HB 2458 -- EDUCATIONAL TAX CREDITS

SPONSOR:  Jones (89)

COMMITTEE ACTION:  Voted "do pass" by the Special Committee on
Student Achievement by a vote of 4 to 2.

This bill establishes the Children's Education Freedom Act which
authorizes a 50% tax credit beginning January 1, 2008, for
taxpayers who donate to a scholarship-granting organization if
the donations are not claimed on the taxpayer's federal income
tax return.  The credit is nonrefundable but may be carried
forward for three years or transferred.  The cumulative amount of
tax credits cannot exceed $40 million annually, adjusted for
inflation based on the federal Consumer Price Index.
Scholarships must average $5,000, adjusted for inflation based on
the index.  The Director of the Department of Economic
Development or a designated oversight organization must establish
a procedure by which the cumulative amount of tax credits is
apportioned among all nonprofit educational assistance
organizations.

Eligibility standards for students receiving scholarships include
residence in a provisionally accredited, unaccredited, or interim
accredited school district; attendance at a public school for the
semester before a scholarship is granted or starting school in
the state for the first time; and a family income of 185% of the
level which qualifies the student for the federal reduced-price
school lunch program.

Scholarships may be given to a disabled child three years of age
or older if the child's parents have nonreimbursed medical
expenses in excess of 7.5% of their federal adjusted gross income
or to a child identified by a principal and approved by his or
her superintendent on the basis of disciplinary or academic
criteria specified in the bill.  Public schools are given the
right of first acceptance of scholarship recipients, and
scholarships may be used at public schools for certain purposes
which include tutoring, general educational development, and
transportation.  Public school districts may opt into the
scholarship program.  Public schools whose students transfer
under the program cannot continue to receive state aid money for
those students beyond the immediately preceding year.

Scholarship-granting organizations must meet requirements for
fiscal soundness, percentage of revenues devoted to educational
scholarships, and public reporting.  Private schools qualify to
accept scholarship students by meeting certain requirements
including employee background checks and student assessments.
The bill specifies how scholarship checks will be distributed.

The provisions of the bill will expire six years from the
effective date, but a child who is receiving a scholarship may
continue in the program until completion of the twelfth grade.

The bill contains an emergency clause.

FISCAL NOTE:  Estimated Effect on General Revenue Fund of a cost
of $80,163 to $40,000,000 in FY 2009, a cost of $75,463 to
$41,200,000 in FY 2010, and a cost of $77,728 to an income of
$2,400,000 in FY 2011.  No impact on Other State Funds in FY
2009, FY 2010, and FY 2011.

PROPONENTS:  Supporters say that 13 states have some form of
school choice.  Many studies show the positive impact of school
choice.  The social costs of failing to address poorly performing
public schools are large.

Testifying for the bill were Representatives Jones (89) and
Cunningham (86); and Americans for Prosperity and Foundation.

OPPONENTS:  Those who oppose the bill say the bill doesn't
address how to help all students and the focus seems to be on the
tax credits rather than the children.

Testifying against the bill were Missouri State Teachers
Association; Missouri School Boards Association; Missouri
National Education Association; Penney Rector, School
Administrators Coalition; and Cooperating School Districts of
Greater St. Louis.

OTHERS:  Others testifying on the bill say a similar bill saved
Pennsylvania about $140 million.  While constitutionality can be
debated, the tax credit/private organization structure should not
cause a constitutional problem.

Testifying on the bill were Justin Hauke; and Dave Roland.

Missouri House of Representatives
94th General Assembly, 2nd Regular Session
Last Updated October 15, 2008 at 3:12 pm