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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