U.S. ED Delivers Huge CARES Win for Private Schools

If you’re finding the whirlwind of information, materials, and requirements about the implementation of the federal Coronavirus Aid, Relief, and Economic Security (CARES) Act overwhelming, you aren’t alone! As one of the largest-scale pieces of legislation passed in American history, the CARES Act has created daunting challenges for state and federal agencies, local leaders, and policy groups alike.

The ACE team has been working for weeks to stay ahead of the CARES Act implementation curve, and we wanted to provide you with an update on several key programs affecting private schools.

GEER and ESSER Fund Equitable Services

New Federal Guidance on Equitable Services is a Huge Win

Yesterday, the United States Department of Education released federal guidance on precisely how state and local educational agencies must allocate CARES aid to private schools under the Governor’s Emergency Education Relief (GEER) Fund and Elementary and Secondary School Education Relief (ESSER) Fund. See this previous post for more information on these programs.

The guidance mirror recommendations that ACE has been pushing at a variety of levels for weeks, and it represents a huge win for private schools across the country. In short, this eight-page document preempts months or even years of fighting with education systems for fair treatment of private schools and families. And it spared thousands of private-school students from being shut out in the cold.

Here’s the short rundown of what the guidance says on the big questions:

  • Every non-profit private school is eligible to receive aid, regardless of student residence in a Title I attendance area or previous participation in equitable services under existing Title programs.
  • Every private school student is eligible to receive services provided with CARES aid, regardless of status as low income, at risk, or any other special category.
  • State ed departments and school districts must start new notification and consultation processes to ensure that every private school has an opportunity to access these funds. Previously, many state ed departments were looking to force CARES aid into existing federal funding timelines, most of which have already closed for the year. That would have meant that hundreds of schools missed a train they didn’t even know was coming.
  • Aid must be calculated using direct proportionality equations that factor in ALL private school students. This calculation will provide, by far, the largest possible per-pupil allocation of aid to private schools. See below for an example directly from the federal guidance:

*Non-public schools participating under the CARES Act programs.

What can schools and families do to ensure we receive the CARES aid to which we are legally entitled?

Here are some immediate action items we strongly recommend for all our partner schools nationwide:

1. Contact your private-school ombudsman. By federal law, every state must have one of these ombudsmen, who are responsible for advocating on behalf of private schools and ensuring that they receive federal aid to which they are due.

You can use our digital advocacy campaign to send a message to your state’s ombudsman in a matter of seconds. You can also look them up directly using this directory. They need to know you are counting on them to help your school!

2. Contact your local school district’s Title-funding office or superintendent. Ask them how they intend to approach equitable services for private schools in their districts and remind them that your school needs help. In particular, you will want to make sure that they are thinking through timelines, processes, and requirements that maximize access to this aid on the part of private schools.

Remember, every dollar you do not receive is another dollar the school district can spend on something else. As a result, these districts may not have a strong incentive to look out for your school’s best interests. You must be your own best advocate! We know this can be daunting, if you have any questions, feel free to reach out to us at policy@acescholarships.org.

3. Contact your state governor regarding his or her discretionary funds. Governors have wide latitude when it comes to allocating these funds, and private schools are entitled to receive “equitable services” from their school districts under this program if those school districts utilize funding for eligible purposes.

There are many, many groups competing for this funding. It is critical for your governor to hear from you about your school’s needs during this difficult time. If you haven’t already, you can use our digital advocacy campaign to contact your governor in a matter of seconds.


Other Grant Opportunities

Education Stabilization Fund Discretionary Grants

This week, the U.S. Dept. of Education announced yet another CARES Act aid program for K-12 schools. This one provides $307.5 million in discretionary grants. Of the total, $180 million is reserved for the Rethink K-12 School Models Grant and $127.5 million is reserved for the Reimagining Workforce Preparation Grant.

Grants given under the Rethink K-12 School Models Program can be used for the following purposes:

1. Microgrants for families, so that states can ensure they have access to the technology and educational services they need to advance their learning

2. Statewide virtual learning and course access programs, so that students will always be able to access a full range of subjects, even those not taught in the traditional or assigned setting

3. New, field-initiated models for providing remote education not yet imagined, to ensure that every child is learning and preparing for successful careers and lives

In particular, the microgrants provide a potential opportunity for private-school families to access much-needed tuition or other assistance. We strongly encourage you to contact your state private-school ombudsman and encourage him or her to advocate for the inclusion of private schools in any grant application filed under this program.

There are fewer details available about the Reimagining Workforce Preparation Grant Program as of this writing, but we will update this post with further information when we receive it. You can read more about both programs here.

USDA Distance Learning and Telemedicine Grants

The U.S. Department of Agriculture has extended the application window for funds under the Distance Learning and Telemedicine (DLT) Grant Program to July 13, 2020.

This lesser-known program is focused primarily on providing educational opportunities and access to medical services in rural communities. It is open to government agencies, businesses, and even nonprofits—which means many private schools may be eligible for funding. Grants can be used for the following purposes:

      • Acquisition of eligible capital assets, such as:
          • Broadband transmission facilities
          • Audio, video and interactive video equipment
          • Terminal and data terminal equipment
          • Computer hardware, network components, and software
          • Inside wiring and similar infrastructure that further DLT services
      • Acquisition of instructional programming that is a capital asset
      • Acquisition of technical assistance and instruction for using eligible equipment

These grants require a 15-percent match on the part of the participant and are awarded via a competitive application process. You can read more about this program and find application instructions here.

The Battle After Blaine

Courts across the United States have been chewing on various aspects of the constitutional debate surrounding educational choice for decades, and parental freedom has prevailed in the overwhelming majority of those cases. Now, the U.S. Supreme Court is primed to use the Espinoza v. MT Dept. of Revenue case to settle the largest and longest-standing legal debate related to K-12 scholarship programs: whether state constitutional Blaine Amendments can be used to deny scholarship families the ability to choose faith-based private schools.

But will that ruling be the end of the conversation? Not if the teachers unions have anything to say about. Today, we’ll take a look at a raft of ballot initiatives in Missouri designed to circumvent the anticipated anti-Blaine ruling in Espinoza.

Blaine Refresher

For those just tuning in, Blaine Amendments are state constitutional provisions forbidding aid to “sectarian” schools and institutions. More than three dozen state constitutions include some type of Blaine Amendment in their constitution. And because most K-12 scholarship programs typically include faith-based education providers, these provisions are very often used by the teachers unions and other opponents of K-12 scholarship programs to launch legal attacks under the guise of maintaining the “separation of church and state.”

In reality, Blaine Amendments have little to do with preserving American ideals. They are discriminatory relics rooted in politically charged anti-immigrant and anti-minority sentiment from the 1800s. Today, they are most often used to deny people and education providers of faith access to otherwise available public benefit programs—including K-12 scholarship programs.

The constitutionality of allowing faith-based schools to participate in public benefit programs is well established under the First Amendment (see here, here, and here). Whether these programs violate the “separation of church and state” articulated by opponents is not in question—they do not. Instead, the opposite question now stands before the U.S. Supreme Court: whether forbidding parents from using K-12 scholarships at faith-based schools violates those parents’ rights to religious freedom under the First Amendment.

Espinoza Ruling

The U.S. Supreme Court will hear oral arguments in the Espinoza case early next year. Following the U.S. Supreme Court’s 2017 Trinity Lutheran decision, it seems very likely that the justices will use Espinoza as a way to finally settle the Blaine argument once and for all. Indeed, ACE Scholarships joined dozens of other organizations in filing an amicus brief asking the court to do exactly that. 

A ruling that Blaine Amendments can no longer be used to discriminate against parents or schools of faith in K-12 scholarship programs would be the most important education-related ruling since Brown v. Board of Education in 1954. It would also settle a debate that has been raging for the better part of two centuries.

Missouri Initiatives

Proponents of parental freedom and choice in education are not the only ones watching Espinoza closely. And they’re not the only ones anticipating a broad ruling against Blaine Amendments as they have been applied thus far.

The national and state teachers unions, who most often launch and bankroll legal attacks against K-12 scholarship programs across the country, understand that Espinoza could be a watershed moment in American education. And they’re taking serious—and seriously sophisticated steps—to make sure that moment does not compromise their ability to maintain a stranglehold on education systems nationwide.

Enter Missouri, where the Missouri NEA, a state affiliate of the goliath National Education Association, has filed six 2020 ballot initiatives (2020-117 through 2020-122 on this list) designed specifically to circumvent the most likely legal rationale for the impending SCOTUS ruling in Espinoza.

Each of these initiatives is slightly different, and it’s not yet clear which, if any, will make it through signature gathering and onto the 2020 ballot. However, all of the initiatives frame themselves around the misleading language of “equitably and adequately” funding public education in Missouri. In reality, that laudable goal is a Trojan horse. The union’s real intent is to forbid the state of Missouri from ever adopting a K-12 scholarship program regardless of any ruling in Espinoza.

To that end, the initiatives seek to do three important things:

  • Sidestep a court ruling forbidding discrimination against people of faith by permanently forbidding any scholarships or other funding from going to any private school, religious or non-religious, in Missouri
  • Ignore prevailing legal logic and regulate tax-credit-incentivized private giving toward K-12 scholarships as public funds, thereby forbidding the state from ever adopting a scholarship tax credit program. These programs, which provide state tax credits for private contributions to nonprofits like ACE Scholarships, are extremely popular with the public on both sides of the aisle and currently serve nearly 300,000 students across 18 states. Courts have nearly universally held that private contributions to such programs, including those incentivized with tax credits, do not constitute public money and therefore cannot be easily challenged in court.
  • Grant standing to sue to parties traditionally found to lack such standing, including any taxpayers, public school student, or school district. In general, lawsuits against scholarship tax credit programs brought by these parties—nearly always at the behest and direction of the unions—are thrown out of court because the parties cannot demonstrate direct harm from private contributions to private nonprofits. In essence, the union is granting itself the eternal and unlimited ability to sue any K-12 scholarship program in Missouri.

What Now?

Any of these initiatives would have the effect of permanently blocking disadvantaged Missouri students from accessing high-quality private schools through a state K-12 scholarship program. If successful, they would also create a roadmap for unions and others who would like to see any SCOTUS ruling against Blaine Amendments undermined in their own states.

ACE Scholarships, which serves approximately 150 students in Kansas City, Missouri, filed a public comment with the Missouri Secretary of State asking that any language circulated in relation to these questions explicitly tell voters that they are designed to cripple educational opportunity, not to ensure “adequate and equitable” public school funding. A number of our Missouri partner schools and several other organizations also submitted comments.

Missouri’s initiative process is complex. If and when the petitions are approved for circulation, the Missouri NEA will have until May to collect signatures from eight percent of the legal voters in six of Missouri’s eight congressional districts. If they succeed, the initiatives would move the final phase of hearings before being officially placed on the ballot.

ACE will be watching these initiatives closely as they work their way through the system and participating in that process wherever possible. If you would like to learn more, please contact Ross Izard at rizard@acescholarships.org.

 

 

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U.S. Supreme Court to Hear Critical Montana Parental Choice Case

 

Late last year, we covered the Montana Supreme Court’s decision to strike down that state’s scholarship tax credit program in the Espinoza v. Montana Department of Revenue case. That decision was definitely disappointing, but it was also a blessing in disguise. As we said then, the state court’s first-of-its-kind ruling set up a unique opportunity to bring the critical issue of religious discrimination to the United States Supreme Court.

This morning, SCOTUS seized upon that opportunity when the high court granted a petition to review the case.

The court’s decision to grant the petition signals that it is ready and willing to (finally) tackle the debate about discriminatory Blaine Amendments. These state constitutional clauses have long been used by those who seek to exclude faith-based organizations from various public benefit programs, including private school choice programs like the one in Montana.

How did we get here?

The high court nibbled at the edges of the Blaine issue in Trinity Lutheran v. Comer back in 2017, when it ruled that faith-based organizations cannot be excluded from public benefit programs simply because they are religious. But that ruling left critical questions unresolved about how this landmark principle would apply in private school scholarship programs.

The court had an opportunity to expand upon the Trinity Lutheran ruling in Douglas County School District v. Taxpayers for Public Education, but it instead chose to vacate the Colorado Supreme Court ruling and remand it back for further consideration.

Today, however, the court looks significantly different both in terms of composition and general philosophy. The new court seems ready and willing to consider the issue more fully. And the Montana Supreme Court’s decision to strike down the Montana scholarship tax credit program provided them with a chance to do exactly that.

What does this mean for parental choice?

The Espinoza case could result in the most significant ruling on American education since Brown v. Board in 1954. The court is now positioned to settle an argument that has raged for the better part of two centuries.

A ruling that invalidates state constitutional Blaine Amendments as they have been applied to K-12 private school scholarship programs would throw open the doors of educational opportunity for tens or even hundreds of thousands of students across more than three dozen states. It would also end or significantly curtail the practice of weaponized political discrimination against faith-based organizations and reaffirm the religious protections in the First Amendment of the Constitution of the United States.

In short, it could be a game-changer.

What happens next?

We are still working to determine exact timelines, but the court could hear oral arguments in the case as early as this fall. A ruling would follow sometime after that.

As the largest K-12 scholarship provider in Montana, ACE has a unique perspective on this case. We voiced that perspective in an amicus brief supporting parents at the Montanan Supreme Court, as well in a separate brief requesting that the U.S. Supreme Court take up the case. We plan to file yet another supportive brief on the merits of the case as the U.S. Supreme Court considers arguments.

Stay tuned for more information as this important case moves closer to resolution.

 

 

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Colorado Lawmakers Move to Formalize Penalties for K-12 529 Withdrawals

Our Colorado partner schools and families will remember hearing about HB 1123 by Rep. Colin Larson earlier this year. The bill would have aligned state law and federal law so that Colorado parents utilizing 529 college-savings accounts for K-12 tuition would not be subject to state penalties. Unfortunately, it died in its first committee hearing at the Colorado Capitol.

See below for a quick recap of the current legal situation surrounding 529 accounts.

Issue Recap

In 2017, Congress expanded the acceptable uses of 529 savings to include K-12 tuition expenses at public and private schools. That new flexibility acknowledged the fact that many families need to access their savings to meet educational needs long before their students go to college. For instance, a student might:

  • Need a more rigorous academic environment
  • Want access to a specialized program or field of study
  • Need a school closer to their parents’ home or work
  • Need a safer environment free from bullying or other issues

The main advantage of 529 accounts has always been that they allow money to grow in a tax-advantaged environment. Colorado has taken those advantages a step further by providing state tax deductions and credits for 529 contributions made individuals and corporations, respectively. Those extra state tax advantages are designed to incentivize increased saving for students’ educational futures.

Here’s where it gets complicated. While federal law now recognizes K-12 tuition as an acceptable withdrawal from 529 accounts, Colorado law has not been brought up to date. As a result, state law considers withdrawals for K-12 tuition to be “unqualified”—a designation that can carry all sorts of consequences for who ignore it.

In practice, this misalignment between state and federal law means that parents who try to utilize 529 funds in accordance with federal law could still be subject to hefty state tax penalties. These penalties will most often take the form of “recaptures,” in which the state forces parents to repay any credits or deductions taken for relevant contributions to the account.

SB 257

While Rep. Larson’s HB 1123 was designed to correct the misalignment of Colorado law and federal law on 529 account usage, SB 257 does exactly the opposite. It actually makes this misalignment permanent by writing into state law that parents cannot take advantage of the new federal flexibility.

In practice, the bill says that any parent who attempts to follow federal law and use 529 savings funds for K-12 tuition will face potentially severe state tax penalties for doing so. What a way to close out the 2019 legislative session, right?

If you’d like to get involved on this important issue, please click the button below.

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Kansas Passes Senate Bill 16

If there’s one thing ACE Scholarships has learned from being involved in tax credit scholarship programs, it’s that enactment is just the beginning. Implementation brings its own set of challenges that will need to be addressed. And sometimes those challenges are tough to predict. That’s exactly the case in Kansas, where a new bill has made a minor technical change with big implications for its scholarship program.

2017 – SB 19

The Kansas scholarship program requires that students meet two eligibility requirements. First, that they qualify for free lunch under the National School Lunch Program by having a family income of 130 percent of federal poverty guidelines or lower. And second, by attending an underperforming public school named on a list created by the state.

Under the old law, the list of eligible public schools was determined using criteria for certain federal funding programs. In 2017, however, the Kansas State Legislature passed SB 19, which included a number of changes to the Kansas program. Among these changes was a change to the list of public schools from which scholarship students must come. Under the bill, this list would now consist of the 100 lowest-performing public schools in the state.

That change didn’t draw much attention until it came into effect in July 2018. At which point, it became clear that the new list excluded a large number of elementary schools. The new, elementary-light list of qualifying public schools posed a significant problem for scholarship organizations. Why? Because students become less likely to transfer as they enter middle and high school. As a result, new scholarship students tend to come primarily from early grades. Thus, excluding elementary schools had the effect of decreasing the number of students who could enter the scholarship program.

2019 – SB 16

Enter SB 16, which changes the list of schools to the 100 lowest-performing elementary schools. This legal change actually began life as part of HB 2395, a K-12 school finance bill. During the process of moving HB 2395, legislators in the House stripped the language related to the scholarship program, along with many other provisions, and added them to a separate bill under consideration: SB 16.

SB 16 went on to pass 63-61 in the House and was subsequently sent to conference committee, where small groups of legislators work to iron out differences between versions of a bill passed by the House and the Senate. The House’s changes were ultimately accepted by both chambers, and the governor signed the bill on April 6, 2019.

What now?

The shift to the new list of low-performing elementary schools takes effect as soon as the bill’s contents are officially published into state law. ACE and other scholarship-granting organizations are waiting for the Kansas Department of Education to publish the list so they can begin recruiting new students.

As with all policy changes, SB 16’s modification to the scholarship program aren’t perfect. Yes, scholarship-granting organizations will now have an easier time recruiting new scholarship students. But the comparatively lower numbers of disadvantaged students in bad middle school or high school environments will now have few places to turn for help—they have effectively missed their chance to receive a scholarship.

ACE hopes to revisit the Kansas program in greater depth at some point in the future so more students can receive the benefits of a high-quality education. For now, though, SB 16 is the law of the land.

 

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Louisiana Lawmakers Consider Technical Changes to its Tuition Donation Credit Program

As we’ve said before (see Kansas SB 19), passing a tax credit scholarship program is often just the beginning. To build a successful, sustainable program that serves students as efficiently as possible, charities like ACE have to think carefully about implementation. Sometimes, that process reveals areas that could use a little tweaking to help things run smoothly. That’s exactly the case in Louisiana, where legislators are considering a number of technical changes to the state’s tax credit scholarship program.

Implementation Challenges

In 2017, the Louisiana State Legislature converted the state’s unique tuition donation rebate (TDR) program to a tax credit program like those in 18 other states with Act 377.

Under the TDR program, the state would directly reimburse donors for at least 95 percent of their donation to scholarship-granting organizations like ACE (called school tuition organizations, or STOs, in Louisiana). Act 377 modified this funding mechanism to instead provide donors with a tax credit equal to at least 95 percent of their donation, thereby converting the TDR program into the Tuition Donation Credit (TDC) program. Under both programs, charities can reserve up to 5 percent of donations for the costs of administering scholarships.

While the shift to the more familiar tax credit model was welcome, it became clear during the TDC program’s first year of implementation that certain parts of the old TDR statute did not mesh well with the new TDC program. Additionally, the conversion of the law from rebate to tax credit left a few areas of inconsistency that complicated the program’s rollout.

SB 224 – Technical Changes to the TDC

Throughout implementation, ACE carefully tracked areas of the statute where things could be corrected, streamlined, or simplified. Those purely technical changes eventually found their way into SB 224, sponsored by Senator Gerald Boudreaux. With seven ACE partner schools and dozens of ACE scholars in his senate district, Senator Boudreaux has a strong reason to want the program to work as efficiently as possible.

Here is a list of changes included in SB 224, all of which are technical in nature:

  • Cleans up contradictory language about when credits are earned and aligns statute with current receipt processes at LDE
  • Addresses wording and language inconsistencies throughout the statute
  • Streamlines scholarship payment processes by allowing two up-front semesterly payments instead of quarterly payments
  • Eliminates the requirement to make payments via hard checks mailed to schools and allows other forms of payment, including electronic payment
  • Ensures schools are receiving funds by adding language that allows charities to take action if parents do not approve scholarship payments to schools
  • Modifies filing timelines and related requirements to streamline processes and ease burdens on administering charities and LDE

SB 224 will be heard by the Senate Revenue and Fiscal Affairs Committee on Monday, April 22. If it is successful there, it will move to the Senate floor.

 

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Texas Looks to Expand Education Opportunity

 

Overview

Earlier in March, Senator Donna Campbell filed Senate Bill 1906 to expand educational opportunity for Texas students. This bill would incentivize certain companies giving to charities that provide K-12 private school scholarships to disadvantaged students.

The scholarships provided by SB 1906 could be used to help pay K-12 private school tuition; purchase support services like tutoring, therapy or after-school programming; or even to defray the costs of educational materials. That kind of scholarship flexibility would be a first among the country’s dozens of existing tax credit scholarship programs. It would also make Texas the 19th state with a tax credit scholarship program.

SB 1906

Here’s an overview of the bill’s key components:

  • Eligible students would have to qualify for the federal guidelines for free and reduced lunch
  • Texas corporations subject to insurance premium taxes would receive a dollar-for-dollar tax credit for contributions to charities providing K-12 scholarships to economically disadvantaged students
  • The charities would have to use at least 90 percent of the contributions for student scholarships
  • Up to $500 per scholarship can be used for educational expenses besides tuition

How to Get Involved

ACE Scholarships supports SB 1906 and the opportunity it would provide to disadvantaged students in the great state of Texas. If you feel the same and want to get involved, click the button below. Your voice could make the difference when it comes to getting this critical piece of legislation passed.

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Everything You Need to Know About Arkansas Senate Bill 539

Overview

With only about two weeks left in the state’s legislative session, Arkansas lawmakers stand on the cusp of becoming the 19th state with a tax credit scholarship program. It has been quite a wild ride, so here’s a rundown on where the conversation stands and how we got here.

Earlier in March, Senator Blake Johnson and Representative Ken Bragg introduced SB 539. This bill makes a small change to Arkansas tax law that would incentivize giving to charities that provide K-12 private school scholarships to disadvantaged students. More specifically, the bill would allow individuals and businesses to receive a dollar-for-dollar tax credit for contributions to these charities. The charities, in turn, would have to use at least 90 percent of contributions for student scholarships.

The scholarships provided by SB 539 could be used to help pay private school tuition, purchase support services like tutoring or therapy, or even to defray the costs of educational materials. That kind of scholarship flexibility would be a first among the country’s dozens of existing tax credit scholarship programs.

SB 620 and SB 539

A separate bill promoted by Arkansas Governor Asa Hutchinson, SB 620, would have created a small-scale, government-funded voucher program for 500 students in Pulaski County. The program would have been a temporary pilot program that would have automatically ended after five years if not reapproved.

Heading into this week, most in Arkansas thought that SB 620 would be the choice vehicle that moved forward. But in a surprising turn of events on Wednesday morning, SB 620 was pulled from consideration in the Senate Education Committee when it became clear that it did not have the votes to advance. Meanwhile, SB 539 was unexpectedly brought up for consideration by the Senate Revenue and Taxation Committee, where it passed. The bill then went on to pass the Arkansas Senate and cross over to the House for consideration.

At this point, Governor Hutchinson has expressed support for both bills. However, it looks like SB 539 will be the bill to advance. Now that the bill has cleared the Senate, it will head to a House committee for a vote. If successful in that vote, it will head to the House floor where it will receive a final vote before being sent to Governor Hutchinson for signature.

How to Get Involved

ACE Scholarships is strongly in support of SB 539 and the opportunity it would provide to disadvantaged students in the state. If you feel the same and want to get involved, click the button below. Your voice could make the difference when it comes to getting this critical piece of legislation passed.

 

 

Recent Articles:

CO Lawmakers Consider 529 Flexibility (Again)

 

Colorado is once again in the middle of a debate over 529 college-savings account flexibility. This time around, the biggest topic of debate is HB19-1123. That bill, sponsored by Representative Colin Larson and Senator Jim Smallwood, is set for a hearing before the House Education Committee at 1:30 p.m. on Thursday, February 14.

As the sponsors wrote in a recent column for the Denver Post, HB19-1123 would make a simple change to Colorado’s outdated law that would allow parents to utilize their 529 funds for K-12 tuition at public or private schools without fear of heavy tax penalties. If lawmakers fail to act on the issue, parents could begin seeing those penalties as early as this year.

Issue Recap

For those just tuning in, here’s some quick background on the issue. In 2017, Congress expanded the acceptable uses of 529 savings to include K-12 tuition expenses at public and private schools. That new flexibility acknowledged the fact that many families need to access their savings to meet educational needs long before their students go to college. For instance, a student might:

  • Need a more rigorous academic environment
  • Want access to a specialized program or field of study
  • Need a school closer to their parents’ home or work
  • Need a safer environment free from bullying or other issues

The main advantage of 529 accounts has always been that they allow money to grow in a tax-advantaged environment. Colorado has taken those advantages a step further by providing state tax deductions and credits for 529 contributions made individuals and corporations, respectively. Those extra state tax advantages are designed to incentivize increased saving for students’ educational futures.

Here’s where it gets complicated. While federal law now recognizes K-12 tuition as an acceptable withdrawal from 529 accounts, Colorado law has not been brought up to date. As a result, state law considers withdrawals for K-12 tuition to be “unqualified”—a designation that can carry all sorts of consequences for who ignore it.

In practice, this misalignment between state and federal law means that parents who try to utilize 529 funds in accordance with federal law could still be subject to hefty state tax penalties. These penalties will most often take the form of “recaptures,” in which the state forces parents to repay any credits or deductions taken for relevant contributions to the account.

Why Should You Care?

The recaptures mentioned above could amount to hundreds or even thousands of dollars. If a parent were to pull the maximum $10,000 for K-12 tuition, that parent could trigger a state deduction recapture amounting to $463. If a parent’s employer has also taken tax credits for contributions to the account, which can amount to up to $500 per year, the recapture of those credits could result in even higher tax bills.

Considering that the Federal Reserve has found that nearly half of American households would be unable to handle an unexpected expense of $400, these recaptures could be crippling for many families. Is that really how we want to treat parents who save for their children’s futures?

What Can I Do?

You may remember that last year’s legislative debate ended in a partisan stalemate. This legislative session, Colorado lawmakers have a chance to get it right and ensure that parents aren’t treated like tax criminals for accessing their own educational savings.

If you’d like to make your voice heard on this important issue, click on the button below to contact members of the Colorado House Education Committee. If you would like to testify in person or in writing at the February 14 hearing, please email Katrina Yoshida at kyoshida@acescholarships.org no later than Tuesday, February 12.

 

 

State Legislatures Kick Off Across U.S.

 

The beginning of January is a relatively quiet time for most folks. They settle into the new year slowly, spend time planning out the first quarter, and generally work on getting their professional sea legs back after the break.

Not so for those who work in public policy. For them, January is the first quarter of legislative game time.

ACE Scholarships works on a variety of policy issues across our eight states each year, all of which are related to existing or prospective parental choice policies. Our involvement could include conducting analysis of various policies, working with legislators and other organizations to design programs, educating various audiences about policy issues, and engaging in advocacy efforts.

If you want to know when legislative season kicks off in your state, here’s a rundown of regular legislative session start dates in all eight ACE states:

Arkansas: January 14 (biennial session)

Colorado: January 4

Kansas: January 14

Louisiana: April 8

Missouri: January 9

Montana: January 7 (biennial session)

Texas: January 8 (biennial session)

Wyoming: January 8

As always, ACE will be closely following choice-related conversations in these states throughout their legislative sessions. If you would like to follow along in real time using the same tools we do, check out our Bill Tracker page. You can use that page to access bill text, track progress, see sponsor information, and more. You can also track our latest policy releases and alerts by state here.

Please do not think that the only role for you is as a passive observer! In addition to the other tools, you can use our Action Center to make your voice heard on various issues by clicking the Take Action button below. We will update that page with new campaigns as issues emerge.