Tax Credit Scholarships

(Jim Clark) – Education is the largest spending category in Nevada’s budget. It consumes about fifty cents of each dollar of state spending. Recent media reports about poor SAT performances by Nevada students, high school grads not ready for college together with an increase in college entrants taking non-credit remedial courses leads to the inference that there’s a lot of money being wasted here. According to the US Department of Education Nevada, per-pupil spending in inflation adjusted dollars increased from $3,268 to $9,035 between 1960 and 2011 (the latest year for which figures are available) during which period test scores actually declined.

The governor and legislature have set out to do something about this. In previous sessions, Nevada enacted laws creating an alternative teacher certification program, a statewide charter school authority, an effective teacher evaluation system and a teacher merit pay program. These changes must be implemented by regulations which have been slow to come but at least the laws are on the books.

In the recent legislative session with Republicans controlling the senate, assembly and state house a flurry of accountability and school choice laws were enacted. They are modeled after those in Florida, Arizona, and other states that have adopted measures to see that taxpayers get more bang for their education buck and increased student achievement. Measures implementing early childhood education, transferring control of failing schools to private education providers, bolstering resources devoted to poverty level students and English language learners were enacted and are being implemented. Perhaps the most daring of school choice measures was the law creating education savings accounts, allowing parents to utilize taxpayer funds for their kids’ private school tuition. The ink on the law was barely dry when so-called “progressive” interests filed lawsuits challenging its constitutionality because parents can use the money at religious schools. We’ll have to wait on the courts to see about that one.

Another new law that has not received much publicity is the tax credit scholarship. It works basically like this: Nevada businesses who choose may pay a portion of their state tax liability into a non-profit entity that grants scholarships to kids who prefer options other than government schools. The state cap was set at $5 million but it can increase with time and use. Kids from low and middle-income families can qualify. Sixteen states have tax credit scholarship laws and none has been constitutionally challenged because the money goes from a business to a non-profit and never becomes taxpayer funds.

The Center for Education Reform recently issued a scorecard for tax credit scholarship laws across the nation. Letter grades were also assigned. Grading factors included participation, dollar value of scholarship, liberality of student eligibility and operational autonomy among others.

Nevada received a “D” because the new law has not yet been implemented. The analyst’s narrative evaluates the law only and recites: “The design of the program allows students from both low and middle-income families to qualify . . . The program has a fairly low budget cap at $5 million but includes an automatic escalator clause which allows funding for the program to increase by 10% when the cap is hit without having to go back through the legislature. Look for Nevada’s program to rise in the rankings next year when it has begun distributing scholarships.”

Arizona’s tax credit scholarship law dates back to 1997 and received the highest rating in the US followed by number two Florida which has had the program since 2001. Fifth best, and rising fast, is Indiana whose law was enacted only in 2009. Correlating the states’ program scores with student achievement the American Legislative Exchange Council ranks Arizona, Florida, and Indiana the top three nationally in gains for low-income students.

Nevada can look to its successful peers for guidance in implementing this program.

Jim Clark is President of Republican Advocates. He has served on the Washoe County and Nevada GOP Central Committees. He can be reached at tahoesbjc@aol.com.