Showdown looms over school scholarship tax credit

Senate Majority Leader Paul Gazelka speaks about a private school scholarship tax credit, surrounded by supporters of the proposal. Briana Bierschbach | MPR News

Minnesota Senate Republicans emphasized Tuesday that they plan to prioritize a bill creating a new tax credit for individuals or corporations that contribute to private-school scholarships for disadvantaged students.

Senate Majority Leader Paul Gazelka and Senate Taxes Committee Chair Roger Chamberlain made a joint case for the program, and the bill to accomplish it was put on path for inclusion in the broader state budget.

Chamberlain, of Lino Lakes, said it would allow for up to $35 million in overall credits per year to leverage scholarships for families who otherwise can’t afford tuition and who might be struggling in their public school setting. The credits would be for 70 percent of the donation, capped at $30,000 for a married couple’s tax return or up to $105,000 for a corporate entity.

“To put it in real simple terms: Private individuals giving to private institutions for private distribution to private organizations. Private, private, private,” Chamberlain said. “This money never gets to the state treasury. It’s just a reduction in the revenues collected.”

Scholarship recipients, he said, would be from low-to-middle income families or children in special education programs. For a family of four, the household income couldn’t exceed $90,000.

Qualifying schools — they could be religious based or another governing structure — would have to meet state testing standards, just as public schools must now administer.

“This is not going to be the end of public schools. Public schools will continue to thrive and be a vital part of our public education system,” Chamberlain said.

Public school officials testified against the plan in Chamberlain’s committee. They said it would divert money that could otherwise be used to improve public schools.

Hopkins school board member Steve Adams said recent boosts to state education aid have districts treading water, given inflation pressures.

“I find it incredible that we are sitting here talking about offering tax credits for private schools, people that send their kids to private schools when we have not yet fully funded our public schools,” Adams said.

Gazelka, of Nisswa, said he expects the initiative will be a matter for end-of-session budget negotiations with DFL Gov. Tim Walz and the Democratic-controlled House.

“This is an important one to us. Negotiations at the end are a bit of give and take, and this is a high priority for us,” Gazelka said. “It’s a way to close the achievement gap.”

Walz, a former public school teacher, downplayed the proposal’s prospects.

“I know this is an ideological issue for them,” Walz said. “I certainly am not going to move a big chunk of the education funding into private entities, not even going to the parents of these students.”

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