November 27, 2009
Tuition assistance fund moves forward
By PAUL R. LEINGANG (Message editor)
It’s a go for the SGO.
A new Indiana law paves the way for corporations and other donors to make major gifts to provide scholarships for students at accredited non-public schools.
Area planners met Oct. 15 and decided to set up a Scholarship Granting Organization — an SGO for short — in accord with administrative rules of the Indiana Department of Education and under the guidelines of the Internal Revenue Service.
Linda Cox, executive director of the Catholic Foundation of Southwestern Indiana, Inc., has taken on the task of organizing the effort. She attended a meeting in Indianapolis Nov. 17 with other interested persons from throughout Indiana. The meeting was organized by School Choice Indiana.
Cox plans to hold an area meeting after Thanksgiving, for representatives of accredited non-public schools — including Evansville Day School, Evansville Lutheran and Evansville Christian schools.
First come, first served
A contributor to an SGO will receive a 50 percent Indiana state tax credit. The state will provide up to $2.5 million in tax credits for the contributions of $5 million, which would be awarded on a first-come first-served basis. The $5 million contributed would be available to eligible students who could attend any accredited non-public school in the geographical area covered by the SGO.
There is no limit as to how much a corporation could contribute to an SGO, but once the state tax credits of $2.5 million are used up, no further credits will be available until the next fiscal year.
Cox said she learned at the Nov. 17 meeting, however, that subregions could be set up within the territory of an SGO. For example, the name of the proposed organization could be the “Tuition Assistance Fund of Southwestern Indiana,” and it could cover the 12 counties that now comprise the Diocese of Evansville.
Within that territory, though, an SGO cannot be organized to serve one particular school or the schools of one particular faith tradition, but must serve students and provide scholarships to any eligible school they choose.
Setting up sub-regions would mean that a donor could be assured that scholarships would be granted in a targeted area — such as Dubois County or Knox County, for example.
The state rules allow each SGO to establish its own eligibility requirements, as long as they do not exceed the state standards. For example, under state rules, a student’s family must have an income at or below 200 percent of the federal free or reduced lunch income level. For southwestern Indiana, that would mean a family of four could currently have an income of $81,566 and be eligible for a scholarship grant.
Under this example, however, an SGO board could decide to award assistance on stricter guidelines, but not more generous.
Scholarship amounts are set by the SGO, but cannot be for more than the tuition and fees of the school the student will attend.
Eligible students may not already be enrolled in a non-public school; only new students are eligible, including those entering kindergarten and those who were registered at a public school in the previous year. No variation from that is permitted under the state rules.
The next steps for the southwestern Indiana SGO include establishment of a 501 (c)(3) tax exempt organization with the IRS, selection of a board of directors and staff, establishment of eligibility guidelines and procedures and the location of an office. An SGO may use up to 10 percent of contributions for administrative purposes.
Contributions may be accepted as of Jan. 1, with grants awarded as soon as March or April for the adademic year starting in the Fall of 2010.
Starting July 1, 2010, another $2.5 million in tax credits will be available, to be applied for scholarship grants in the 2011-2012 academic year.