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Senate panel advances $2 million scholarship tax credit for low-income K–12 families
Summary
The Senate Revenue & Tax Committee voted to pass SB 680, a capped $2 million income tax-credit program aimed at funding private tuition scholarships for households under 200% of the federal poverty level; the bill drew testimony from education leaders, parents and DFA on administration and fiscal effects.
Senators in the Revenue & Tax Committee approved SB 680, which would create an income tax credit to fund scholarships for kindergarten through 12th-grade students from households with incomes below 200% of the federal poverty level. Sponsor Senator Dismain said the program is capped at $2,000,000 a year, would be administered by a scholarship-granting organization and is intended to help roughly 250 children.
The bill’s sponsor characterized the measure as a targeted choice program. "This is about allowing parents to make decisions that are in the best interest of their child's, lives and their particular situation," Senator Dismain said during his presentation. The bill limits awards so a contributor cannot claim credits beyond the contributor’s tax liability, and credits would be awarded on a first-come, first-served basis and may be carried forward for up to three years.
Opponents, including Mike Hernandez, executive director of the Arkansas Association of Educational Administrators, and Dale Quarry of the Arkansas Rural Education Association, argued the proposal weakens oversight and creates a two-tier system of accountability. "I feel like...we're abandoning what we say is important," Hernandez said, urging caution about differing regulatory standards between public and private providers.
Johnny Key, representing the Department of Education, told the committee the department sees SB 680 as "a reasonable and responsible approach to providing additional educational choices for low income families" and said, because the credit is capped at $2,000,000, the department does not view the measure as interfering with Arkansas' constitutional duty to fund public education.
Paul Gearing of the Department of Finance and Administration told the committee DFA would issue and maintain the inventory of credits and estimated the FY2023 revenue impact at $2,000,000, with approximately $100,000 in additional personnel costs to administer the credit. Sponsor and supporters emphasized the narrow scale and cap when defending the bill against claims that it would materially reduce public-school funding.
After testimony and questions, the sponsor moved the committee to "do pass." The motion, made by Senator Desmayne and seconded by Senator Johnson, carried on a voice vote and the chair announced the bill passed. The committee record shows public testimony both for and against the measure; the bill will proceed in the legislative process.
