Tax Dollars for Private Schools: A Bad Idea

Two New Bills Would Drain K-12 Funding, Conflict with State Constitution

When NSEA Director of Research Larry Scherer testified in opposition to LB118 and LB295 before the Legislature’s Revenue Committee, he made two clear points.

First, Scherer said the two bills likely run afoul of the state’s constitution. LB118 would allow annual tax deductions of up to $2,000 per child to assist parents with the expense of attending public, private or parochial schools.

“The clear benefit of this bill supports tuition at private schools,” said Scherer.

The second bill, LB295, would create the Opportunity Scholarship Act, giving individual and corporate taxpayers a tax credit for donations to groups that provide scholarships to attend non-profit, private schools. Scherer noted that Article VII, Section 11, of the Nebraska Constitution prohibits the appropriation of public funds for sectarian education.

“Clearly, the real impact of LB295, although somewhat circuitous through the use of a tax credit, is an expenditure of public funds to benefit parochial schools,” he said.

Both bills, said Scherer, also raise questions about the willingness of the Legislature to subsidize private entities, in this case private schools, while at the same time failing to provide adequate funding for public schools.

Scherer used that connection to make his second point: that the Legislature has rarely provided adequate and full funding for schools. Scherer knows state aid: as an attorney working for the Legislature 30 years ago, he assisted with the creation of the original state aid formula.

“Over the last 15 years, the Legislature has fully funded the needs of public schools under then-existing law only three times. In addition to threatening the quality of public education, the result of the state not keeping up with its end of the bargain through state aid is higher property taxes,” said Scherer.

State analysts estimate the deductions allowed by LB118 would cost the state $8 million in revenue the first year, and more every year after that. The credits allowed by LB295 are estimated to cost the state $10 million annually in the first year, increasing each year thereafter.

“Even if there were not constitutional problems with these bills, there is the more pressing issue of the revenue shortfall and projected structural future deficits of a reported $900 million,” he said.

“How responsible is it for the state to start new, $8 million and $10 million programs when we’re making cuts to nearly every other program in the budget?”

Scherer urged the committee to kill both bills.