The Arkansas House Revenue and Taxation Committee late Tuesday afternoon advanced legislation that would pay the private school tuition and fees for roughly 250 students and award up to $2 million a year in state income tax credits to the contributors for the scholarships.
In an 11-8 roll-call vote, the 20-member committee recommended House approval of Senate Bill 680 by Sen. Jonathan Dismang, R-Searcy, over the opposition of officials from the Arkansas Association of Educational Administrators, Arkansas Education Committee and Arkansas Rural Education Association.
The action comes about a month after a bill that would have funded private school tuition for qualifying students and awarded up to $4 million in state income tax credits to scholarship contributors failed to clear the House. The 44-52 vote on House Bill 1371 by Rep. Ken Bragg, R-Sheridan, fell seven short of the 51 required for approval in the 100-member House.
Bragg, the House sponsor for SB680, told the tax committee that "lower-income families don't have the ability to take advantage of the options most of us here at this table have."
"This bill gives a small number of children that opportunity to seek an educational experience that will benefit them," he said. "This bill is just like any other tax credit bill. It has no affect on public education."
But a committee member, Rep. Jim Wooten, R-Beebe, said the measure is bad legislation that will lead to the demise of public education.
"I am a firm supporter of public education," he said.
Wooten said he is standing up for the students in the Beebe, White County Central, Bald Knob and Riverview school districts.
Education Secretary Johnny Key told the House tax committee, "We find [the bill] is a reasonable and responsible approach to providing additional education choices for low-income families in Arkansas.
"With the aggregate tax credit being limited to $2 million annually, the bill does not create an impediment to our constitutional duty as a state to fund public schools," he said.
The bill is consistent with the state's long-standing approach of providing public funded vouchers for children attending private pre-kindergarten centers and publicly funded scholarships for students attending private colleges and universities, Key said.
But Carol Fleming, president of the Arkansas Education Association, testified that "when we divert public tax dollars to private schools, we lose our ability to ensure that those students are receiving the support and the educational opportunities that they deserve.
"We cannot afford to fund two different education systems, one private and one public, on the taxpayers' dime," she said.
"Additionally, we cannot have law that is brought to us because of someone's backstory and personal story that needs to be put into place," Fleming said.
In response, Dismang said, "If we are not here doing things based on our personal experiences that we think has a better impact for the rest of the state, then we shouldn't be here."
Referring to testimony against the bill from Rep. David Tollett, R-Lexa, Dismang said, "I think you just tried to explain to everyone on this committee that you know better, you know better about how to parent because you are a school administrator. That's not the case."
SB680 would create the Philanthropic Investment in Arkansas Kids Program Act, and would apply to tax years beginning on or after Jan. 1, 2022. The state Department of Finance and Administration projects that the bill would reduce state general revenue by $2 million in fiscal 2023, starting July 1, 2022.
It would provide educational scholarship grants for eligible students to attend private schools.
Students with a household income that's up to 200% of the federal poverty level would be eligible for the scholarships under the bill. The scholarships would be equal to up to 80% of the state foundation funding for each student applying from kindergarten through eighth grade and up to 90% of the state foundation funding for students in ninth grade through 12th grade.
SB680 would provide an income tax credit to individuals or businesses equal to 100% of their contributions to scholarship organizations that provide the grants, according to the finance department. The credit may not exceed an eligible taxpayer's income tax due, and unused income tax credits may be carried forward for three years. The finance department's Office of Tax Credits and Special Refunds would issue tax credits on a first-come, first-served basis up to $2 million per calendar year.
Asked how potential donors would know when the state hit the $2 million cap, finance department spokesman Scott Hardin said this week in a written statement, "Under SB680, a requirement is in place in which DFA must notify the Division of Secondary Education when the annual cap of $2 million is met.
"Additionally, the remaining tax credits would be publicly-available information," he said in the written statement. "DFA could ensure this remains available to the public on the agency's website and via periodic media outreach."
Since the tax credit is equal to 100% of a contribution, the finance department said it expects the $2 million cap to be reached each year. One large corporation or an individual taxpayer could potentially receive the full amount of the annual credit limit by making a $2 million contribution, the department said.
In addition to establishing the standards required for the scholarship-granting organizations and tracking their grants, the state Department of Education's Division of Elementary and Secondary Education would hire an independent research organization to review information submitted by the private schools on the academic achievement of students attending those schools under the program created by the bill, the finance department said.