Amended education savings accounts bill gains support of governor, advances in House committee

Rep. Jim Dotson (R-Bentonville)
Rep. Jim Dotson (R-Bentonville)


A bill that would establish education savings accounts to be used at parents' discretion to fund private school and other education costs passed in an 11-5 vote in the House Education Committee Tuesday. An earlier version of the bill also passed the committee last week, but the bill was amended to decrease its fiscal impact and gain Governor Hutchinson's support.

Under House Bill 1222, individuals and corporations who contribute to the accounts, to be managed by nonprofit organizations, would receive an income tax credit equal to 65 percent of their donation. The donation would also qualify for a federal income tax deduction. Parents could use the dollars in the savings accounts for private school fees or home school education. The tax credits would be awarded in the second year of the program.

The bill has been amended six times. The latest amendment would turn the program into a pilot that would sunset after four years and would cap the amount the state could put toward tax credits at $3 million per year.

Rep. Jim Dotson (R-Bentonville), lead sponsor of HB 1222, told the committee the latest amendment consisted of "fairly significant modifications" to the bill. "This is truly a ... pilot program at this point with this amendment in here. This is an amendment that the governor requested to be put in there. I've agreed to it."

Hutchinson had expressed concern about the negative revenue impact of previous versions of the bill, but he now supports it, according to J.R. Davis, the governor's spokesperson.

"[The governor's] very appreciative of Rep. Dotson's willingness to narrow the scope," said Davis. "The financial hit to the state is not as drastic. It also allows the state to study this program as a pilot."

Critics of the bill say the education savings accounts are a voucher program. School vouchers use state money to fund scholarships that pay for students to attend private school.

The bill has a long list of opponents, including the Arkansas Education Association, which represents public school teachers; the Arkansas Association of Educational Administrators, which represents superintendents; the Arkansas School Boards Association; the Arkansas Rural Education Association; the Rural Community Alliance; Arkansas Advocates for Children and Families; and the Arkansas Public Policy Panel.

Rep. Bruce Cozart (R-Hot Springs), chair of the Education Committee, did not allow for public testimony at today's committee meeting. He said it slows things down and there are more than 58 bills on the agenda with not too many days left in the 2017 regular session to hear bills in committee.

About HB 1222, Cozart said, "That was just an amendment so there was no reason to allow testimony. It would have been the same testimony [that was heard last week], so we weren't going to hear that today."

Tracey-Ann Nelson, the executive director of the Arkansas Education Association, said she would have testified against the bill Tuesday had testimony been permitted.

"Not allowing entities and citizens to have their say is totally against what we are in terms of America. ... The vote may not go your way, but to not even be on the record to demonstrate what is important in the eyes of your members or your citizenry is a complete and utter diversion of our democracy," Nelson said.

Richard Abernathy, executive director of the Arkansas Association of Educational Administrators, said he also would have testified Tuesday had Cozart allowed it. He said the committee members are making decisions without hearing from the people "that are in the trenches doing the work."

"It's bad public policy when you start sending tax money to institutions that are not held accountable," Abernathy said.

In order to participate in the education savings accounts, parents would be required to waive the state's legal obligation to provide services or education to their child, except as may be required by federal law. Parents are also required to waive their child’s federal civil rights protections under the federal Individuals with Disabilities Education Act.

Parents could use the money in the education savings account to fund tuition at a private school as well as for other education expenses, including uniforms, books, tutoring services, transportation, examination fees and even college, since a portion of the unused money in a savings account would carry over to the next year.

Abernathy said the amended bill still discriminates against public school parents.

"This bill discriminates against public school parents. ... They are not eligible to participate in educational savings accounts to send their kids to college. Whereas, if you are attending homeschool or a private school, you in fact can divert some of those dollars that you receive from education savings accounts to pay for your kid to attend college," Abernathy testified last week in committee.

During questions, Rep. James Sturch (R-Batesville) expressed concern about how the bill could negatively affect individual school districts by decreasing public school enrollment.

The bill would allow five nonprofit organizations, certified by the state Department of Finance and Administration, to administer the education savings accounts. Each of the five nonprofits could approve up to 1 percent of eligible students from any individual public school district to participate in the program.

Dotson said, "As far as I understand, there is that potential, there could be up to 5 percent coming out of a single district if there is funding available."

Rep. James Sturch (R-Batesville)

In Arkansas, the largest portion of the cost of a public school student’s education is covered by what’s called “foundation funding” — a mixture of state general revenue and local property taxes that the state collects and then remits to local school districts. The legislature has established foundation funding at $6,646 per student for the current school year. When a student leaves a public school for a private school, the foundation funding does not follow the student. The student’s former public school district does not receive foundation funding for that student the next year.

HB 1222 would not directly divert public education funding to private schools as some voucher programs in other states have done. Instead, dollars that would have otherwise entered state general revenue in the form of income tax would be diverted to the nonprofits administering the education savings accounts. Those nonprofits would then be able to transfer an amount of money equivalent to foundation funding for each academic year into an eligible student’s account.

Sturch said there's a school district in his area that if four students who qualified for free and reduced school lunches decided to leave the public school, that district could lose not only the state's foundation funding, but also funds from the federal government to pay for free and reduced school lunches.

"Is there any way that we can be assured that different areas aren’t going to be affected negatively by this?" Sturch asked.

Dotson answered that this was the first time he had heard of Sturch's particular concern, and assured Sturch that the scope of the bill was much smaller with the $3 million tax credits cap.

The bill first would prioritize students who received the scholarship the year before, then those students' siblings, followed by students from a waitlist who qualify for free and reduced school lunch, then new applicants that qualify for free and reduced school lunch, followed by students who come from military families, then finally all students on the waitlist and all other new applicants.

If the bill becomes law, the four-year pilot would begin in the 2018-19 school year.

The bill now goes to the full House.

Arkansas Advocates for Children and Families and the Arkansas Public Policy Panel have provided donations to the Arkansas Nonprofit News Network. Arkansas Public Policy Panel donated specifically to support legislative coverage on education issues. Donors have no say in editorial decisions.

This reporting is courtesy of the Arkansas Nonprofit News Network, an independent, nonpartisan news project dedicated to producing journalism that matters to Arkansans.

The Arkansas Nonprofit News Network is an independent, nonpartisan news organization dedicated to producing journalism that matters to Arkansans. Our work is re-published by partner newsrooms across the state.