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Choice bill passes 

Governor now supports amended bill to create education savings accounts.

click to enlarge DOTSON: Amended his bill at the direction of Governor Hutchinson.
  • DOTSON: Amended his bill at the direction of Governor Hutchinson.

A bill that would establish education savings accounts to be used at parents' discretion to fund private school and other education costs passed in a 11-5 vote in the House Education Committee Tuesday. An earlier version of the bill also passed the committee last week, but the bill was amended to decrease its fiscal impact and gain Governor Hutchinson's support.

Under House Bill 1222, individuals and corporations who contribute to the 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 would be awarded in the second year of the program.

The bill has been amended six times. The latest amendment would turn the program into a pilot that would sunset after four years and would cap the amount the state could put toward tax credits at $3 million per year.

Rep. Jim Dotson (R-Bentonville), lead sponsor of the bill, told the committee the latest amendment consisted of "fairly significant modifications" to the bill. "This is truly a ... pilot program at this point with this amendment in here. This is an amendment that the governor requested to be put in there. I've agreed to it."

Governor Hutchinson had expressed concern about the negative revenue impact of previous versions of the bill, but he now supports it, according to J.R. Davis, the governor's spokesperson.

"[The governor's] very appreciative of Rep. Dotson's willingness to narrow the scope," said Davis. "The financial hit to the state is not as drastic. It also allows the state to study this program as a pilot."

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.

The bill has a long list of opponents, including 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; Arkansas Advocates for Children and Families; and the Arkansas Public Policy Panel.

In order to participate in the education savings accounts, parents would be required to waive the state's legal obligation to provide services or education to their child, except as may be required by federal law. Parents are also required to waive their child's federal civil rights protections under the federal Individuals with Disabilities Education Act.

Parents could use the money in the education savings account to fund tuition at a private school as well as for other education expenses, including uniforms, books, tutoring services, transportation, examination fees and even college, since a portion of the unused money in a savings account would carry over to the next year.

During questions, Rep. James Sturch (R-Batesville) expressed concern about how the bill could negatively affect individual school districts by decreasing public school enrollment.

The bill would allow five nonprofit organizations, certified by the state Department of Finance and Administration, to administer the education savings accounts. Each of the five nonprofits could approve up to 1 percent of eligible students from any individual public school district to participate in the program.

Dotson said, "As far as I understand, there is that potential, there could be up to 5 percent coming out of a single district if there is funding available."

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

HB 1222 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 be diverted to 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.

Sturch said there's a school district in his area that, should four students who qualified for free and reduced school lunches decide to leave the public school, could lose not only the state's foundation funding, but also funds from the federal government to pay for free and reduced school lunches.

"Is there any way that we can be assured that different areas aren't going to be affected negatively by this?" Sturch asked.

Dotson answered that this was the first time he had heard of Sturch's particular concern, and assured Sturch that the scope of the bill was much smaller with the $3 million tax credits cap.

The bill would prioritize students who received the scholarship the year before, then those students' siblings, followed by students from a waitlist who qualify for free and reduced school lunch, then new applicants that qualify for free and reduced school lunch, followed by students who come from military families, then finally all students on the waitlist and all other new applicants.

If the bill becomes law, the four-year pilot would begin in the 2018-19 school year.

The bill now goes to the full House.

This reporting is courtesy of the Arkansas Nonprofit News Network, an independent, nonpartisan news project dedicated to producing journalism that matters to Arkansans.

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.

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