Bill would again boost caps on scholarship program

[Independent Record] Bill would again boost caps on scholarship program

The state House on Thursday gave initial approval to a bill that would raise the tax credit caps for a program that funds student K-12 private school scholarships and the innovation education program for public schools up to $5 million dollars each from the current $2 million.

House Bill 408 passed a second reading on a 69-31 vote and faces a final vote before moving to the Senate for consideration.

The bill is carried by House Majority Leader Sue Vinton, R-Billings. The scholarship was first created in the 2015 session and became the subject of a U.S. Supreme Court case. After passage, the Democratic governor's administration wrote rules prohibiting students from using a scholarship funded through the program to attend religious private schools. The administration at the time argued if the money went to religious programs, it would violate a no-aid provision in the state Constitution that stops state money from going to religious organizations.

Following a lawsuit from a trio of Montana parents, the case ended up before the high court, which sided with the parents. Chief Justice John Roberts, who wrote the 5-4 majority opinion in June 2020, said the state was not required to "subsidize private education" but that if it did "it cannot disqualify some private schools solely because they are religious."

In 2021, legislators dramatically increased the amount a person or business could claim in a tax credit by donating money to either public schools or scholarship organizations. The previous limit was $150 and lawmakers put it at $200,000 that session. Lawmakers also capped the amount of credits people could claim at $1 million on the public side and $1 million on the scholarship side for the 2020 tax year. That increased to $2 million the following year, with provisions to increase that by 20% in later years if donations come in at 80% or greater of the limit.

It took just six minutes in 2022 for people to claim all the new tax credits for the innovation education program, with 10 public school districts pre-approving 23 donations from 20 people and three businesses to hit the $1 million cap. Two weeks later, scholarship organizations hit the $1 million limit.

In support of the bill Thursday, Vinton said that current demand is estimated at $9 million by registered scholarship organizations and the innovation grant for public schools is also not large enough. Her bill would make changes to not let the funding end up so concentrated in public school districts; in 2022, Big Sky Schools received $694,000, or nearly 70% of the total amount of pre-approved donations.

The amount any one district can receive in Vinton’s bill is either 15% of the district’s total budget or 20% of the total credit. If donations exceed the cap, they would be transferred to an advanced opportunity program that all districts can apply for funding from.

Arguing against the bill, Democratic Rep. Mark Thane, a retired school teacher and administrator for Missoula, said he was concerned that the bill has a carry-forward provision that would allow a taxpayer to direct up to three years of their tax liability to the tax credits, taking away from other taxpayer-funded services.

Thane attempted to amend the bill to end the three-year carry-forward provision, but it failed. So did a proposal from Rep. Ed Stafman, D-Bozeman, attempting to add accountability provisions to schools that receive the scholarship. It also failed.











* I understand and agree that registration on or use of this site constitutes agreement to its user agreement and privacy policy. Holly Michels

Head of the Montana State News Bureau

State Bureau reporter for Lee Newspapers of Montana.

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