Michigan House, Senate OK bills creating tax credits for school scholarships

Beth LeBlanc
The Detroit News

Lansing — The GOP-led Michigan House and Senate are advancing bills Tuesday that would provide tax credits to residents who contributed to a scholarship program for students to use on alternative or supplemental education, including nonpublic schools. 

The bills, introduced last Thursday, passed quickly Tuesday morning through House and Senate education committees. The full Senate chamber approved the legislation 20-16 later Tuesday morning, and the House voted 55-48 Tuesday afternoon a separate identical package. 

Since the bill packages are separate, one or the other will have to be approved by the opposite chamber in the coming days before heading to Democratic Gov. Gretchen Whitmer's desk, where it ist likely to receive a cold welcome.

Critics argue the scholarship program amounts to an unconstitutional voucher program, while supporters maintain the alternative education opportunities are essential after a year of remote learning. The Michigan Constitution bans spending public money directly or indirectly on private schools.

"After a year unlike any other, I think it's time we rethink education," said Sen. Lana Theis, a Brighton Republican who sponsored the bills alongside Sen. Tom Barrett, R-Charlotte.

"...There is no reason our kids can’t be among the most successful in the country but doing things in the same way over and over again will not lead to success," Theis said. 

Sen. Dayna Polehanki, D-Livonia, said the legislation appears to run afoul of Michigan's constitution, which bans public funds — including in the form of tax benefits — from going to nonpublic schools. 

"It seems plausible that private and religious schools could be the biggest recipients of these funds," Polehanki told Barrett and Theis at a Tuesday committee hearing. "So we have private donors getting tax benefits from taxpayer dollars to pay for kids to attend private or religious schools. You know and you know, senators, that the Michigan Constitution is crystal clear on the subject of using public money for private or religious education.”

Whitmer's office called the legislation a "non-starter" that violates Michigan's constitutional protections for public school funds.

"This legislation undermines that constitutional guarantee, permitting the diversion of hundreds of millions of taxpayer dollars annually to private institutions," Whitmer spokesman Bobby Leddy said. "Michiganders are tired of the attempts to force a Betsy DeVos-style voucher program that drain resources from our public schools."

DeVos 'litmus test'?

Michigan's so-called Blaine Amendment, approved by voters in 1970, prohibits public dollars from being used for nonpublic schools. Legal and petition initiative efforts seeking to undo the amendment in the decades since its passage have been unsuccessful, even those that received millions of dollars in support from West Michigan's DeVos family.

House Republicans have said 28 states have successfully adopted similar programs to the one approved Tuesday. An expert said earlier Tuesday Michigan essentially is "landlocked" by states with either a voucher or tax-incentivized program.

Rep. Bryan Posthumus, R-Cannon Township, argued the legislation wouldn't violate the Blaine Amendment because the money would go to scholarship-granting organizations and not directly to private schools. He said the income eligibility requirements in the bill give at-risk students a chance at opportunities usually afforded to students from families with more income. 

"For too long here in Michigan, we’ve allowed zip codes and parents’ wealth to determine the educational opportunities for kids," said Posthumus, who sponsored the House legislation with Millington Republican Rep. Phil Green. "This legislation is an opportunity to fix that.”

Posthumus said he had not been in communication with Whitmer's office about the bill, but noted the Michigan Education Association is opposed.  

"We’ll find out very quickly whether the governor is on the side of teachers'  unions or whether she’s on the side of parents and kids," Posthumus said.

The legislation is nothing more than a nod to the "Betsy DeVos agenda" and amounts to an "assault" on public education, said state Rep. Brenda Carter, D-Detroit.

"This is just a tax break for the wealthy who already have the ability to donate to as many private schools they want to," Carter said.

“It’s no coincidence that there is a campaign finance deadline tomorrow," added state Rep. Darrin Camilleri, D-Trenton "These bills are nothing more than a DeVos litmus test to funnel her enormous wealth to legislators who share her desire to privatize our public schools.”

How program would work

Under the legislation, individuals could contribute money toward scholarship-granting organizations under the Student Opportunity Scholarship program for which they would receive a tax credit. The program would be capped at $500 million in contributions each year. 

To receive a scholarship from the fund, a student would have to be in a household with an income under 200% of the financial eligibility for free or reduced lunch, have some sort of disability, be in the foster care system or have someone else in their household receiving funds through the Student Opportunity Scholarship program. 

The funds could be used on tuition or fees for public or nonpublic education or online learning programs, tutoring, extracurricular programs, textbooks or instructional materials, computer hardware, uniforms, standardized test fees, summer school, after-school programs or child care, dual enrollment, transportation, sports fees or career or technical programs.

For a public school student, the funding would be capped at $500 or, for a public school student with a disability, at $1,100. 

For nonpublic school students, the funding would be capped at 90% of the minimum foundation allowance spent on public school students, minus three-eights of the percentage that the household income exceeds free or reduced lunch eligibility criteria. For a nonpublic school student with a disability, scholarship amounts would be capped at 90% of the minimum foundation allowance without consideration of household income.

Nonprofits wishing to participate in the program would apply to the Michigan Department of Treasury for certification and renewal as a scholarship-granting organization. The application would need to include proof of their nonprofit status and descriptions of how they would determine eligible students, the application process used for interested students and the process the nonprofit would use to approve education service providers for the program. 

To receive certification or renew certification for a scholarship-granting organization, the Treasury Department would need to ensure the nonprofit could or did allocate 90% of the scholarship funds it received, maintain separate accounts for the scholarship funds and operating budgets, and used two or more education service providers in administering scholarship funds.

The nonprofits could keep no more than 10% of the scholarship funds for administrative expenses.

The tax credits would mean up to $500 million a year less in the state general fund and some losses from the school aid fund, as well as the possibility that more students and funding leave public schools for nonpublic institutions.

Parents push for aid

Traci Lambert, a northern Michigan mother to a student with Down syndrome, told senators Tuesday that the funding would have helped her to get the best education possible for her daughter after battling the school district for years for better, more integrated learning experiences. She said she was left to pay out of pocket for additional therapies, testing and reading programs for her daughter. 

"Ultimately, many parents like me are spending their child’s college education funds on their public K-12 education," Lambert said. 

Jessie Bagos of Royal Oak expressed frustration with the school system after her twin sons were forced to spend much of their kindergarten education last year at a computer screen. If additional funding had been available, her sons could have attended private schools that provided in-person options, she said. 

"Our tax dollars are paying for public education and yet we were denied our rights to go to school," Bagos said. "Parents were paying to send their kids to these pods or daycares where they could sit in front of a computer with other kids, and that was OK? But going to school in person wasn’t?”

Bagos advocated for making the scholarship program available to more individuals than those currently covered by the income eligibility listed in the legislation. 

Bagos also is a plaintiff in a recent lawsuit filed against the state by the Midland-based Mackinac Center for Public Policy over prohibitions on the use of  the tax-incentivized Michigan Education Savings Plan for nonpublic school tuition. 

The suit filed last month asks the court to declare Michigan's Blaine Amendment unconstitutional and stop the state from demanding a tax cut refund from people who use their education savings for private K-12 education.

Voters last rejected a proposed constitutional amendment initiative for school vouchers in 2000. 

School groups respond

Peter Spadafore, deputy executive director of the Michigan Association of Superintendents and Administrators, said Tuesday that the association would be urging the governor to veto the bill. 

"Michigan voters have continuously rejected using public dollars for private schools and this is just an attempt at an end run around that," Spadafore said. "A voucher by any other name is still unconstitutional in the state of Michigan."

The conservative school choice group Great Lakes Education Project celebrated the legislation and said it would allow communities more "opportunities for success." 

“Our kids need instruction tailored to their individual needs, so they can get an education that allows them to stay on track during pandemic disruptions," said Beth DeShone, executive director for the project. "GLEP is excited about the legislation approved today that would allow students to access the school, services, and tools necessary to meet their individual learning needs.” 

Similarly, the West Michigan Policy Forum supported the bills, arguing they would help to reverse pandemic learning loss. 

"We can’t let this learning loss become permanent," said John Kennedy, chairman of the West Michigan Policy Forum. "Michigan needs to provide parents the resources for them to get their children the help and education each child deserves.