(SNR) - A bill proposed to the
Nebraska State Legislature is growing in popularity among
Catholic parents and others who believe in the freedom to choose
the best school available to meet their children’s needs.
LB 50, which was introduced by Senator
Bob Krist of District 10 in Omaha and co-sponsored by Senator
Tony Fulton of District 29 in Lincoln, helps support school
choice by providing an income tax credit for individuals and
businesses who contribute to scholarship funds managed by
Scholarship Granting Organizations (SGOs).
An SGO, according to LB 50, would be a
new non-profit organization that has the sole purpose of using
at least 95 percent of their annual revenue to award
scholarships that would help offset the costs of private-school
tuition for Nebraska children.
"LB 50 is going to give more parents
the choice to send their kids to private education with
financial assistance via scholarships," said Nebraska Federation
of Catholic School Parents President Jim Stolze.
Mr. Stolze currently has two children
attending Daniel J. Gross Catholic High School in Omaha. He
believes that Catholic education is worth the investment.
"We think it creates a well-rounded
person, spiritually and academically," he said. "It’s also been
proven that in private schools – especially Catholic schools –
graduation rates are higher and test scores are higher."
Unfortunately, there are many families
in the state who cannot afford private school tuition. Those are
the families that will be helped by this bill.
LB 50 would limit the qualifying SGOs
to those that award scholarships based on financial need. The
SGOs would also be required to provide scholarships to students
of at least two different schools that meet state standards for
legal operation, including non-discrimination.
"From our perspective, LB 50 is about
enabling more Nebraska children to be educated in privately
operated schools, in accord with the wishes and desires of their
parents," said Jeremy Murphy, associate director for Education
Issues for the Nebraska Catholic Conference when he addressed
the Unicameral on February 16.
"Low- and limited-income families have
very limited options to enroll their children in private
schools," Mr. Murphy pointed out. "Many families are
underprivileged, struggling financially, and really need more
assistance than our schools can provide to them and still
At Sacred Heart School in Falls City,
principal Douglas Goltz is keenly aware of the sacrifices that
families make to send their kids to parochial school.
"The economy is tough," he said,
"We’ve got people who are making big sacrifices. They’ve got to
eliminate some of the things they’d like to do, those extra
things that you have to do without."
According to a survey released in
September of 20091, "More than eight out of ten
likely voters in Nebraska would choose some form of private
education if they could."
By passing LB 50, the Nebraska
Unicameral can help make private education possible for many
families who currently can’t afford it, even if it is the best
school choice for their children.
Statewide, a little more than 11
percent of Nebraska kids in grades Kindergarten through twelfth
grade are being educated in private and parochial schools. In
some counties, the figure is nearly 30 percent. When LB 50
becomes law, those percentages will rise.
This could be helpful to the state,
because the cost of educating students in public schools would
be lessened, even with the tax credit for scholarship
The bill caps the total amount of tax
credits for the first year to $10 million. It also caps the
total tax credit that can be received at 65 percent of the
For example, if a donor made a
qualifying contribution of $100, they would receive a $65 tax
credit from the State of Nebraska. The reason the LB 50 tax
credit is capped at 65 percent is because such a donation might
also earn an itemized deduction on the donor’s federal tax
Many parents who currently send their
children to Catholic schools are happy about LB 50, because it’s
an opportunity to get tax relief related to education. The
reality is, parents who choose parochial and other private
schools ease the state’s financial obligation to public
education in two ways.
First, by enrolling their kids in
private schools, the state has fewer children to educate.
Second, these families still have to contribute to public
education with their tax dollars. Collectively, families who opt
for private schools save the state millions of dollars by using
these privately funded institutions.
According to the Nebraska Catholic
Conference, "If the 38,098 children being educated in
other-than-public schools were instead enrolled in public
schools, additional state and local revenue in excess of $375
million would be needed each year to maintain the same per-pupil
Mr. Stolze is optimistic about the
long-term effects of LB 50.
"It will stabilize some schools that
have been losing students, and in many cases increase attendance
in private schools," he predicted. "There may even be new
He also believes that strengthening
private education in Nebraska will be good for the public
"Competition helps everyone," he said.
Mr. Goltz would like to see families
get some financial relief.
"Even though our tuition is low, it
still adds up," he said. "Any way they could get some assistance
would be great."
Anyone who wishes to support LB 50 can
sign the online petition at
attend the Educational Freedom Rally on Tuesday, March 22 (see
information on page 16).
For more information about LB 50,
including a link to the full text of the bill, please go to
http://bit.ly/dVhh3R or visit
and click on "Education."
1. Survey conducted by Strategic Vision, an Atlanta-based
polling agency, surveying 1,200 likely voters with a margin of
error of +/- 3 percent. The survey is available for viewing at
Questions About LB50
What would LB 50 do?
It would establish a state income-tax
credit for a portion of donations made to any state-certified,
non-profit organization that provides private school tuition
scholarships for children from low- and moderate-income
families. This will encourage individuals and businesses an
additional incentive to financially support scholarship
Why should we want this tax
Many Nebraska families want to choose
private education, but they can’t pay tuition costs. More
privately-funded scholarships would give more families the
freedom to make educational choices.
How much of a tax credit could
an individual or business claim?
The available income-tax credit would
be limited to 65 percent of total contributions made to
certified Scholarship-Granting Organizations during the tax
year. It’s limited to 65 percent because these donations are
also typically eligible for federal tax deduction.
How is a tax credit different
from a deduction?
A tax deduction lowers the amount of
gross income that is taxed. A credit reduces the total amount of
Why does LB 50 propose a tax
credit rather than a tax deduction?
Tax deductions for charitable
contribution only provides a small benefit compared to a tax
credit. Because the scholarship programs authorized by LB 50 are
entirely privately funded, the incentives to contribute must be
as meaningful as possible or the program will not raise enough
revenue to make a real difference.
Is LB 50 good for the State of
Private-school enrollment reduces
costs for state and local government, so providing strong
incentives for scholarship contributions is in the best
interests of taxpayers, as well as children who would receive
How would LB 50 affect state
State government would forego the tax
revenues claimed by the eligible credits, up to the ceiling
established by the legislation. The lost revenue would be offset
by the savings of not having to pay the per-pupil state aid for
children who use scholarships to attend private school. This
program could result in a significant net cost savings annually
– even millions of dollars over a 10 year period.
What is a Scholarship-Granting
An "SGO" would be a special-purpose,
nonprofit, charitable organization that would have tax-exempt
status. Each "SGO" would obtain charitable contributions and
award scholarships to eligible applicants.
Why not authorize a state
agency to administer the scholarship programs?
These would be privately-funded
scholarship programs, which would have to do their own
fundraising. Government agencies do not administer private
What would prevent an SGO from
raising a lot of money and then not using much of it to award
scholarships? What controls administrative costs?
The policy established under LB 50
would require each SGO to distribute at least 95 percent of its
annual revenue as scholarships for eligible students. Only five
percent of revenue could be set aside for paying administrative
Since SGOs would be private
programs, what would prevent them from discriminating in
Each SGO would be required to have
obtained 501(c)(3) tax-exempt status from the Internal Revenue
Services. Thus, all federal prohibitions against discrimination
by such federally tax-exempt organizations would apply.
Who would qualify for a
scholarship from an SGO program?
Each Scholarship-Granting Organization
would set its own overall eligibility standards, subject to
requirements set forth in the legislation.
What would be the monetary
value of a scholarship awarded to an eligible student?
Each SGO would establish its own
scholarship amounts based upon its revenue and its particular
approach for helping families. Experience in other states shows
that SGOs really focus on scholarships as a leg-up for families,
not often full-ride support.
Where and how would families
use these scholarships?
Scholarships awarded through this
program could be used in any private school located in the state
that is non-profit and approved or accredited under regulations
administered by the Nebraska Department of Education. Each SGO
would determine the qualifying schools for which it would
provide scholarships. The legislation would require that each
SGO must award scholarships to at least two different schools.
Is this program a voucher?
No. Vouchers involve a direct
appropriation or transfer of government funds to pay the costs
of private education. The tax-credit-supported scholarship
program would be funded by private donations, not public funds.
Won’t this scholarship program
take funding away from public schools?
Nothing in LB 50 would require the
state to reduce funding to a particular public school district
or on a statewide basis. To the extent that state aid is
distributed on a per-pupil, cost-of-education support model,
school districts would have some reduction in funding for
children who enroll at a private school, but that would be the
case with or without the LB 50 scholarship program. What’s more,
the loss of some state aid notwithstanding, local school
districts would have an enhanced potential to do more per
enrolled student with local resources. This program can be a
win-win for all Nebraska students.
Doesn’t this represent public
support for religious institutions?
No. LB 50 proposes a student-based
scholarship program that would be funded through voluntary,
private, charitable contributions. The state tax credit would
operate as an incentive for voluntary, private participation in
a worthy public good, i.e., educational choice and opportunity.
This is like allowing tax deductions for charitable
contributions to churches and other private charities, which
help meet the needs of the common good. Courts have considered
the issues and have consistently upheld the legal basis for such
Would this program impose more
regulations or limit the autonomy of private schools?
No. For one thing, no private school
would be required to participate in the program or accept
scholarships. For schools that do participate, there might be
some reporting requirements to the SGO—not to the state—and
these requirements are not expected to be significant. In
addition, a provision of LB 50 explicitly prohibits the Act from
being construed as granting any expanded or additional authority
to the State to control or influence the governance or policies
of any participating private school.
Do these types of tax-credit
scholarship programs exist in other states?
Yes. Seven states have similar
tax-credit scholarship programs, which vary by the amount of
credits, program caps, and eligibility criteria. For instance,
Iowa’s program raises $7.5 million per year and provides
scholarships to 9,624 students per year. Iowa authorizes the 65
percent state tax credit similar to what is proposed by LB 50.
Programs also exist in Arizona, Florida, Georgia, Indiana,
Pennsylvania, and Rhode Island. Oklahoma most recently passed an
SGO program, which is still in the implementation stages.