When proponents first pitched an Indiana school voucher plan, opposition came not just from public school advocates. Some parochial and private-school parents were critical of a plan that – initially – awarded vouchers only to students currently attending public schools.
A generous tax benefit that also made vouchers available to families who might never have enrolled their children in public schools was offered as an enticement to support the plan. The result, as The Journal Gazette’s Niki Kelly reported Sunday, is a tax credit that will cost the state nearly $10 million in the next fiscal year and last year served as the pathway for nearly 20 percent of the state’s voucher students to attend private or parochial schools at taxpayer expense.
The program works like this:
• Contributors – individuals or businesses – make contributions to a Scholarship Granting Organization established by one of five approved granting organizations in the state. Half of the contribution qualifies for a direct credit on the contributor’s bottom-line tax bill.
• The SGO awards a scholarship to a student to use at a private or parochial school. Once students receive one year of scholarship support, they qualify for vouchers the next year or any subsequent year, provided their families meet the generous eligibility guidelines. A family of five can earn up to $105,000 a year and qualify for voucher assistance.
Voucher supporters are delighted by the results of the SGO tax credit, of course. They are eager to note the private-school scholarships cover costs for a student who might otherwise be enrolled at taxpayer expense in public school. They are not so eager to acknowledge two other points: The student’s parents might have intended to enroll them in a private or parochial school regardless of the scholarship program and many of those students will then qualify for years of ongoing voucher support.
“If we give a scholarship to an incoming kindergartener, as long as (families) stay within the income limits, that student will be eligible for vouchers for the next 12 years,” a notice in a local church bulletin advised in 2011. “Full vouchers for 12 years could be worth $57,000 in tuition!”
The SGO pathway also allows any sibling of an SGO recipient to qualify for a voucher, so one year of SGO support can set up a family for voucher eligibility for years to come, provided they meet income limits.
The tax credit for scholarship donors overwhelmingly benefits the wealthy. More than two-thirds of the total credits claimed in 2012 went to taxpayers earning more than $500,000 a year. The credits resulted in a $7.5 million loss to the state’s general fund for 2015, but the cap will rise to $9.5 million next year, increasing the state’s total of uncollected taxes and reducing the amount of revenue available to support public education and other state services.
That’s not the only tax benefit for private and parochial schools. The General Assembly in 2011 created a $1,000-per-child tax deduction for parents who home-school or send their children to private or parochial schools, ostensibly to offset the cost of educational materials. There is no income limit on the tax break, so it is available even to the wealthiest taxpayers sending children to the most costly private schools. Since 2011, more than $270 million in tax deductions have been claimed under the program, according to the Indiana Department of Revenue.
The educational materials deduction is not available to parents of public school families, even though they might pay hundreds of dollars in textbook fees each year. Indiana is one of just eight states to charge for textbook rental in public schools.
Voucher supporter Brandt Hershman, a Republican senator from Tippecanoe County, told Kelly the SGO program “feels like we are doing the right things.”
For private and parochial schools, that undoubtedly is true. But the array of benefits politicians have crafted to support private schools has long-term consequences for the state. Do Hoosiers truly want to create two separate and unequal systems of schools?