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Tuition Tax Credits

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Update: On Feb. 17, SB151 was substituted with SB151 (2nd sub.): Students At Risk of Academic Failure Study. The new bill calls for a study of the issue during the interim session, essentially halting it for this session.

About the Proposal:

SB151: Student Opportunity Scholarships, sponsored by Sen. Howard Stephenson, would have let taxpayers claim an income tax credit for donations they make to “scholarship organizations” that provide scholarships for qualifying students to attend a private school.

To qualify to receive the scholarship, a student must be:

  • Low income – the bill defines this as a household annual income less than or equal to 100 percent of the income eligibility guideline for reduced price lunch; and
  • Poor performing – receive a score below expected reading level (grades 1-2) or below proficient on a test in language arts, math, science, OR writing (grades 3-11)

Once a student receives a scholarship for any year, the bill allows that student to continue to receive scholarships annually through the tax credit program.

The bill establishes the maximum amount of tax credits that may be awarded annually at $5 million for the first year, increasing by 20 percent in each subsequent year. The fiscal note will grow substantially over time. This money would be diverted directly from the Education Fund.

UEA’s Position:

  • In 2007, Utah’s citizens overwhelmingly rejected a school voucher bill. The citizens of Utah do not want their tax dollars going to support private schools. Public taxes belong to the public in their public schools.
  • A significant number of Utah students would qualify for the scholarship under the low-income threshold. According to USDA guidelines, the 100% reduced lunch level equates to an annual household income of $41,348 for a family of four.
  • The student receives $5,000 toward tuition (almost twice the WPU) and that amount will increase by the same percentage as any future increase to the WPU,
    so the scholarship amount will always outpace the WPU and the fiscal impact will increase over time.
  • Most private schools have admittance and retention criteria that would exclude students qualifying under this bill. The idea that these credits would create a market for new schools to serve these students is untested and unsound.
  • Many low income parents do not have the means to transport students to private schools outside of their neighborhoods and would be unable to provide the additional money to cover private school costs beyond the scholarship amounts.
  • Utah has extensive choice within its existing public education system. Students may choose to attend their neighborhood school, another school in their district, another school elsewhere in the state, a charter school, an online school or studies that include home school and/or concurrent enrollment in college studies.
  • Businesses and individuals can already contribute to school district foundations and partner with schools of their choice to assist struggling students.
  • Rural areas of the state have no private school options.
  • This bill does not require a private school to be accredited in order to be eligible to receive taxpayer dollars.
  • There are no sure data to support the notion that private schools perform any better than public schools. That is true in Utah as well as the nation.
  • The bill’s qualifying student criteria denies the reality of the pace of learning for individual children. Not all children come ready for school and it takes time to help all students in grades 1 and 2 learn to read proficiently. This is not a failure of public schools; this is a readiness issue that our public schools in Utah actually successfully overcome in almost all cases by the end of the third grade.
  • While we support efficiency in government, we do not support continued attempts to privatize institutions, like public schools, that provide equal opportunities for even the neediest individuals. Private businesses rightly focus on profits. They will NEVER offer the same equal opportunity public-sector services provide.
  • 93 percent of all Utah students attend public schools. We should not take money away from the majority of students to benefit private schools.

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