LB 295 would hurt public schools
As published in the Lincoln Journal Star.
While the faculty, leadership and partners of St. Mary’s Catholic School in Lincoln should be commended for innovative ways of educating their diverse students (“Real school choice best for all,” Sept. 25), the funding model and rationale that Bishop James Conley promotes in the editorial are problematic for several reasons.
Particularly concerning is a lack of focus on the side effects of the proposed LB 295 for public schools, which, as Bishop Conley writes, “would authorize tax credits for donations to nonprofits that have the sole focus of providing private-school scholarships for low-income students.”
Embedded in LB 295 are not just tax benefits for wealthy donors, including corporations, but the opportunity for these donors to turn a profit from taxpayer dollars. Nebraskans need to question not only the means to the end but who actually benefits under this bill.
In this proposed law, donors who give to private school scholarship funds are able to redirect their state tax payments toward private schools through a dollar-for-dollar state tax reduction, called a credit. Some high-income taxpayers subject to the federal Alternative Minimum Tax can actually turn a profit under this scheme, according to a report released earlier this year. On top of the dollar-for-dollar state tax reduction, they can also claim a charitable giving deduction on their federal tax return.
In other words, for the wealthiest Nebraskans, the value of their tax benefits received at both the state and federal levels could actually exceed the amount of their donation. Already, lawmakers in several states, Georgia and South Carolina among them, have made it possible for donors to reap rewards by establishing similar laws. Investment companies and some private schools in those states advertise the tax credits on television and online as a moneymaking opportunity. Other kinds of charitable giving don’t receive this sort of preferential treatment. Donations to private school scholarship funds are already tax-deductible in Nebraska today, as are donations to other 501(c)3 charities. Creating a separate tax credit for these funds, especially given the state’s current budget challenges, makes no sense. St. Mary’s, like parochial schools throughout the state, is clearly working hard to staff and fund its mission, which includes serving disadvantaged students whose families select this option. Private and parochial schools do wonderful work in communities across Nebraska, and often enjoy excellent relationships with their local public schools -- except maybe on the football field or basketball court. But these private options should continue to be funded privately.
Parochial and private schools in Nebraska have thrived for decades without taxpayer funding. This separation was clear from the beginning. Taxpayers know they make essential contributions to our public schools—and not additional funding streams for other kinds of educational institutions.
The state of Nebraska currently faces a significant budget struggle. Revenues have been below forecasted levels for years, and our public schools are not being fully funded. According to the state’s own funding formula under the Tax Equity and Educational Opportunities Support Act (TEEOSA), the Legislature has only funded public schools adequately three times in the last 16 years.
Here in Nebraska, most public services, including public schools, are feeling the squeeze. With LB 295, they stand to lose even more.
With our current economic challenges in mind, Bishop Conley’s justification that these tax credits “would take no money from the public-school funding model” does not hold up. Simply put, tax credits take revenue that could be used for public education, at a time when public education is not adequately funded, and puts it toward private schools. When the state is facing historic budget shortfalls and making difficult cuts to vital services, we need to be wary of plans that put personal gain ahead of community aims represented by our excellent public schools.