Debate begins on legislation granting $25 million in tax credits for private school scholarships

by Paul Hammel, Nebraska Examiner
March 6, 2023

LINCOLN — Debate began Monday on a long-controversial bill to provide state tax credits for donations to private school scholarships, with advocates maintaining that the measure is about helping low-income families.

State Sen. Lou Ann Linehan of Elkhorn, the chief sponsor of so-called “opportunity scholarships” bills in recent years, said poor families should have the same choice of private and parochial schools as those with financial means to afford it.

“This isn’t about public versus private (schools), it’s about parents having the same rights that we do,” Linehan said.

“I don’t think that their (school) choices should be limited by family income or ZIP code,” the senator argued.

More generous break

Opponents of Legislative Bill 753, however, argued that the bill would funnel public funds to private schools and would provide a much more generous tax break than donations to other charities.

The bill provides a dollar-for-dollar tax credit for money donated to a group that provides scholarships for private and parochial schools.

The OpenSky Policy Institute, which opposes the bill, calculated that a $10,000 donation to an opportunity scholarship would net a $10,000 tax credit for the donor, while a tax deduction on a similarly sized donation would net at most only a $644 benefit.

“This is not about choice or access, this is about government incentivized donations,” said Omaha Sen. Megan Hunt. “It’s about giving money to rich people, as usual, using some poor people as nice marketing.”

She questioned the motivations of those who needed a generous tax break in order to donate to private schools.

Nebraska is one of only two states in the country without any kind of school choice via publicly funded “charter” schools, vouchers or tax incentives. North Dakota is the other state.

The lack of school choice in Nebraska inspired a national organization, primarily funded by Donald Trump’s former Education Secretary Betsy DeVos, to pour more than $700,000 into state legislative races to elect more school choice advocates.

Part of Pillen plan

The conservative shift in the Nebraska Legislature this year has given Linehan and other supporters of the scholarship tax break new hope that LB 753 will be passed after similar bills were derailed in the past. The bill has 30 cosponsors, and if you count its main sponsor it is only two votes short of overcoming a filibuster.

Under LB 753, which is part of Gov. Jim Pillen’s package of education proposals, the state would provide up to $25 million a year in tax credits for donations to groups that provide scholarships for private and parochial schools. That amount would escalate if all of the credits are used.

Students in poverty highest priority

The highest priority for scholarships would include students whose family’s income is below the federal poverty line ($27,750 for a family of four), special needs students or those experienced bullying at their current school.

Omaha Sen. Justin Wayne, a former member of the Omaha School Board, spoke emotionally in favor of LB 753. He said that parents in his North Omaha district are clamoring for an alternative to public schools, but they often can’t afford the tuition, and scholarships are scarce.

“Look into the camera and tell my parents why you can’t give them choice,” Wayne said, his voice rising.

Wait list, lack of scholarships

He said the only alternative school in his area, the Nelson Mandela Elementary School, has a waiting list.

But a spokeswoman for the private, tuition-free school said that isn’t quite the case.

The school’s website states that students who live in the vicinity of the North 30th Street school can apply for admission as kindergarteners or first graders. Students are selected on “need and best fit” for the rigorous academics at Nelson Mandela, which has a goal of closing the “learning and achievement” gap in Omaha between white students and those of color.

Mandela School founded in 2015

The school, which has a capacity of 216 students, was founded in 2015 and is funded by the Lozier Foundation and the Ruth and William Scott Family Foundation. The school opposes LB 753 (see box).

Doesn’t support LB 753

According to a statement from Nelson Mandela School on its Facebook page:

“From our inception in 2015, we have consistently communicated our opposition to scholarship tax credits, vouchers, and charter school systems and do not support LB 753.

Nelson Mandela Elementary is entirely funded through private donations, not taxpayer dollars.

Dianne Lozier and Nelson Mandela Elementary believe that a strong and well-funded public school system is critical to the future of our state.”

Linehan said the Children’s Scholarship Fund in Omaha raises about $2.5 million a year, providing 1,600 private school scholarships for low-income students, so a tax credit could substantially increase donations and expand the number of scholarships.

She and other backers of LB 753 maintained that it doesn’t “take away” funding for public education, and if you argue that, you would need to say the same about every tax break or spending the state allows. They added that the governor is planning to increase appropriations for public education by creating a $1 billion “education future fund” and spending an additional $250 million a year.

Not the solution to achievement gaps

Opponents of LB 753 said that directing public funds to private schools wasn’t the answer for closing the achievement gap and that the bill would provide scholarships to families who can easily afford it, not just low-income families.

Omaha Sen. John Cavanaugh introduced an amendment that he said would limit the scholarship recipients to families truly in financial need.

He said he also objected to directing state funds to private schools that “discriminate.” Cavanaugh, who is Catholic, pointed to a policy announced in August by the Omaha Catholic Archdiocese — a policy later amended — that allowed transgender students to be expelled.

He said the policy, which has prompted him to transfer his children to public school, also allowed a student to be expelled based on “values” expressed by their parents.

Much of Monday’s debate involved a battle of studies. Opponents of LB 753 pointed to reports stating that private schools do not produce higher achieving students, while supporters maintained that studies show “competition” makes public schools better.

There was also disagreement over whether the bill violated the constitution or whether court rulings have validated such measures.

Debate is expected to continue on the bill into Wednesday.

Nebraska Examiner is part of States Newsroom, a network of news bureaus supported by grants and a coalition of donors as a 501c(3) public charity. Nebraska Examiner maintains editorial independence. Contact Editor Cate Folsom for questions: info@nebraskaexaminer.com. Follow Nebraska Examiner on Facebook and Twitter.

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