Vouchers- Tax Credit and Deduction Programs

Education Program

Public Voucher, Tax Credit and Deduction Programs

Table of Contents

Cleveland, Ohio
Colorado
Florida
Maine and Vermont
Milwaukee, Wisconsin
Washington, D.C.
Tax Credit and Deduction Programs

Cleveland Scholarship and Tutoring Program

In 1995, Ohio lawmakers created the Pilot Scholarship and Tutoring Program in Cleveland. This program was established to provide the parents of students within the boundaries of Cleveland City School District the opportunity to apply for either a tutoring grant or a scholarship to attend private non-sectarian or religious schools. Scholarships may also be used to attend public schools in participating adjacent districts. Initially, students in grades K-3 were eligible. The Legislature and Governor have since approved annual appropriations to continue and expand the program by one grade per year through grade eight. Today, students in grades K through 10 may participate in this program.

Scholarships and tutoring grants are available only to students in families living 200 percent below the poverty level. In 2003, this was $36,800 for a family of four. In 2003, the per pupil amount increased from $2,250 to $2,700.

For more information on the CSTP please visit, ???

Colorado Opportunity Contract Pilot Program

In April 2003, Colorado became the first state to enact a state-wide program since the Zelman decision in June 2002. In the fall of 2003, a Colorado judge enjoined the implementation of the program based on state constitutional provisions, this decision is currently being appealed.

If implemented, vouchers would be available to students in grades K through 12 who qualify for free or reduced lunch, attended a public school in the previous year. The program would apply to any Colorado district with eight or more schools that rate poorly under the state accountability system. To date, eleven school districts fall under this criteria.

For more information on this program, visit the Colorado Department of Education Web site.

For recent developments in this voucher case, go to News.

Florida-A+ Opportunity Scholarship Program and McKay Scholarship for Students with Disabilities

In 1999, the state of Florida implemented the first state-wide voucher program entitled, the Opportunity Scholarship Program. This program provides vouchers to students who attend schools deemed failing according to a scale from A to F. If a school receives an F in two years out of a four year period, the student may be granted a voucher to attend a higher-scoring public school, private school, or a parochial school. In addition, schools that are top-performing or are improving receive additional state funding.

Florida also established in the John M. McKay Scholarships Program for Students with Disabilities. Under this program all students who attend Florida public schools can receive a voucher to attend a public or private school or their family's choice. The voucher amount is based on the amount of aid is determined by the child's disability. This ranges from $4,500 to $21,000. If this does not cover the amount of tuition, then families are permitted to make additional payments to the private school.

For more information on these programs visit, the Florida Department of Education Web site.

Maine and Vermont

Maine and Vermont also have long standing voucher programs. In Maine, if no public secondary school exists to serve the surrounding community's students, the state allows school districts to send its' students to private schools and pay their tuition. However, students are not allowed to attend parochial schools under this program

Vermont established a voucher program in 1869 that allows students who reside in towns without public schools to attend public or approved private secondary schools either within Vermont or outside of the state. The tuition is paid in full by the hometown school board if the student attends a public school, however, if the student opts to attend a private school then the school board only pays the amount equal to the average tuition charged by the state's high school districts. If the private school chargers more than this amount, the school district may pay the greater amount, but is not required to do so. If the school district does not pay the greater amount, then the parent must cover the difference.

Milwaukee Parental Choice Program

In 1989, Wisconsin lawmakers approved the Milwaukee Parental Choice Program. This program provides state funding for low-income students to attend private schools located in Milwaukee. However, when it was first implemented students could only attend nonsectarian private schools. The program was expanded in 1995 to include sectarian schools as well. However, the expansion of this program to include sectarian schools was widely opposed leading to legal challenges. In June, 1998, the Wisconsin Supreme Court found that the changes to the original legislation passed constitutional scrutiny.

Vouchers are available to students in grades K through 12 from Milwaukee families with incomes at or below 175 percent of the federal poverty level. In 2003-2004, this was $35,532 for a family of four. Other provisions include:

No more than 15 percent of MPS membership can attend private schools under the program. In 2002-2003, the limit was set at 14,900 students who could attend a Milwaukee choice program.
The amount of the voucher is the lesser of the following:
- the private school's operating and debt service cost per pupil related to educational programming or the amount paid per pupil in the previous school year plus the amount of the per pupil revenue limit increase provided to school districts in the current year. As of 2003, this amount was up to $5,882.

As of 2002-2003, 11,624 students and 103 private and parochial schools were participating in the program. However approximately 14,900 pupils were eligible in 2002-2003.

For more information on this voucher program, visit the Wisconsin Department of Public Instruction.

District of Columbia Choice Incentive Act of 2003

On January 22, 2004, President George W. Bush signed into law the first federally funded voucher program and the only voucher program to be administered by the United States Department of Education.

The District of Columbia Choice Incentive Act of 2004 will allow nearly 2,000 low-income families in the District to receive scholarships worth up to $7,500 to attend private and parochial schools beginning in the 2004-2005 school year.

The nearly $14 million initiative is part of Mayor Anthony Williams' three-sector education improvement initiative that also includes $13 million dollars for D.C. charter and traditional public schools.

Students in grades K through 12 are eligible for the vouchers if they qualify for the free and reduced lunch program and are living 185 percent below the poverty level. For a family of four in 2003-2004 this equates to $34,040. In addition, priority is given to students in schools that are labeled "in need of improvement" under No Child Left Behind.

For more information, visit www.DCscholarships.com

Tax Credit and Deduction Programs

Arizona

In 1997, the Arizona legislature established two nonrefundable tax credits, a private school tuition credit and credit for contributions or fees made to public schools.

The private school tuition credit provides taxpayers with a dollar-for-dollar tax credit up to $5000 for an individual and $625 for a married couple for contributions made by the taxpayer to school tuition organizations that grant scholarships for students to attend private schools. See A.R.S. 43-1089 for more information.

Taxpayers may also receive a credit up to $200 for an individual or $250 for a married couple as a reimbursement for any fees paid to the school for extracurricular. Such activities are school sponsored in nature that require the school to pay a fee in order to participate including fees for: band uniforms, equipment of uniforms for varsity athletics, science lab materials or in-state or out-of-state trips for purposes of a competitive event. See A.R.S. 43-1089.01 for more information.

Arizona's income tax credits were challenged and upheld in court in 1999. In Kotterman V. Killian, (1999), the Court held that the credit did not violate either the federal Establishment Clause or the state constitution's Blaine Amendment prohibiting appropriations to sectarian institutions.

Florida

In 2002, Florida policymakers enacted The Florida Corporate Income Tax Credit Scholarship Program. Under this program, businesses and corporations that make contributions to non-profit organizations that grant scholarships to low-income students are eligible for income tax credits. The law requires the scholarship organizations to use 100 percent of contributions made by corporations to cover tuition, textbook expenses or transportation for children who qualify for the federal free or reduced lunch program. The amount of the scholarship cannot exceed $3,500 for a student enrolling in an eligible nonpublic school and $500 for a scholarship awarded to a student enrolling in a public school outside of the student's residential district. Corporations may contribute up to 75 percent of the amount of their tax due. Contributions cannot contribute more than $5 million to any single scholarship fund. The total amount of tax credits cannot exceed $88 million per fiscal year. See Florida Statutes Title XIV, Chapter 220.187 for more information.

Illnois

In 1999, Illinois established program granting income tax credits not to exceed $500 for qualified education expenses. Parents are eligible for a tax credit for 25 percent of whatever they spent on their child's books, tuition and lab fees. To be eligible parents must spend at least $250. See Illinois Statute (Chapter 35, Article 2, Sec. 201(m)) for more information.

In Griffith v. Bower (2001) and Toney v. Bower (2001), two different panels of the Illinois court of appeals upheld the constitutionality of the Illinois state income tax credit for educational expenses.

Iowa

Starting in 1987, Iowa allowed a tax deduction of up to $1,000 spent on each dependent's elementary and secondary education expenses, including tuition and textbooks, however excluding the costs of religious materials and extracurricular activities. However, the tax deduction was eliminated, and revised the tax credit provision in 1998. Due to this revision, parents are only allowed to claim a tax credit of up to 25 percent of the first $1,000 for each dependent's acceptable education expenses, which now include public school extracurricular activities. Also, prior to the revisions families whose net income was more than $45,000 were ineligible to receive the deduction, however the revisions removed that $45,000 ceiling.

In 1992, the U.S. District Court ruled that the Iowa tax deduction and credit program does not violate the federal constitution's ban on government establishment of religion.

See Section I.C. 422.12 for more information,

Minnesota

Minnesota became the fist state in 1955 to enact legislation targeted at allowing parents to claim a tax deduction of up to $200 for tuition and other school expenses. The law has gone through several revisions, more recently, 1999. According to Minnesota law parents are allowed:

A tax credit equal to 75 percent of the amount paid for education-related expenses for a qualifying child in kindergarten through grade 12. Education-related expenses include fees, textbooks, transportation, tuition, tutoring and $200 for computer and associated software. It does not cover the cost of tuition. The credit is worth $1000 per student or $2,000 per family for families whose incomes fall under $33,500. The maximum credit is reduced by $1.00 for each $4.00 of the household income over $33,5000. No credit is available for families whose income is greater than $37,5000

A tax deduction is also available up to $1,625 for elementary school expenses and $2,500 for secondary school expenses. Parents who do not itemize deductions on their federal income tax forms are available for this deduction.

The Minnesota tax credit program was challenged and upheld in court in 1983. See Mueller v. Allen (1983) for more information.

Pennsylvania

The state of Pennsylvania established the Educational Improvement Tax Credits (EITC) in 2001. This law makes available, credits to corporations that donate money to educational improvement organizations or scholarship organizations. Pennsylvania's tax credit is available for 75 percent of a corporation's contribution up to $100,000 or 90 percent of their contribution, if they contribute for more than one year. Educational improvement organizations thus in turn must distribute at least 80 percent of their annual receipts as grants to the public schools for innovate educational programs. Scholarship organizations must contribute at least 80 percent of their annual receipts for distribution in the form of scholarships to public and non-public school children to attend a school of their choice.

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