Illinois Education Tax Credits – A Trojan Pony?
In September this year, I called my Illinois Representative
Justin Slaughter to discuss why he had voted yea for SB1947 after he had
initially voted nay a short time before.
You might recall that SB1947 was the Educational Funding Bill, which had
been vetoed by Governor Rauner for setting aside too much money for assistance
to CPS.
The bill, which allowed Chicago to receive significant
additional money for CPS as well as provide for increases in property taxes,
failed on its first vote as a result of an amendatory addition of a Republican
inclusion of a tax-credit program for private schooling – a tax-deductible
voucher package.
The first vote was, as stated before, a failure. The second ballot, an attempt to override the
Governor’s veto was also unsuccessful.
The third vote, a compromise that many Democratic Representatives
described as “difficult” passed 73-34.
The Governor was quick to sign it.
Although many pols described the final vote as a compromise,
which left everyone with a sense of some regret, they all agreed that the
result was the best they could achieve for the most people. Representative Justin Slaughter explained to
me that the vote was extremely difficult for him. He told me that he had to weigh the positives
over the negatives: the increased funding formula for all schools, the freeing
up of a budget that had curtailed the state’s operations for the last few
years, and the needs of students and citizens across our state. As "difficult as it was, I voted finally to accept it for the positives it brought, even though the educational tax credits were the reason I said no to begin with."
A close friend of mine who has worked politically in
Springfield for decades called the entire dance of voting nay and then yea a
politically inspired Madigan charade.
Just enough twists and turns of soulful and hand-wringing compromise to provide
Representatives like those who changed their votes some cover for the next
election. That’s not necessarily
cynicism; it is experience.
Meanwhile, the Illinois Policy Institute, the right-wing
organization from which Rauner recruits and then fires his new, administrative team, declares the Governor victorious in getting a “voucher system” sanctioned as a part of the state code.
So, what exactly do we have in Illinois with Education
Tax Credits or “Scholarship Tax Credits” as known in the other 18 states that
use them?
In 2018, the State of Illinois will allow anyone
(corporation or individual) with a payable state tax to apply that amount to a
specific school or subset of schools (think parochial system kindergarten –
high school) at a 75% rate of owed tax.
For example, my very wealthy friend Ernesto will owe $5000 in state
taxes. If he decides to provide all of
that payment for his favorite private Academy, $3750 will go to his chosen
school. And, he will pay the state of Illinois the
lesser amount of $1250 in tax responsibility.
When my pal Ernesto stopped by the other day, he was
ecstatic. He plans instead to pay the
total $5000 to his favorite Academy and an additional $1250 out of pocket to the same Academy. “Is that legal?” I asked. “Why not try it,” he replied, smiling. “Besides. He offered, “I can get a federal deduction
on the $1250.” I reminded Ernesto that
much of this is still in the air, and a non-political scholarship granting
organization is charged with making heads or tails of this new system. He gave me that “What, me worry?” smile.
The Illinois Policy Institute declares Illinois as one of
eight other states that have provided for tax credit scholarships, although
there are now 18. And in each case, the
successes (political and otherwise) have led to more states following suit. In Illinois, Republicans wanted a
dollar-for-dollar exchange for those who would pay their state income tax to
specific schools or programs (but not individuals). That is the state tax credit program in Florida. In the end, Illinois Democrats stood strongly against
this and Republicans finally compromised for the 75%.
Hang on, here’s the math:
An individual (like Bruce Rauner) or corporation can give up
to $1 million from state taxes each year.
The total amount the State of Illinois can take from this
arrangement for the whole state stops at $75 million. The bill will be reviewed in 5 years, as that
is its sunset moment.
Because that $75 million represents ¾ of the tax liability,
the private schools can receive $100 million in “vouchers” specific to their
schools/students. This is money that
will not reach the state coffers for services like public education, health
care and safety. Because it does not come "directly" from the public coffers, and it instead diverts money on its way to the general revenue, tax credits do not fall into the federal Blaine Amendment rule preventing public funds for private schooling.
Recipients of such scholarships awards can come from
households which earn 300% of the federal poverty level ($24,600) OR $73,800. Once a student enters the program, the
threshold is raised to 400% - or, $98,000.
This is not the “lower class
families in Illinois.
If we are considering a “voucher system” to assist the
lowest income students to enroll in a suitable educational system, we are
looking at a price of (on average) $13,000 per voucher. This includes the price of tuition, books,
fees, transportation, etc. This will
cover less than 6000 students.
How are the EdChoice and other Voucher Proponents
Reacting?
Lukewarm but hopeful.
EDChoice leader Jason Bedrick felt that this sudden change in the hearts
and political position of Democrats represented the great strength of Governor
Rauner in drawing the line in the sand to refuse cooperation with their budget demands over the last few years. The Illinois Policy Institute agreed.
Bedrick also described the most any student might receive at $13,000;
but, he also suggested strongly that students would probably number somewhere
between 5000 to 20,000 students. That
range is between $15,000 and $3750.
Because no state in their memory has every reduced or
dropped such programs, Bedrick looks forward to a probable increase in the program
in the State of Illinois. In five years, he foresees $75 Million becoming $150M, $250M, and
onward.
On the other hand…Strings Attached
Part of the bargain struck between Democrats and Republicans
in the arrangement for a “tax-credit voucher system,” was to force those private schools
who accept such funding to administer annual state tests to those students who
are participating in their credit programs. In
the past, this contingency has caused nearly 50% of private schools to retreat
from accepting such students on the national level.
As Ernesto has always made clear to me. “Our private schools are not like yours at all. We are better to begin with and demand more, so why should we submit to your measurements?”
Some accountability?
When arguing against any accountability, leaders in the “voucher/choice” present slippery opposition. EdChoice leader Bedrick contends, “Why should we have to follow requirements. If parents want something different, it doesn’t’ make sense to use the same type of test as public schools…” In fact, according to Pew Reports, when a state asks for a standardized test requirement on the state level, private schools opt out at nearly 50%. Most of them, like leader Jeff Murray of School Choice Ohio state: ‘There’s better ways to track accountability,” another common position from Private School leaders.
Pew and ALCU express positions that most money in tax-credit programs goes instead to those who are already well off. ALCU describes most who access these scholarships" as financing extra fees and activities costs. There's also the more duplicitous argument by such proponents as well: like the discomfort expressed by Principal Tom Otten of Elder High
School in Cincinnati, Ohio. “Students
(who come to us) from academically deficient schools will struggle worse than
ordinary students.”
The state of Illinois has also thrown another “poison pill”
at those who would have us hit-and-run public educational schools. The amounts of money given to those seeking
vouchers in Illinois will also be determined by how low the family resides on the
poverty level. If your family is at 185%
of the federal poverty level ($45,110), you can receive the full STC amount
($13,000).
From there, the available scholarship money reduces to 75% for those with income up to
$61,500. And $51% for any family over
that $61,500.
Another serious string attached is the requirement that the
State of Illinois, in conjunction with these private schools that plan to agree
to the terms of the law, will keep records and data of how students perform on
state tests, what money has been spent on those who have participated, and
expenses for each student.
If past is prologue, this will give many private schools,
academies and parochial systems serious pause.
And in five years,
Representative Justin Slaughter will have another chance to look at this bill
and whether or not to suspend the continued undermining of public education or play the
charade once again.
I plan on being around, Representative.
Sources:
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