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Senate passes broader tax credits for Alabama Accountability Act scholarships


By Chip Brownlee
Alabama Political Reporter

MONTGOMERY — The Senate has narrowly given the go-ahead to a bill that would double the tax credit cap for contributors to the Alabama Accountability Act’s private school scholarship program.

The Senate approved the bill by President Pro Tempore Del Marsh (R-Anniston), which would increase the cap on income tax credits for donations to scholarship-granting organizations from $50,000 a year to $100,000, by a vote of 17–15.

The donations could also be claimed as a credit for up to 100 percent of the individual’s tax liability under Marsh’s change to the Act — up from 50 percent in previous iterations of the bill.

If the bill passes the House and is signed by the Governor, companies will also be able to donate to SGOs and receive a tax credit for their gross utility tax liability — also up to $100,000 a year.

The changes, Marsh hopes, will help bump donations to scholarship granting organizations, which give scholarships to students to attend private schools. In 2016, the State issued less than $20 million in income tax credits for donations — down from nearly $26 million in 2015.

Some SGOs, however, like the Alabama Opportunity Scholarship Fund, had more than $4 million on hand in reserves as of June 30, 2016. Another, Scholarships for Kids Inc., had more than $10 million on hand.

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“We’ve been told that all the money has been given out,” said Sen. Paul Bussman, R-Cullman. “My concern is that if they’re not giving out all the money, do we really need to start doing more tax credits.”

Marsh said the large rollovers are to make sure that there is money for the new school year. Scholarships for Kids spent almost $5 million in scholarship grants in the first half of 2016, according to the most recent report available.

But they ended 2016 with nearly what they started.

But with falling donations, it may be hard to keep kids on scholarships, Marsh said.

“The important thing to me is that these kids that are in this program have a chance to stay there,” Marsh said.

Even though Marsh’s bill does not affect the current $30 million cap on annual tax credits issues, some Senators were concerned that additional AAA donations and tax credits could take away money from the State’s K-12 public schools — an argument that dates back to the AAA original debut in the Legislature in 2013.

The concerns pushed seven Republicans and an independent to join seven Democrats in voting no on Marsh’s measure, which narrowly passed the Senate 17-15.

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The Alabama Accountability Act, which passed the Legislature in 2013, gives tax credits to and sets up scholarship opportunities for families who wish to send their kids to private schools.

Families who are zoned for schools performing in the bottom 6 percent of schools statewide — dubbed “failing schools” — can receive the refundable tax credit. Any parent who wishes to put their child in a private school is eligible for scholarships.

Marsh’s bill this semester, SB123, would change “failing” to underperforming”, a change he said was requested by educators across the State.

In the most recent report, only a third of students who are currently receiving scholarships actually came from a failing school. And a University of Alabama study last year showed that AAA students performed no better than public school students, though the University said the report was inconclusive because of a lack of available data.

Sen. Quinton Ross, D-Montgomery, also questioned the legitimacy of many of the scholarship-accepting private schools, including one that he found called Cowboy Church Ministries, which is an unaccredited Christian school.

“In terms of accountability, we need to know who these people are because we don’t collect a lot of data,” Ross said. “A lot of these schools are not even accredited.”

Changes to the AAA passed last year require accreditation. Schools have until 2019 to become accredited.

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The bill will now head to the House for consideration.

Email Chip Brownlee at [email protected] or follow him on Twitter.

Chip Brownlee is a former political reporter, online content manager and webmaster at the Alabama Political Reporter. He is now a reporter at The Trace, a non-profit newsroom covering guns in America.


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