VA Tax Credit Supports Private School Scholarships

Aug 29, 2013

A new program is rolling out that provides tax credits for scholarship donations to private schools in Virginia.

Passed by the 2012 Virginia General Assembly Session, The Education Improvements Scholarships Tax Credit Program has significant support from non-public, faith-based schools.

The legislation allows for individuals and businesses to donate to a scholarship foundation and receive a tax credit of 65%. These foundations must be approved by the Virginia Department of Education and of the dozen approved as of the end of July, they are all faith based.  

“That’s a concern that taxpayer money should be going to pay for faith based schools and in a way that’s what this is doing.”

That is Democratic Delegate Jennifer McClellan who voted against the bill creating the scholarship tax Credit Program.  The bill’s sponsor, Republican Delegate Jimmie Massie, says the bill was not written for just faith based groups but they did have a voice at the table:

“The faith based organizations, the Catholic Conference and the Jewish Conference and some of the Christian faith  based organizations were big advocates of this. They’ve been working with me closely over the years so they’ve got a jump on people; they knew it was coming. But, there’s nothing in the legislation that limits anybody--faith based or non-faith based--from establishing a scholarship foundation.”

These foundations must be 501 c-threes or c-fours and provide scholarships to Virginia students.  Massie says the program provides not only tax incentives but provides assistance to children and families who may not otherwise afford a private school:

“Those donations go to a scholarship foundation and then the foundation turns around and awards scholarships to kids that are in the public school system to go to the nonpublic school of their parents choice. It is limited to families with incomes up to 300% of the federal poverty level and for those families with disabled kids up to 400% of the federal poverty level.”

A family of four with a household income of $70,000 would be within 300% Federal Poverty Level while an annual income of $93,000 would be within 400% of the FPL. The state does have a cap of 25-million dollars a year in available tax credits. Delegate McClellan says her biggest opposition is that that money could have gone into the public school budget:

“I oppose anything that takes money out of the public school system and diverts it to private schools. I don’t think we’re funding all of our public school needs particularly since the recession when we made a number of cuts in K-12 education. We have not backfilled those cuts.”

Delegate Massie says that the cost-sharing the state does with local schools could lead to a positive return when a student goes private:

“On this scholarship program when a child comes out of a school they’re going to lose one child and they’re going lose on average 55% of their fund for the state but they get to keep the local funding. So they’ll have less children and more money to spread over all of those children.”

Massie says it is not all about money. The scholarship tax credit was modeled on one in Florida and he says there are other benefits:

“The competition that this scholarship program will create will actually make the public schools better. So, we think it’s a win-win for the families, the kids and the public schools.”

Delegate McClellan’s opposition points to government responsibility:

“One of the primary responsibilities of government... when we promise every child a high-quality free public education that’s where our priorities should be. Not in helping others to go to private school.”

The Education Improvements Scholarships Tax Credit Program is administered by the Virginia Department of Education.

More information about the tax credit program is available here.