Denise and Daniel Henderson speak at a school choice rally alongside Elle, their foster daughter. | Courtesy of School Choice Scholarships

When Denise and Daniel Henderson’s oldest foster daughter wanted to attend a private school for middle school, they vowed to make it happen.

First, they cleared tight regulations on children in the foster care system attending schools with religious ties. A judge gave them a court order to allow Elle, then 10 years old, to take the admissions test at Portland Christian School — an “absolutely unheard of” move, Denise Henderson said.

Then came the price tag. Portland Christian, a private K-12 school off of Westport Road, costs roughly $7,000 per year, depending on the grade level.

Paying for one year of tuition was “one of the toughest things,” Denise Henderson, a nurse and stay-at-home mom, said. “It took everything,” including help from Hendersons’ parents and Daniel working extra as a restaurant manager, she said.

But it was helping Elle, who came to the Hendersons with significant past trauma. She needed an “overly safe, overly secure” spot with minimal behavior issues to scare or distract her — and that spot was Portland.

Sending their two younger foster kids to Portland was out of the question until someone mentioned scholarships from School Choice Scholarships, a third-party organization in Louisville that provides scholarships to private schools for low-income families or students with special needs or in foster care.

House Bill 205, filed Tuesday by Rep. John “Bam” Carney, seeks to allow scholarship tax credits, which would give tax breaks on donations to provide similar scholarships.  

Andrew Vandiver of Catholic Conference of Kentucky | Courtesy of CCK

Similar legislation proposed last year would have allowed for up to $25 million in credits per year in the state. This year’s bill is expected to be “very similar,” Catholic Conference of Kentucky Associate Director Andrew Vandiver said. Vandiver, a vocal tax credit advocate, has “high hopes” for a bipartisan passage this session.

If passed, those who donate to scholarship-providing nonprofits would receive a 95 percent tax credit on the donation, potentially subtracting up to $1 million from their taxes. Compared to a deduction, a credit is “significantly more generous” to the donor and “more costly to the state,” according to the Prichard Committee, a nonpartisan education advocacy group.

Allowing tax credits can encourage donations, supporters say, boosting the number of scholarships available.

Five years ago, School Choice Scholarships had around 170 students on scholarship with another 500 on a waiting list, Executive Director Heather Huddleston said.

Now, the program has 400 on scholarships and more than 6,000 on a waiting list, she said.

If the full $25 million in credits is utilized, around 7,000 additional kids in Kentucky could receive scholarships, Vandiver said. Around 72,000 students in Kentucky attend non-public schools currently.

For supporters, the legislation boils down to providing choice for families. More scholarships could mean less difficulty paying for private school tuition, allowing families like the Hendersons to send their kids to a school best for them, supporters say.

Brigitte Blom Ramsey of the Prichard Committee

The Prichard Committee is not “anti-parental choice,” Director Brigitte Blom Ramsey said, but believes any strategy to lift achievement needs to be done in an equitable way.

A scholarship may not cover the full cost of tuition, leaving the poorest families scrambling to make up the difference, opponents argue.

For example, the Hendersons said it would cost roughly $21,000 to send their three kids to private school each year. Each child gets a $2,000 annual scholarship, leaving the family to pay $15,000 out-of-pocket.

Scholarships are typically stackable with aid from private schools, Vandiver said, making it more likely to cover a reasonable portion of the cost. That aid could come as additional scholarships or discounts for those with financial need.

Private schools have a lot of empty seats, mostly because of people pulling out over cost, Vandiver said. They have an incentive to bring in students, and they can’t do that without putting the school in financial reach of families, he added.

Families go through a FAFSA-like process (used for college financial aid) to prove “objective” need to qualify for a scholarship, Vandiver said. Scholarships go to students with high needs: special education, students in foster care or qualified for free or reduced lunch.

For example, a family of four making around $44,000 or more would not qualify for School Choice Scholarships’ program. Scholarship families in Florida, a state which supporters typically point to as a program that works, have household incomes of around $28,000, Vandiver said.

HB 205 allows for scholarships to go to families making less than 200 percent of the free and reduced lunch rate — around $91,000 for a family of four. The overall distribution would the socioeconomic diversity of local districts. Nearly half of an organization’s scholarships would have to go to disadvantaged students, but groups are allowed to narrow that further.

Due to their waitlist, all new families that qualify for a School Choice scholarship go through a lottery to determine who receives aid. The randomized process also allows for a diverse recipient makeup, Huddleston said.

School Choice Scholarships doesn’t plan to help wealthier families until everyone is off of their waiting list, Huddleston said.

Opponents also point to the statewide financial impact of tax credits, arguing Kentucky could lose money in a time when its public schools are underfunded.

“There is a substantial opportunity cost to enacting such a policy when we already underinvest in the adequacy and equity of our system of public education,” Perry Papka, senior policy director at the Prichard Committee, wrote in a blog post about the tax credits.

A Legislative Research Commission fiscal note attached to last year’s bill said tax credits could have a “substantial negative impact.” Kentucky would lose $21 million in tax revenue in the first year of implementation, and that figure could continue to grow in subsequent years to as high as $50 million.

If the $25 million cap is hit, it increases by 25 percent, Vandiver said. The fiscal note takes the bill at full face value, tracking what the impact would be if the maximum amount was hit each year and continued to grow. Vandiver said this is an unlikely scenario, as Kentucky is not large or wealthy enough to donate that much each year.

At most, the legislation could cost the state more than $200 million, according to the fiscal note. 

But the LRC is not allowed to estimate potential benefits, tax credit supporters note. Students moving out of public schools would reduce district spending on students while retaining local tax dollars, Vandiver said.

Any longterm savings are “not likely” unless a full classroom’s worth of students left a district, Ramsey said. A district’s fixed costs — teacher salaries, facilities — would not drop without “significant” student movement.

Scholarship tax credits would pull money from public schools by reducing the amount of tax revenue heading to the general fund, state teachers association President Stephanie Winkler argued in a statement Tuesday.

In it, she stated that the proposed legislation would allow donors to “determine which students and schools get their tax dollars.” However, to receive a credit, donations would have to go to a third-party organization and couldn’t go directly to a school or student.

Those organizations ultimately award scholarships to several schools — School Choice has worked with over 60 schools.

“This bill is a back door charter-school voucher program,” Winkler said in a statement.

Gary Houchens

Generally, states with scholarship tax credits have seen neutral or positive financial impacts, a state board of education member, Gary Houchens, said in a blog post supporting tax credits.

A fiscal analysis by EdChoice, a national school choice organization, published in the peer-reviewed Journal of School Choice found positive impacts from $1,650 to $3,000 per scholarship student.

Houchens, also a board member of the pro-tax credit nonprofit EdChoice KY, said if the 72,000 Kentucky students not in public schools wanted to attend them suddenly, the state would need to find $287 million to pay for them.

“So students choosing a nonpublic school option actually save the state money and increasing that number would further this savings,” Houchens wrote.

Any alternative to public schools is likely to cost taxpayers money, Ramsey said. Alternatives should have a sound research base behind it demonstrating a higher probability of boosting achievement equitably.

“We should choose wisely,” she said.

Research for academic achievement benefits from tax credits programs is mixed, Prichard’s Papka wrote.

Reviews of Florida’s program “do not reveal any silver bullet” that scholarships lift student achievement, he wrote. Participants tend to perform at the national average. A new Urban Institute report, released Monday, found that participants are slightly more likely to earn a college degree compared with their peers in public schools.

On Tuesday, Ramsey said that the research is “inconclusive at best” and doesn’t show a clear way to close achievement gaps. Until there is a “significant” body of research supporting tax credits, she says, Kentucky should focus on research-based methods to improve education.

Any bill proposing scholarship tax credits should include language requiring a look at the financial and academic impact of the legislation, she said.

Ultimately, this isn’t an anti-public education movement, supporters like Vandiver say. He said he wants public education to succeed, but it isn’t what is right for everyone.

The Hendersons agree, gushing about one of Elle’s public school teachers but saying Elle has matured in the “smaller, safer” environment of a private school. She’s gained coping skills to deal with issues stemming from her trauma, and teachers are receptive to helping her.