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State-Funded Voucher Programs and Tax Benefits
This section includes information about state tax deductions and
credits for educational expenses and information about state-funded voucher
The Arizona Private Scholarship Tax Credit (A.R.S. Section 43-1089, 1997) provides for an Arizona state income tax credit of $500 per individual and $1,000 per couple (married filing joint) for contributions to a School Tuition Organization (STO). School tuition programs must award at least 90% of their income to scholarships for low-income students to attend private schools. Eligible students must be eligible for the federal free and reduced price school lunch program (less than 185% of the federal poverty line). Scholarships amounts are capped at $4,200 (K-8) and $5,500 (9-12) as of 2006, increasing by $100 per year thereafter. To comply with IRS requirements parents may not designate or recommend their own child as the recipient of the funds. Parents may also not enter into sponsorship swaps. Arizona also has a corporate tax credit (A.R.S. 43-1183 or SB 1499) for contributions to STOs. The tax credits are awarded on a first-come, first-served basis, with a $5 million annual cap per corporation and a $10 million annual aggregate cap. The constitutionality of the program was upheld in 1999 (Kotterman v. Killian).
Step Up for Students is a non-profit organization that administers the Florida Corporate Income Tax Credit Scholarship Program (Fla. Stat. 220.187, 2001). Corporations receive a dollar-for-dollar tax credit for contributions to non-profit scholarship granting organizations. Step Up For Students provides scholarships of about $4,000 to low-income students to help them enroll in any of about 1,450 participating private K-12 schools in the state. (Families can alternately choose to receive $500 to cover the cost of transportation to an out-of-district public school.) Students must be eligible for the federal free or reduced-price school lunch program (family income less than 185% of the poverty line) to qualify for scholarships. There is no income requirement for a child in foster care or a child who is homeless. Children entering kindergarten must have reached age 5 by September 1. Students participating in the program in grades 6-12 must have attended a Florida public school for the entire prior school year. To date, corporations have contributed more than 265,000 scholarships worth more than $1 billion. Scholarships are awarded on a first-come, first-served basis. The $5 million cap on the total contributions to each scholarship granting organization was rescinded in 2006. Corporations may contribute up to 75% of their income tax liability. The scholarships are awarded through three Scholarship Funding Organizations, Children First Florida, Florida Pride and the Carrie Meek Foundation. See above for more information about these SFOs. Additional information may be obtained by calling 1-877-735-7837 or sending email to email@example.com.
Florida also provides the A+ Opportunity Scholarship Program (A+OSP) to students attending "failing" public schools (Fla. Stat. 1002.39). This scholarship provides up to $3,500 and allows children to enroll in private schools or a better public school. This program has been challenged in the courts on constitutionality grounds (use of public funds to support a church or sectarian institution) and was ruled unconstitutional by the Florida Supreme Court in Bush v. Holmes (2006).
Florida also offers the McKay Scholarships for Students with Disabilities Program (see also McKay Coalition) provides scholarships of up to $6,500 to special needs children who are not making adequate progress.
The Georgia Special Needs Scholarship enables Georgia special needs children who were served under an Individualized Education Program (IEP) in a Georgia public school during the prior school year to attend participating private K-12 schools in Georgia. Eligible students may also attend one of Georgia's three public schools for the deaf and blind or a different public school in the student's school district or a neighboring school district that has space and can provide the services identified in the IEP.
Georgia also offers a Corporate and Individual Scholarship Tax Credit program (House Bill 1133) that provides up to $50 million in tax credits for donations to Student Scholarship Organizations (SSO). Corporations get tax credits of up to 75% of their tax liability. Individuals get tax credits of $1,000 per individual or $2,500 per married couple. The SSOs must spend at least 90% of the donations on scholarships to enable low income students to attend private K-12 schools. See the Center for Educated Georgia for details.
Illinois provides a 25% income tax credit for up to $500 spent on qualified education expenses, such as tuition, books and fees (Illinois Statute Chapter 35, Article 2, Sec. 201(m), 1999). The constitutionality of the program was upheld in 2001 (Griffith v. Bower and Toney v. Bower).
Iowa provides a 25% income tax credit for the first $1,000 per dependent education expenses (Iowa Code 422.12, 1987). This tax credit was found to be constitutional by the US District Court in 1992.
The Iowa Individual School Tuition Organization Tax Credit (see Iowa Alliance for Choice in Education) provides Iowa taxpayers can receive a state income tax credit equal to 65% of their contributions to School Tuition Organizations (STO), with an aggregate cap of $7.5 million per year (SF 2409, 6/2/2006). STOs must use at least 90% of the donations their receive to provide scholarships to enable low income students to attend private schools. Eligible students must have family income less than 300% of the federal poverty line. More than 7,500 students receive scholarships, with an average scholarship of more than $500.
The Louisiana Student Scholarships for Educational Excellence Program provides scholarships for K-3 students living within Orleans Parish to attend private schools. Eligible students must have family income less than 250% of the poverty line. Scholarship amounts are up to $6,300.
Maine provides for payment of private school tuition for students in rural school districts that do not provide a public school. The tuition scholarships are capped at the average per-student cost of Maine's public high schools. The funds may not be used at religious or sectarian schools.
Minnesota provides two tax credits for qualifying K-12 education expenses (Minn. Stat 290.0674; deduction in 1955 and credit in 1997). The K-12 Education Credit is more generous than the K-12 Education Subtraction (deduction), but requires that the family meet income criteria (family income less than $37,500 for one or two qualifying children; add $2,000 for each additional child). The maximum credit is $1,000 per qualifying child and may be reduced if the family income exceeds $33,500. (The credit is reduced by $1 for one qualifying child and $2 for two or more qualifying children for each $4 in family income exceeding $33,500. The $2,000 per family cap was repealed in 2005.) The credit is limited to 75% of the qualifying education expenses. The subtraction is limited to families with at least one child attending a school in the five-state area (Minnesota, Iowa, North Dakota, South Dakota or Wisconsin). The subtraction is limited to $1,625 per qualifying child in grades K-6 and $2,500 per child in grades 7-12. The constitutionality of the program was upheld in 1983 (Mueller v. Allen).
Ohio's Cleveland Scholarship and Tutoring Program (CSTP) provides funds to low-income students from the Cleveland Municipal School District to attend private schools in grades K-8 (Ohio Rev. Stat. 3313.97.4 - 3313.99, 1995). Eligible students should have family income less than 200% of the federal poverty line. The amount of the award is 90% of the school's tuition up to $3,000 (i.e., a maximum award of $2,700). A lower percentage (75%) may be used depending on family income. The funds may not be used at religious or sectarian schools. More than 6,000 students and 45 private schools participate. The constitutionality of the program was upheld by the US Supreme Court on June 27, 2002 (Zelman v. Simmons-Harris, 536 US 639 (2002)).
Ohio's EdChoice Scholarship Program provides scholarships to up to 14,000 students attending under-performing public schools (HB 79 and HB 530, 2006; Ohio Rev. Code Ann. 3310.02). These vouchers enable the students to enroll at a participating private school. The vouchers are worth up to $4,375 (K-8) and $5,150 (9-12) toward the private school's tuition (FY2008 figures). If more than 14,000 students apply for the program, priority will be given to continuing students and then to students from families with incomes at or below 200% of the poverty line. (See also School Choice Ohio.)
Ohio's Autism Scholarship Program provides scholarships to autistic children to attend special education programs to obtain the services specified by the student's Individualized Education Program (IEP). The special education programs may be provided by public schools outside the student's school district or by private schools. More than 1,000 students and 180 schools participate. Scholarships are capped at $20,000.
The Pennsylvania Educational Improvement Tax Credits (EITC) (House Bill 996 enacted May 7, 2001; 24 P.S. 20-2002-B) provides corporate income tax credits for contributions to scholarship organizations and for contributions to educational improvement organizations in the public schools. The tax credits are limited to 75% of a contribution of up to $300,000 in a single year, increasing to 90% if the corporation commits to providing the same amount for two consecutive years. There is an annual first-come first-served cap of $67 million, split 2/3 to the scholarship program and 1/3 to the educational improvement program. The average scholarship is about $1,000.
The Rhode Island Corporate Scholarship Tax Credit (HB 7120, 2006) provides corporate income tax credits for contributions to Scholarship Granting Organizations (SGO). The tax credits are limited to 75% of a contribution of up to $100,000 in a single year, increasing to 90% if the corporation commits to providing the same amount for two consecutive years. (The corporation retains a credit at the 90% rate if the second year's contributions are at least 80% of the first year's contributions. Otherwise the rate drops back to 75%.) There is an annual first-come first-served cap of $1 million for all tax credits. SGOs must use at least 90% of the donations for scholarships. Eligible students must have annual household income less than or equal to 250% of the federal poverty guidelines. The average scholarship is about $3,750. (See also Rhode Island Scholarship Alliance.)
Utah: See Carson Smith Special Needs Scholarship.
Utah's Parent Choice in Education Act provides scholarships to enable low-income students to attend private schools (HB 148 and HB 174, 2007). To receive the full $3,000 scholarship, eligible students will have family income less than or equal to 100% of the income eligibility guideline. Scholarship amounts are reduced by $250 for each 25% of income above the income guideline, up to 200% of the income guideline. Student with family income of 200% to 250% of the income guideline are eligible for a $1,000 scholarship. Families with income over 250% of the income guideline are eligible for a $500 scholarship. The income eligibility guideline is the maximum income eligible for the federal free and reduced price school lunch program (185% of the federal poverty line). Scholarship amounts are reduced 45% for kindergarten. There is an anti-double-dip provision with regard to the Carson Smith Special Needs Scholarship.
Vermont provides for payment of private school tuition for students in rural school districts that do not provide a public school. The tuition scholarships are capped at the average per-student cost of Vermont's public high schools. The funds may not be used at religious or sectarian schools.
Washington DC provides low-income District of Columbia children with scholarships of up to $7,500 to attend private schools through the Opportunity Scholarship Program. This program was funded by the D.C. School Choice Incentive Act of 2003 and is administered by the US Department of Education. The program is open to children in K-12 who qualify for the federal free and reduced-cost lunch program (185% of the federal poverty level).
Wisconsin's Milwaukee Parental Choice Program (MPCP) (see also School Choice Wisconsin) provides low-income families with vouchers to enroll their children in private schools (Wis. Stat. 119.23, 1989; SB 618, 2006). Eligible students must reside in Milwaukee and must have family income below 175% of the federal poverty level (new students) or 220% of the federal poverty level (continuing students). Participating schools must enroll all eligible students or use random selection when applicants exceed available space. The Wisconsin Supreme Court upheld the constitutionality of the program on June 10, 1998, despite the inclusion of religious schools, finding in favor of the program because it has a secular purpose and the primary effect is not one of advancing religion. The US Supreme Court declined to hear the appeal of the case in November 1998. More than 18,500 students and 120 schools participate in this program, with an average scholarship of about $6,500. Enrollment is capped at 22,500.
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