of the Delegates on behalf of Governor Larry Hogan, includes an appropriation for the state’s existing voucher program. The Broadening Options and Opportunities for Students Today (BOOST) Program would be re-appropriated for the 2019–20 school year and capped at $10 million, which is a $1.2 million increase from this current school year. The bill had its first reading in the Appropriations Committee on Jan. 18.

Mississippi

• SB 2165 aims to create a voucher, which would allow, initially, low-income children or children with disabilities in consistently low-performing schools scholarships to attend non-residentially assigned public schools or private schools. The bill envisions expanding the program to children of middle-income families over time with a cap of $25 million in the 2021–22 school year.
• SB 2173 proposes a tax credit program for low- and middle-income children and children with disabilities through corporate donations capped at $300,000 per business annually. The legislation would allow for the creation of scholarship organizations to provide scholarships to children to attend schools of choice. The program would also allow for educational improvement organizations, which could provide grants for innovative educational programs to district schools.
• SB 2093 would create a universal education savings account in the state of Mississippi. The bill proposes eligible students should receive 90 percent of the state’s per-pupil funding which they could use on a wide variety of educational expenses, including tuition at nonpublic schools, tutoring and educational therapies or services. The program would also allow families to place unused funds into a 529 plan or use money on tuition or fees at a post-secondary institution.
• HB 634 would create a tax-credit scholarship program in the state of Mississippi. Students would be eligible for this program if they are a member of a household whose total annual income does not exceed two times the income used to qualify for the federal free and reduced-price lunch program (roughly $92,870 for a family of four based on 2018-19 eligibility guidelines). The scholarship could be spent on school supplies, textbooks, tuition for private schools, uniforms, educational software, tutoring services and online educational services.

Missouri

• HB 34, HB 478 and SB 160 would create the Missouri Empowerment Scholarship Accounts Program, a tax-credit funded ESA program open to all school-aged students in Missouri (from towns with a population greater than 30,000 in the case of the latter two bills).
• HB 33 and HB 476 would create funding mechanisms for “Bryce’s Law,” a tax-credit scholarship program for students with special needs.

Montana

The Montana Supreme Court granted on Jan. 24 a stay of its ruling in Espinoza vs Montana Dept. of Revenue (holding the tax-credit scholarship program unconstitutional), allowing the Montana Department of Revenue to administer the program through the 2018 tax year. Beginning Jan. 1, taxpayers in Montana will no longer receive state tax credits for any contributions to scholarship-granting organizations. For families, this should allow scholarships to be funded through the 2018–19 school year. Donors funding scholarships for the 2019–20 school year, if any, will not receive state tax benefits. The Institute for Justice, representing the plaintiff families, intends to file a motion with the U.S. Supreme Court requesting that the Court consider the adverse ruling of the Montana Supreme Court. If this motion is granted, it is unlikely that the U.S. Supreme Court will hear the case before the fall of 2019.

Nebraska

Nebraska’s LB 670 would create the Opportunity Scholarship Program, a tax-credit scholarship program for low-income students.

New Hampshire

• HB 632 was introduced on Jan. 16. It is a direct attempt to repeal the tax-credit scholarship program in New Hampshire. This program allows individuals subject to New Hampshire’s interest and dividends tax to receive a tax credit up to 85 percent for donations to scholarship organizations. In the 2018–19 year, the average value of all non-homeschooling scholarships could not exceed $2,762 except for children with special needs whose scholarships could not be less than $4,834. This program also allows credits for businesses against the business profits tax, business enterprise tax and, in some cases, the interest and dividends tax. This program allowed 413 students greater choice in the state of New Hampshire for the 2019 school year.
• SB 318, if passed, could significantly change the nature of the tax-credit scholarship program in New Hampshire by creating a Public School Grant Program. The tax-credit scholarship program provides tax incentives to support nonprofit organizations that grant scholarships to children from households where family income is less than 300 percent of the federal poverty level. The scholarships can be used on a wide variety of educational expenses. This bill would divert funds from the scholarship program for low-income children to be used for afterschool services by families whose children are already attending publicly funded schools.

North Dakota

• SB 2142 would have created a nearly-universal ESA. The ESAs would have been funded at 75 percent of state funding and would have required achievement testing for participants. The bill failed to pass in the Senate Education Committee.
• HB 132 would create an individual tax credit for parents who pay for private school tuition or who homeschool their children. Students must be enrolled in a private school or home school for at least half of the school year for their parents to qualify for the credit. The credit would be worth up to the average state’s per-pupil funding. The proposed credit is not refundable in the traditional sense, but any educational expenses in excess of a taxpayer’s liability may be carried forward via the credit to each of the 12 succeeding years. The bill has been referred to the House Finance and Taxation Committee.

Oklahoma

Oklahoma legislators filed several bills to expand existing educational choice programs or create new ones, including:

• SB 180, HB 2621 and SB 407 would expand the tax-credit scholarship program from $3.5 million to $25 million, $30 million and $40 million respectively.
• HB 1160 would create a personal-use tax credit of up to $2,500 for a variety of educational purposes, including private school tuition (preschool through 12th grade), tutoring, online instruction, curricula, textbooks and workbooks, educational software, etc.
• SB 360 would expand eligibility for the Lindsey Nicole Henry Scholarship for Students with Disabilities Program to students who have at least one parent who is incarcerated.
• SB 570 would create a new publicly funded Hope Scholarship Program for students who have been victims of bullying.
• SB 901 would expand eligibility for the Lindsey Nicole Henry Scholarship for Students with Disabilities Program to students who are homeless.

There is also one bill that would curb educational choice:

• HB 1857 would reduce eligibility from 300 percent of the federal poverty level (about $75,000 for a family of four) to $60,000 for everyone, without regard to how many children they have.

Oregon

The Oregon Senate introduced and read SB 668, which would establish an ESA that could be used at private schools, online courses, tutoring, therapy services or institutions of higher education. Students with disabilities, as well as those from families whose household income is less than 185 percent of the federal poverty level, would receive ESAs worth $6,500. All other students would receive ESAs worth $4,900. The bill has since been referred to the Education, Student Success and Ways and Means committees.

South Carolina

HB 3681 was introduced on Jan. 22 and would establish a statewide education savings account program for children who are diagnosed with special needs or come from low-income households. At the time of writing, the program has 58 sponsors and bipartisan support. If passed, this would be the first ESA program in the state. If passed, children who receive an ESA, could use the funds for wide variety of purposes including tuition and fees at participating schools, textbooks, tutoring, curriculum or instructional materials, computer hardware or other technology, fees for transportation (not to exceed $750 annually) and tuition at post-secondary institutions.

Virginia

• SB 1015 would expand eligibility for the Education Improvement Scholarships tax credit program to include children enrolled in or attending nonpublic prekindergarten programs.
• SB 1365 and HB 2351 would increase the size of tax-credit scholarships available for low- and middle-income students with disabilities from 100 percent to 300 percent of the state’s per-pupil expenditure.
• HB 2459 would expand eligibility for tax-credit scholarships under the state’s Education Improvement Scholarships program to children from low-income families or children with special needs to enroll in preschool.
• HB 2568 would create a new Child Safety Savings Account, a publicly funded ESA for children who are the victims of bullying or certain acts of violence.

West Virginia

The West Virginia Senate Education Committee introduced SB 451, and omnibus education bill, that would appropriate more money for education, change class size limitations, create a floor for school district funding, allow for charter schools to open in the state and create an ESA for children from families under $150,000. The bill currently is on the Senate floor waiting to be read for the third time.

HB 2002, which would create an ESA for special needs students, was introduced and was referred to the House Education Committee. It is currently there waiting to be heard.

Wisconsin

Wisconsin’s SB 725 and AB 830 would create an ESA program for low-income students who are “gifted and talented.” The students who would receive the $1,000 ESA may be enrolled in public or private schools and use the ESA funds for a variety of approved educational expenses.