March 6, 2009
Indiana Senate passes Scholarship Tax Credit Bill
Editor’s note: The following is provided by Jeff Brantley, executive director of School Choice Indiana, Inc., a non-partisan, state-wide organization.
The Indiana State Senate Feb. 19 passed a bill to create a new scholarship tax credit program designed to help thousands of Indiana families choose the private or public school of their choice.
Senate Bill 528, authored by Senator Carlin Yoder (R-Mid-dlebury), would create the In-diana School Scholarship Tax Credit program for charitable contributions to qualified scho-larship granting organizations (SGOs). These SGO programs would provide scholarships to lower-income Hoosiers to at-tend participating schools of their choice. It would also provide scholarships for families that choose to transfer their child to another public school.
Thousands of lower-income Indiana families want and need new educational opportunities for their children. Looking to access the best education possible, they are unable to take advantage of successful private schools in their area because they cannot afford to pay the tuition. Scholarship programs exist, but they serve a relatively small number of families in limited areas of the state based on how much can be raised in private donations.
This new program would provide up to $5 million a year in state tax credits, which would leverage up to $10 million in private donations. This would fund more than 3,000 scholarships per year, providing a significant increase in options for parents and a means for private schools to serve an ever-growing demand from lower-income Hoosiers.
Under the program, scholarships would be funded entirely through private, charitable do-nations. SB 528 would provide an important incentive to en-courage these donations. Indi-vidual and corporation donors would be able to claim a 50 percent credit against their state tax liabilities for their contributions.
Senate Bill 528 passed the Indiana Senate with bipartisan support ona 35-15 margin. The bill now moves to the Indiana House of Representatives for consideration.
Tax credits
Tax credits, as opposed to vouchers, have become the do-minant policy proposal in states to provide school choices to lower-income families around the country.
Eleven states currently have scholarship tax credit programs in place. For instance, Pennsyl-vania’s program raises over $40 million a year and is providing scholarships to over 38,000 students to attend the school of their choice. Flor-ida’s program raised $88 million and provided nearly 20,000 scholarships (Flo-rida’s average scholarship is much higher than Pennsylva-nia). Last year, Florida’s program reached its state cap and it was increased, while Georgia created a new program.