OKLAHOMA CITY (April 26, 2011) – The Oklahoma House of Representatives voted today to increase educational opportunity for needy children through a new scholarship tax credit program.
Senate Bill 969, by state Sen. Dan Newberry and state Rep. Lee Denney, would create the “Oklahoma Equal Opportunity Education Scholarship Act.”
“This legislation provides an opportunity for Oklahomans to help poor children obtain a quality education,” said state Rep. Lee Denney, R-Cushing. “It provides a much-needed new source of education funding to benefit the students who are most at-risk.”
The bill would allow a tax credit equal to 50 percent of the amount contributed to a scholarship-granting organization up to $1,000 per person, $2,000 per couple or up to $100,000 per business entity.
The total credit authorized could not exceed $1.75 million annually.
Scholarships funded through the tax credit program would serve children from low-income families and allow them to attend private schools. The privately funded scholarships would pay up to $5,000 or 80 percent of the average per-pupil expenditure in the school district where the recipient student resides. Scholarships for special needs students under the bill would cover up to $25,000.
The measure further allows the same tax credit to any taxpayer who makes a contribution to an eligible educational improvement grant organization. For any taxpayer who makes a commitment to contribute the same amount for two additional years, the credit would be equal to 75 percent of the amount of the contribution.
Overall, the bill provides for a maximum $5 million in annual credits allowed – $3.5 million would go to individual scholarships, while the remaining $1.5 million would fund grants to help rural schools in areas where private school is not an option.
“This legislation would direct more funding to rural schools to help them offer courses that are not feasible under current budget constraints,” Denney said. “This legislation will help all students who have trouble accessing high-level academic courses and instruction, whether they live in the inner city or rural Oklahoma.”
She said Senate Bill 969 could direct more money to education without any true impact on state finances because of existing tax practices.
“The money going to these scholarship programs is money the state would never have received anyway since it would have been sheltered through other tax breaks already on the books,” Denney said. “By providing citizens a way to obtain the same tax breaks while also benefiting needy children in both urban and rural areas, we are maximizing the use of those dollars to benefit poor children who would otherwise be denied the education they desperately need to break the cycle of poverty and create a better life for their families.
“This bill is about helping kids and schools that don’t have the means to obtain and provide the opportunities taken for granted in other parts of our state.”
Senate Bill 969 passed the Oklahoma House of Representatives on a 64-33 vote. It now returns to the state Senate for further consideration.
The Tax Commission is directed to maintain a listing of all credits reserved during each tax year. When the five million dollars ($5.0 million), the maximum amount of credits available each year, is reached the Commission will notify all scholarship granting organizations that no additional credits are available for the year. Should eligible claims exceed the cap, the Commission will determine each taxpayer’s proportionate share of the total credit pool.
The measure allows $5.0 million to be generated in tax years 2011 and in 2012, while claims may not be made until tax year 2013. The existence of qualified claims are assumed to sufficient to alter withholding and estimated pay remittances in tax year 2013 resulting in an FY-13 estimated revenue decrease of $4.0 million. The remaining $6.0 million in credits earned in tax years 2011 and 2012 plus $5.0 million in credits earned in tax year 2013 are expected to be claimed in FY-14 ($11.0 million).
The Tax Commission also estimates the need for two staff auditors for monitoring of the program, at a recurring cost of $108,000 and one-time $14,746 cost for equipment and IT programming, for an FY-12 administrative cost of $115,746.