Private school scholarship program clears first round

Senators advanced a proposal from general file April 9 that would provide millions in state dollars to fund private school scholarships following a successful cloture vote.

Sen. Lou Ann Linehan
Sen. Lou Ann Linehan

LB1402, as introduced by Elkhorn Sen. Lou Ann Linehan, would appropriate $25 million in general funds in fiscal year 2024-25 to the state treasurer to provide grants to scholarship-granting organizations, who then would use the funds to provide scholarships to eligible students to pay costs associated with attending a K-12 qualified school.

A qualified school is defined as any nongovernmental, privately operated nonprofit elementary or secondary school that complies with certain federal anti-discrimination provisions and fulfills the applicable accreditation or approval requirements established by the State Board of Education.

If the total amount of grants awarded in any fiscal year exceeds 90% of the appropriation to the state treasurer for that fiscal year, the appropriation for the following fiscal year would increase by 25%, not to exceed a maximum appropriation of $100 million.

Linehan said she offered the bill as a replacement for the Opportunity Scholarships Act, which was passed by the Legislature last year. That measure, which she sponsored, allows individuals, passthrough entities, estates, trusts and corporations to claim a nonrefundable income tax credit of up to 50% of their state income tax liability on contributions they make to nonprofit organizations that grant such scholarships.

The Opportunity Scholarships Act was the subject of a successful referendum petition drive and the possible repeal of the law is slated to be on the November 2024 general election ballot.

Linehan said school choice in Nebraska currently is limited to those who can afford to move to a new public school district or pay private school tuition, and LB1402 would give thousands of low-income families the same opportunity to choose the best education for their children.

“We love school choice in Nebraska,” Linehan said. “We believe in choice if you have the money to do it.”

Linehan offered an amendment during general file debate April 9 that would replace a pending Appropriations Committee amendment and reduce the yearly scholarship cap to $10 million without an annual increase. The state treasurer, rather than outside scholarship-granting organizations, would be responsible for overseeing the program and the treasurer could contract with an outside entity to administer it.

The amendment would repeal LB753.

The amendment also outlines eligibility requirements for students and contains a formula for scholarship distribution that would give first priority to students who received an education scholarship under the Opportunity Scholarships Act while it existed and their siblings.

Second priority would go to eligible students whose household income level does not exceed 185% of the federal poverty level or who have a family member actively serving in the armed forces, and those who are on an individualized education program, are in foster care or are experiencing bullying or harassment, among other criteria.

Individual scholarships would be limited to 75% of the statewide average general fund expenditure for public school students. The state treasurer would report annually to the governor and the Legislature regarding the number of scholarships awarded and recipients’ demographic information.

Linehan said 1,000 students have applied for scholarships under the existing program, and about 2,500 students have expressed interest. The $10 million authorized in LB1402 to fund those scholarships would amount to a “rounding error” compared to the $1 billion lawmakers provided to public schools last session, she said.

Omaha Sen. Christy Armendariz supported the bill and the amendment. Taxpayers are obligated to educate the state’s children, she said, and many public schools are failing to do so. Only 26% of students at some schools in her district are proficient in English, Armendariz said, and math scores are even lower.

“We don’t have time to come up with other solutions,” Armendariz said. “I am quite frankly in a panic for every third grader this year who hasn’t learned to read.”

Sen. Jen Day of Omaha opposed the proposal. There are many contributing factors when public school students struggle, she said, including poverty, the impact of mass incarceration on families and childhood sexual abuse. Appropriating tax dollars to private schools isn’t the answer to those problems, she said.

“When we’re talking about a child actually being able to get an effective education, we have to address the problem holistically,” Day said.

Also speaking in opposition, Lincoln Sen. George Dungan said a direct appropriation to private schools is explicitly prohibited under the state constitution. The courts previously allowed tax dollars to fund college scholarships in Nebraska, he said, because they could be used at either public or private educational institutions. LB1402, however, would provide scholarships only for K-12 private school students, he said.

Several proponents, including St. Paul Sen. Fred Meyer, said the two programs are fundamentally the same and dismissed the constitutionality argument.

“The legal question is behind us,” Meyer said.

Sen. John Cavanaugh of Omaha said LB1402 would silence the 117,000 Nebraskans who signed the referendum petition to place the repeal of the existing scholarship tax credit on the November ballot. Voters have made it clear that they want a say in how their tax dollars are used, he said, and lawmakers should not “interject” themselves and try to circumvent that process.

“The voters deserve an opportunity to be heard on this,” Cavanaugh said.

After four hours of general file debate, Linehan offered a motion to invoke cloture, which ceases debate and forces a vote on the bill and any pending amendments. The motion was adopted on a 33-13 vote. Thirty-three votes were needed.

Senators then voted 32-1 to adopt Linehan’s amendment and the committee amendment and advanced LB1402 to select file by voice vote.

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