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Education Tax Credit bill (01/18/2009)
by Craig Junker

President, Cotter Schools

Every week we read news stories about the challenges facing elementary and secondary education throughout our country. This past fall, media outlets raised concerns about the disparity in graduation rates and academic performance ≠between lower income and higher income students. Lately, we have learned that Minnesota’s major financial shortfall will likely lead to a sharp decline in public school funding next year. No doubt, school funding cuts will impact the ability of many schools and possibly jeopardize children’s futures.

To face these challenges in today’s tenuous economic climate, finding creative, innovative, and collaborative ways to ease the burden is crucial. One idea that has been successful in other states involves tax credit legislation that supports economically disadvantaged students. The “Equity and Opportunity in Education Tax Credit” bill proposes tax credit incentives for corporations and individuals that make contributions to K-12 schools and educational improvement organizations delivering programs to lowincome students at public and private schools in Minnesota. Corporations and individuals supporting the program will receive a tax credit equal to 80% of their contribution. This tax credit will reduce the tax liability listed on the donors’ corporate or individual Minnesota state tax return. Presently, a tax deduction of 8% is allowed for contributions. As you can see, the tax credit will very likely encourage more giving to support educational initiatives in both public and nonpublic schools.

In Arizona, this legislation has changed education funding significantly. Over $98.1 million was contributed in 2007 by 287,000 businesses and individuals to schools and programs serving low income students. Pennsylvania realized $75 million in contributions in 2007. Minnesota Representative Morrie Lanning, a supporter of the bill, states, “This is an important program for Minnesota’s children. It is about encouraging private philanthropy to ensure educational opportunity for children of poverty.”

The Coalition for Kids, with members from various statewide business and education interests, is advancing the “Equity and Opportunity in Education Tax Credit” legislation this session. The bill is authored by Representative Paul Thissen (DFL) and Senator Linda Scheid (DFL). Representative Thissen stated, “As a leader in education, it makes sense for Minnesota to support this innovative tax-credit plan that will provide a student living in poverty with scholarship funds to access tutors, enrichment programs, tuition assistance, or the other supports they need to graduate from high school and advance to college.”

Senator Scheid also noted, “This tax credit will help pay for these services and give every student, regardless of their socioeconomic status, access to an engaging education.” When individuals and businesses invest in local schools, they become partners with parents and educators in assisting kids to succeed.

Public school students, through the foundation set up by the district, will benefit by gaining access to tutors, after school programs, early childhood programs, and others initiatives that provide extra support necessary to improve academic achievement. Nonpublic students in the state will be provided with tuition assistance in the form of need-based scholarships. The need-based scholarships help students remain in the school that best meets their academic needs as determined by their family.

As a result of the tax credit incentives, educational improvement organizations will be positioned to expand offerings to low income students and schools. Educational improvement organizations include nonprofit education and community development centers based in local communities.

The intention of the “Equity and Opportunity in Education Tax Credit” is to improve the achievement gap and make Minnesota an innovator in education funding to support Minnesota’s children living in poverty. Minnesota has long been known as a state that prioritized strong education for all students. This initiative provides for more private investment to help maintain robust schools in Minnesota. As Representative Thissen previously observed, “That would be a headline worth reading . . . our children and our state deserve nothing less.”



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