This has been in the the news for a few weeks now.

 

House Bill 162 / Senate Bill 102

 

AN ACT relating to opportunities in education.

 

Create a new section of KRS Chapter 141 to establish a separate income tax credit for tuition assistance based on contributions made to a qualified scholarship-granting organization; create a new section of KRS Chapter 141 to provide goals and reporting of metrics related to those goals; amend KRS 141.0205 to establish the order in which the credits may be taken; create a new section of KRS 136.500 to 136.575 to allow financial institutions to take the tax credit against the tax imposed by KRS 136.505; create a new section of KRS 136.500 to 136.575 to order all tax credits; create a new section of KRS Chapter 156 to require the Kentucky Department of Education to publish a list of certified nonpublic schools and nonpublic schools seeking certification; require the Department of Revenue to report information to the Legislative Research Commission; amend KRS 131.190, 131.135, 131.618, 131.650, 131.990, 141.389, and 131.020 to conform

 

 

Bill Text

 

 

Fiscal Study

 

PROVISIONS/MECHANICS: If enacted, the bill would create a nonrefundable tax credit for taxable years beginning January 1, 2018, but before January 1, 2024, against the individual income tax, corporation income tax, limited liability income tax, and the bank franchise tax for contributions made to qualified nonprofit scholarship granting organizations.

 

The credit per taxpayer per taxable year is equal to the lesser of: 90% of the contributions made during the taxable year or $1,000,000. The credit may be carried forward for up to five succeeding taxable years until the credit has been utilized. Only contributions to qualified scholarship-granting organizations on the list maintained by the Department of Revenue for each calendar year shall be recognized for tax credits under this proposal. Prior to making a contribution to a qualified scholarship-granting organization, the taxpayer or qualified scholarship-granting organization acting on behalf of the taxpayer is required to apply to the Department of Revenue for preapproval. The department is required to notify the taxpayer within 30 days of its approval or denial.

 

The aggregate value of the tax credit awarded in fiscal year 2018-2019 shall not exceed $25,000,000. The aggregate value of the tax credit in subsequent fiscal years is increased by 25% if 90% of the annual credit cap is reached in the immediately preceding fiscal year.

 

The Department of Revenue is required to create forms, educational materials, publish a list of qualified scholarship-granting organizations and a list of organizations that have been approved to evaluate the financial aid needs of students seeking scholarships based upon annual household income, and a create a website to track pending tax credits, tax credits allocated to date and the amount of credit available to taxpayers making contributions.

 

A nonpublic school that desires to become a participant in a scholarship program provided by a scholarship-granting organization is required to register with the Department of Education and notify the department of its intent to become a certified nonpublic school. The Department of Education is required to maintain a list of certified nonpublic schools and those seeking certification.

 

FISCAL EXPLANATION: Based upon the preliminary work that must be done to implement this tax credit program and the preapproval required prior to making a contribution subject to the tax credit, it is estimated that a negative impact to the General Fund will not occur until FY 2018-2019 at which time the estimated negative impact to the General Fund will be ($25,000,000). Assuming that the credit cap trigger is utilized in each subsequent fiscal year and that no action is taken by the General Assembly to extend the credits, the estimated negative impact to the General Fund will be as follows:

 

FY 2018-2019 – ($25 million)

FY 2019-2020 – ($31.25 million)

FY 2020-2021 – ($48.83 million)

FY 2021-2022 – ($61 million)

FY 2022-2023 – ($76.25 million)

FY 2023-2024 – ($95.3 million)

 

The negative impacts listed above are the maximum reductions to the General Fund. There may be other impacts which would produce savings, thereby reducing the maximum amount each fiscal year. Those savings are indeterminable.

A nonpublic school that desires to become a participant in a scholarship program provided by a scholarship-granting organization is required to register with the Department of Education and notify the department of its intent to become a certified nonpublic school. The Department of Education is required to maintain a list of certified nonpublic schools and those seeking certification.

 

This paragraph is interesting to me. By becoming a certified, nonpublic school, are they held to the same standards, tests and laws as public schools?

This paragraph is interesting to me. By becoming a certified, nonpublic school, are they held to the same standards, tests and laws as public schools?

 

That's a very very good question.

 

Also relevant to that, Representative Phil Moffett (R- Louisville) has introduced an additional bill proposing charter schools in Kentucky. Kentucky is one of seven states - including Montana, Nebraska, North Dakota, South Dakota, Vermont, and West Virginia - that does not currently have charter schools.

 

HB 103 / Bill Text