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Minnesota lawmakers consider new tax credit for school donations

It’s going to be a tough year to get any new spending programs passed at the Legislature, but a group called Coalition for Kids thinks it has a chance to get a new tax credit for school donations.

It would be for a program to support low-income kids with scholarships to private schools and special programs at public schools.

Now, if you donate to a school for scholarships or special programs, you get a tax deduction. The proposed legislation would offer a much more lucrative tax credit to donors.

Similar legislation has been proposed before, and made it through both tax committees last year before getting dropped in conference committee, said Jim Field, Coalition for Kids coordinator.  He’s also president of the Minnesota Independent School Forum.

The teachers’ union has opposed the bill in the past; it seems a bit like voucher programs which they oppose. But it’s a different approach to getting more kids to graduate from high school, Field said.

And this year, his group has research to show that the tax credit program would actually help improve the state budget picture.

This is why, Field said:

Private schools lose about half their students between kindergarten and 12th grade; in other words, for every 100 who start private school in kindergarten, only 50 are left by the end of high school, often because of the cost.

Those 50 then go back to their public school, which is a boon for the local school district (which gets paid by the state per student) but costs the state the extra money sent to the districts.

Field said keeping just 500 students in private schools would save the state $5 million a year.

“Sure, the districts may not like it — they get paid for how many kids in school —  but if serious about saving state money and increasing the graduation rates of  poverty level kids, this is the way to go,” Field said.

A study of a student tax credit program in Florida showed that for each dollar spent, the state saved about $1.40, he said.

Under the terms of the bill, which will be heard in the Senate tax committee later this month, a donor would get a 90-percent tax credit for money donated to schools for low-income children, if there is a two-year commitment to the donation. For a one-year commitment, the tax credit is 75 percent, he said.

Corporations and individuals could fund tutors or special programs for low-income public school students, scholarships for students to attend nonpublic schools or fund nonprofit organizations that provide academic enrichment or engagement programs for low-income students.

Field said the proposal, Minnesota’s Equity and Opportunity in Education Tax Credit, is modeled after tax credit laws in Arizona and Pennsylvania. In Arizona, 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.

Joe Kimball reports on St. Paul City Hall, Ramsey County politics and other topics. He can be reached at jkimball [at] minnpost [dot] com.

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