‘Opportunity Scholarship’ Bill Advances to Provide Tax Credits for Private School Scholarships

Foes question whether LB 753 violates the state constitution, which prohibits state aid to religious institutions

State Sen. Lou Ann Linehan of Elkhorn. (Zach Wendling/Nebraska News Service)

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LINCOLN — Nebraska would no longer be the only state in the union that doesn’t provide some sort of “school choice” under a bill sent to final-round approval Thursday.

Legislative Bill 753 would permit state tax credits for donations to organizations that provide scholarships to kids to attend private and parochial schools. An estimated 5,000 students could switch to private schools, a legislative fiscal note says, and some senators predict it would lead to opening of more private and religious schools.

Initially, $25 million a year would be allowed for the credits, but the credits could eventually rise to $100 million a year. That would be more than the state spends a year on the State Patrol ($80 million a year) but about 10% of what Nebraska spends each year on state aid to K-12 public schools.

Advocates: Lets students have a choice

Advocates portrayed the bill as a way to allow students, particularly low-income kids, the opportunity to attend a private school if they aren’t thriving in a public institution.

They cited three inner-city Catholic schools in Omaha where almost all students qualify for free school lunches, where very few are Catholic and where 94% graduate from high school on time, compared to 78% in the Omaha Public Schools.

“This bill allows children to find the best school that fits their needs, even if they can’t afford tuition,” said State Sen. Lou Ann Linehan of Elkhorn, who has worked seven years to pass a school choice measure.

LB 753, which has the support of Gov. Jim Pillen, advanced from second-round debate on a 33-11 vote.

A legal ‘workaround’

Four hours of debate on the bill focused mainly on its fiscal impact on public school funding and whether the measure was a “workaround” to provide public funds to private schools.

Two attorneys opposed to the bill, Sens. George Dungan of Lincoln and John Cavanaugh of Omaha, questioned whether LB 753 violated a state constitutional prohibition on providing public aid to religious institutions.

Dungan cited a Nebraska Law Review article in February by Anthony Schutz of the University of Nebraska College of Law that questioned whether the bill was constitutional.

It’s not “cut and dried,” the senator said, adding that LB 753 appeared to be a “workaround” to make it constitutional.

But Linehan disputed that, citing Nebraska Supreme Court rulings that stated that it was OK to provide public funds to private schools.

Not an ‘appropriation’

She said LB 753 would not be an “appropriation” of state funds because it’s a tax credit.

“It’s not an appropriation if we never collect the money,” Linehan said.

The tax credits, under the bill, would not go directly to schools but to “scholarship granting organizations,” which would provide scholarships, estimated to average $5,000 a year, to students.

Critics said that providing tax credits to private schools would reduce funds for public schools and might stress the state budget eventually.

A new fiscal note on the bill, prepared earlier this month, stated that if 5,000 students, as projected, switch from public to private schools in the state’s 11 largest school districts, it would reduce state aid to those schools by nearly $12 million due to the loss of students. But if the switches happened in a broader group of districts, there would be a mix of school aid winners and losers, with a projected overall hike in school aid of $92,000.

North Dakota bill awaits signature

Nebraska and North Dakota have been the only states that didn’t provide some government funds for private/parochial education, but on Thursday, the North Dakota House gave final approval for a bill that provides funds for students to attend private schools.

The powerful state teachers union, the Nebraska State Education Association, has pledged to launch an initiative petition drive and put the issue before state voters if LB 753 passes.

After Thursday’s vote, NSEA President Jenni Benson said legislators aren’t listening to Nebraska voters because a majority of them oppose giving public tax dollars to private schools.

“Supporters of LB 753 claim it’s all sunshine and rainbows but the reality is LB 753 is a tax voucher scheme that will drain funding from our public schools and give it to unaccountable private schools that discriminate against kids,” Benson said in a press release.

Linehan, during Thursday’s debate, disputed that, saying that private schools must be approved by the state. Other supporters said the state offers all kinds of tax credits, and it could be argued that every one takes away funds from public schools.

A mayor fear of school choice opponents is that once the state opens the door to school choice, the program will grow and lead to approval of charter schools and vouchers — something supporters of LB 753 discount.

Two senators who represent North Omaha, Justin Wayne and Terrell McKinney, have supported the bill as giving children in their districts an option to public schools.

Another supporter of the bill, Omaha Sen. Brad von Gillern, said he expected that passage of the measure would aid in the construction of more private schools.

Von Gillern, who said he served as an elder at West Omaha’s Lifegate Church until October, said a coalition of groups, including Lifegate, is talking about opening a Christian high school in Omaha. The elementary school at Lifegate, he added, has a waiting list.

“There’s definitely a need,” von Gillern said.

The senator said he didn’t consider his former post with the church and voting on LB 753 as any kind of conflict of interest. The Opportunity Scholarships would go to students, not the church or school, von Gillern said, and the success of a Christian school would be determined by how well it educates students.

Lawmakers did adopt one amendment to LB 753 on Thursday that had been suggested by Sens. Jana Hughes of Seward and Barry DeKay of Niobrara.

DeVos group spent heavily

Hughes said she was concerned that funds given to scholarship granting organizations (SGOs) didn’t create a “tax shelter.” Her amendment requires that unused scholarship funds would be transferred to other SGOs or given to the state general fund.

DeKay said his part of the amendment would insure that there was a re-evaluation of the opportunity scholarship program after three years to ensure it was improving educational outcomes.

A similar opportunity scholarship bill failed to pass last year, but a national school choice group, funded by former U.S. Secretary of Education, Betsy DeVos, spent heavily last fall to get state senators elected who support the idea.

Nebraska Examiner is part of States Newsroom, a network of news bureaus supported by grants and a coalition of donors as a 501c(3) public charity. Nebraska Examiner maintains editorial independence. Contact Editor Cate Folsom for questions: info@nebraskaexaminer.com. Follow Nebraska Examiner on Facebook and Twitter.

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