Nevada Gov. Brian Sandoval, R, has signed a landmark school choice bill that gives low-income students an opportunity to use privately donated funds toward private school tuition.
The bill creates a tax credit for companies subject to Nevada’s modified business tax. They become eligible to claim a credit equal to an amount donated to a private school scholarship organization. No more than $5 million in the tax credit can be approved for fiscal year 2015-16, with a 10 percent increase every year thereafter.
The scholarships created from these donations can go to help students at or below 300 percent of the poverty line cover private school tuition in whole or in part.
The bill also specifies that scholarship organizations must not own or operate schools that receive grants, nor can they spend more than 5 percent of its revenue on administration.
“This is a great day for students across Nevada,” Sandoval said on April 7, when the Nevada Senate passed the bill. “The creation of Opportunity Scholarships ensures that all children, regardless of financial ability, will have the opportunity to attend a school that provides an education that best suits their needs.”
“Opportunity Scholarships open the door for more families to have greater freedom in where their children will be educated, ensuring that more of Nevada’s kids have a chance to succeed,” Chantal Lovell, the deputy communications director for the Nevada Policy Research Institute, told the Washington Examiner. “By allowing businesses to make donations to a scholarship fund in return for tax credits, Nevada’s companies can help to create the educated workforce they need to make this state better for generations to come.”
While supporting the scholarship bill, Lovell said the state still needs more school choice reforms — for example, more charter schools and education savings accounts.
The scholarship bill was opposed by Democrats, who argued that the bill is just a tax cut bill, not an education bill. Even though the participating businesses will indeed see a tax cut, the bill still encourages them to give more money to serve the public good by improving students’ education through their donations.
Some critics of the bill say the bill will reduce taxpayer funds going toward public education. However, the bill does not affect the amount of money appropriated for public education. The $5 million lost to state coffers is less than one percent of the $4.4 billion spent on public education in Nevada.
The bill passed both the Nevada Assembly and Senate on party-line votes, with no Democrats voting in favor.
Fourteen other states have similar tax credits for scholarship organizations, according to Maryland Education Credit, which is advocating for a similar program.
