Voucher-like bill clears another hurdle

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

A controversial 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 Arkansas House Education Committee Tuesday.

Senate Bill 746 and its predecessor, House Bill 1222, have a long list of opponents. The legislation was initially opposed by Governor Hutchinson because of its potential cost, but he later said he supported it after HB 1222 was amended to cap the growth of the program. HB 1222 failed in a 37-47 vote in the House earlier this month after passionate testimony from representatives who said the bill would negatively impact public school districts they represent. That same day, SB 746 was amended to mirror the failed legislation and was amended again a few days later in committee to address lawmakers' concerns.

Under SB 746, individuals and corporations who contribute to the education savings 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, capped at $3 million, would be awarded in the second and subsequent years of the program. The program would sunset after four years.

Rep. Jim Dotson (R-Bentonville) told the House Education Committee Tuesday that "the bones of the bill are virtually the same" as HB 1222.

The main differences between SB 746 and the bill that failed to pass the House is that SB 746 would require that schools comply with federal anti-discrimination legislation. It also specifies that no more than 1 percent of students in a single public school district could receive an education savings account per academic year and that the funds could not be saved to pay for college expenses once a student graduates from high school.

“This puts the parent in the driver's seat for the child's education,” Dotson said.

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. Opponents include 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.

Alyce Love, a retired teacher from Dumas and a member of Arkansas Citizens First Congress, a coalition of organizations that work together for progressive changes in state policy, testified against the bill. She said it would divert money away from public schools.

"If Arkansas is now ready to invest more money in education, there are many proven strategies that we could invest in that would have far more benefits for all of the students than an education savings account or voucher scheme," Love said, adding that pre-K, summer and after-school programs and teacher quality would make for worthy investments.

In Arkansas, the largest portion of the cost of a public school student’s education is covered by what is 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.

SB 746 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 not be received because of state tax credits granted to the donors of 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.

Parents could use the money in the education savings account to pay for tuition at a private school as well as for other education expenses, including uniforms, books, tutoring services, transportation and examination fees, among other things.

Proponents of the bill say it would provide opportunities for low-income students and could potentially save the state money.

"We have a potential unrealized loss in state revenue collection that is less than the realized loss in expenses that the state is obligated for," Dotson said. "So when we're no longer having to pay for that student's education directly out of the state treasury, that is a reduction in expenses that exceeds the amount of tax credits available."

This potential savings would rely on enough students leaving the public school system so that the amount of money the state would have provided for their education was more than the cost to the state to provide the tax credits, which are capped at $3 million for the second, third and fourth year of the program.

Richard Abernathy, executive director of the Arkansas Association of Educational Administrators, said in an interview that the bill would not save the state money.

"Save the state money? Lord, no. I mean, that’s good talk, but no, it’s not. Anytime you’re saying that it’s going to cost $3 million, it’s going to cost $3 million. And general revenue is going to be reduced by that, so no, it’s not going to save the state money," Abernathy said.

SB 746 requires the nonprofit organizations that would administer the education savings accounts to approve two new applications from students who attended public school during the prior year for every student who applies who did not attend public school the prior year. This provision would likely have the biggest effect in the first year when all applications will be new. In the second and subsequent years of the program, priority would be given first to eligible students who received funding in an education savings account during the previous academic year, then to those students' siblings, then to students who are eligible for free and reduced school lunch, then to dependents of members of the United Armed Forces or National Guard, then to all other students on the wait list and new applicants.

Molly Dunaway, the mother of eight children and the daughter of House Education Committee Vice Chair Charlotte Douglas, testified in favor of the bill. Dunaway said she has spent a decade homeschooling six of her children. (Two of her children are 18-month-old twins).

Dunaway said her children have costly education needs including curriculum, speech therapy, concurrent classes and ACT prep classes. She said she is part of a network of about 200 families that homeschool their children in Crawford and Sebastian counties.

"These children all belong to the state. They are all children of the state of Arkansas who all have special needs," she said.

Also testifying for the bill was retired Maj. Gen. Kendall Penn, executive director of the National Guard Association of Arkansas; Adam Thompson, regional advocacy director for ExcelinEd, a nonprofit organization founded by former Florida Governor Jeb Bush that promotes conservative education reform; and Sen. Alan Clark (R-Lonsdale).

Clark said of the bill's opponents: "The worry that this will expand? Probably will. But the only way it will expand is if this pilot program is successful. So what the people testifying against it are telling you is that they know it's going to be successful, and they don't want that because they don't want school choice."

Candace Williams with the Rural Community Alliance urged legislators to think about how this bill might affect school districts in the future.

"We're at a position now where public education is not even fully funded to the [Bureau of Legislative Research] recommendation. And we're deciding now to siphon out more public dollars to private entities, it just doesn't make sense," Williams said, adding that she comes from an impoverished community.

"I think about if this bill were around when I grew up, would my peers be able to use this? No, they would not have been able to use this bill" because of the additional costs that come with a private school education.

Tracey-Ann Nelson, the executive director of the Arkansas Education Association, said in an interview after the meeting that the bill would "allow corporations to not pay their fair share through a tax credit."

"It’s a tax credit scheme for wealthy individuals and corporations, and legislators should be ashamed to be diverting dollars from the revenue pot for the state, because the citizens of Arkansas need those resources" for education, roads, housing. "We need it for the things that all of our citizens need and not just a few," Nelson said.

Dotson said he is optimistic that this time his education savings account bill will pass in the House.

"You know, what I've learned around here is that I don't make predictions. Until the votes are cast and you see them on the board, it’s … you never know," he said. "We have a lot of support for it. More support than there was for 1222."

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.