February 24, 2012

Scholarship Tax Credit clears Senate, faces hurdles in House

Indiana Gov. Mitch Daniels talks with parents and students at the “Ed Reform Rocks Rally” at the State Capitol in Indianapolis on Feb. 15. More than 2,000 parents and students attended the rally to support school choice and quality schools. (Photo by Charles J. Schisla)

Indiana Gov. Mitch Daniels talks with parents and students at the “Ed Reform Rocks Rally” at the State Capitol in Indianapolis on Feb. 15. More than 2,000 parents and students attended the rally to support school choice and quality schools. (Photo by Charles J. Schisla)

By Brigid Curtis Ayer

Catholic families struggling to pay school tuition may see a light at the end of the tunnel if a bill providing additional entry points to the Scholarship Tax Credit (STC) program passes this year.

“The good news is it passed the Senate. The bad news is it will be a struggle in the House,” said Glenn Tebbe, executive director of the Indiana Catholic Conference (ICC), who serves as the official spokesperson for the Catholic Church in Indiana on public policy matters. (Related: Stay connected with the legislature through weekly I-CAN updates)

“We are supportive of helping income eligible non-public school families gain access to the tax credit scholarship for their children,” Tebbe said.

The proposal, Senate Bill 296, authored by Sen. Jean Leising, R-Oldenburg, would give students who are currently enrolled in Catholic or non-public schools an opportunity to qualify for the tax credit scholarship in grade eight. Once eligible, they could receive a scholarship during high school.

The STC program is privately funded by charitable donations to scholarship granting organizations (SGO’s), which award scholarships to eligible students. Families whose incomes fall under 200 percent of the federal free and reduced lunch qualifying amount are eligible for a tax credit scholarship. This is about $85,000 for a family of four.

Leising explained that under current STC guidelines, there are two entry points for students to receive the scholarship. A student may apply for a scholarship in kindergarten. If awarded a scholarship, the student is eligible to apply for a voucher for first grade—provided the family still meets the income guidelines. The second entry point is for students who are enrolled in a public school.

“The second entry point is not really a viable option for non-public school students in first grade through 12th grade because, to become eligible, their parents would have to pull them out of the non-public school for one year in order to get the scholarship,” Tebbe said.

Leising said that with all the education reform that passed last year, there was very little direct relief for the families already attending a non-public school.

“Senate Bill 296 is an effort to provide relief for some of those families that are making the sacrifices to send their child to a non-public school,” Leising said.

“St. Louis Catholic School in Batesville has a Scholarship Tax Credit program set up for kindergarten, and about half of their kindergarten kids were financially eligible for the tax credit scholarship,” she said, “so all of those kids next year, if they remain eligible under the income guidelines, will be eligible for a state-funded voucher for first grade.

“… What I’m trying to do is allow eighth-graders to be eligible for a tax credit scholarship, which could allow them to be eligible potentially to receive a school voucher for ninth grade and the rest of their high school years,” Leising said.

Tebbe said that while a conversion of the tax credit scholarship to a voucher for high school was the original intent of the bill, Senate Bill 296 was amended in the Senate Education committee where they removed the conversion of the tax credit scholarship to a voucher for students who receive a scholarship in grade eight.

Despite the change, Tebbe said the tax credit scholarship will provide some financial assistance for families who want to send their child to a non-public high school, and who are eligible for a scholarship through an SGO.

Legislative Service Agency, a non-partisan group that provides legal and fiscal analysis to the Indiana General Assembly, estimated that last year there were about 26,630 students attending

non-public schools who meet the income guidelines to be eligible for a voucher. These students would also meet the income guidelines to receive a tax credit scholarship, but are ineligible primarily because they currently attend a non-public school.

“Right now, the concern is I’ve got to get it through the process,” Leising said.

Rep. Bob Behning, R-Indianapolis, House sponsor of Senate Bill 296 and a school choice advocate, will be carrying the bill in the House.

Behning, who also chairs the House Education Committee, where the bill is assigned, plans to amend it to improve the STC program.

Behning said that current law governing scholarships granted through the STC program does not provide flexibility for families whose incomes fluctuate from year to year.

For example, the only entry points for scholarship tax credits are for kindergartners entering either a public or non-public school or any student who attends a public school.

Behning said that non-public school students in first through 12th grade who lose eligibility to the STC program due to a family’s income fluctuation cannot gain access again unless they leave the non-public school, and attend a public school for two semesters—even though the family meets the income guidelines.

“What I’m trying to accomplish here is a ‘once eligible, always eligible’ for the tax credit scholarship, provided the family meets the income guidelines,” Behning said. “For families whose income fluctuates from year to year, they could remain eligible for the tax credit scholarship even though their income goes up in some years.” †


Stay connected with the legislature through weekly I-CAN updates

Get connected and join the Indiana Catholic Action Network—I-CAN.

Interested parties may join I-CAN electronically at the ICC Web page.

In addition to the I-CAN Update each week, people can obtain more detailed information regarding the bills and the legislative process through the ICC Legislative Action Center.

Under policy tools, click on “issues and legislation” and access the state or federal bills by clicking “current legislation.”

People can access the archived updates, ICC positions and other background information at the ICC Web site at www.indianacc.org. †

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