KEA President Stephanie Winkler talks to reporters after a scholarship tax credit bill fails to get a committee vote. | Photo by Olivia Krauth

A “Hail Mary” push to pass scholarship tax credits in the waning days of Kentucky’s legislative session stalled Tuesday as the legislation was heard in a House committee without receiving a vote.

With less than 10 legislative days left in the session, it appears increasingly unlikely tax credit legislation will pass both chambers and make it to Gov. Matt Bevin’s desk in 2019. Bevin said Tuesday he was supportive of the legislation and would sign it, should it get to him.

Tuesday’s House Appropriations and Revenue Committee meeting, the last scheduled for the session, continued a rollercoaster of a week for House Bill 205’s supporters. Some supporters believed the bill could have died quietly last week, much like it did in past sessions, but backing from key lawmakers like House Speaker David Osborne revived the bill.

But that new life was quickly dashed by fierce opposition from the statewide teachers union, who called the scholarships “backdoor vouchers” for private K-12 schools. Education officials and advocates decried the bill for pulling as much as $25 million in tax revenue from the state in its first year, with that number potentially climbing.

Kentucky superintendents jumped on teachers’ activism bandwagon over the weekend and Monday, with all 173 district leaders opposing the scholarship tax credit bill. Districts’ fixed costs would not drop as students — and their per-pupil state funding — left for private schools to utilize the scholarships, they argued.

If the bill passed out of Tuesday’s committee hearing, a sickout or larger strike could happen, teacher activists warned Monday.

Supporters found out late Monday night that the House A&R committee would hear the bill for discussion only on Tuesday, dashing hopes the bill would make it to a House floor vote and onto the Senate by the end of the month.

Since the bill has already hit two readings in the House, a committee passage Tuesday would have readied the legislation for a potential floor vote Tuesday afternoon.

Supporters like Andrew Vandiver — the associate director of the Catholic Conference of Kentucky who also unsuccessfully pushed for the legislation in 2018 — feel the groundwork has been laid.

With greater public awareness and backing from key lawmakers, Vandiver thinks 2020 could be the year the bill passes. He called the lack of a committee vote was a “set back,” but said his hopes aren’t over until the session is over.

Kentucky Education Association President Stephanie Winkler also stressed an “it ain’t over until it’s over” mentality after the committee meeting Tuesday. Educators are still on edge and cynical from last year’s session when lawmakers pushed pension reform into a sewer bill at the very end of the session and passed it without the required number of readings.

HB 205 could still pass this session through a few long shot methods, including tacking it on to a different bill like with the sewer bill last year. A special committee meeting also could be called to vote on it, or it could be transferred to a different committee for a vote. Lawmakers could focus on its companion bill, Senate Bill 118, instead.

The bill would still need to clear the House, where lead sponsor Rep. Bam Carney wants to gain the 60 votes required for an appropriation bill in a non-budget year. After the hearing, Carney told reporters he doesn’t think he has the votes yet.

In front of a room split by red and yellow clothing — red shirts for public education, yellow fleece scarves for school choice — lawmakers heard testimony from parents benefitting from scholarships and superintendents worried about the financial impact on their districts.

Scholarship tax credits would provide tax breaks to those who donate to nonprofits providing scholarships for private schools, with a cap of $25 million in credits in the first year. If donations hit 90 percent of that figure, the ceiling can increase over the coming years.

Critics, including superintendents, say it would pull too much money from schools, both in lost tax revenue and SEEK funds leaving districts. Some believe the bill could pull 1 percent of public school kids towards private schools. In a district of 3,000 students, that would mean 30 missing students — not enough to warrant staff reductions or fewer bus routes, one superintendent noted Monday.

Supporters argue the scholarships, which would go to low-income families or students in the foster care system or with special needs, allow for more school choice for those who may not be able to afford private schools. If 30 affluent students decided to leave the district, they could, and a superintendent would have to handle the financial change, one supporter said. But district leaders could stop a bill to afford the same freedom to low-income students, they said.

It can be tricky to determine just how much Kentucky could save or lose in revenue, as it is possible all $25 million in credits won’t be given out. It is also difficult to speculate about the “switcher rate” — how many students would leave public schools for private.

A fiscal analysis of HB 205 by the Legislative Research Commission found that Kentucky would lose $32 million in tax revenue in fiscal year 2020, with that number topping out in fiscal year 2022 at $50 million.

But the LRC cannot estimate how much the state would save in SEEK funding when kids transfer out of public schools. A new analysis prepared by the budget director’s office of the Bevin administration, trying to account for that, said Kentucky would lose $10 million in FY20 and continue to lose until the credit sunsets in FY24.

Then, it found, Kentucky would begin earning money from the smaller student body in public schools. “If properly anticipated, the budgetary SEEK savings will nearly offset the fiscal impact of the tax credit in the long-run,” the analysis said.

Both sides said the focus should be on kids but disagree on the best route. Three parents of students in private schools — including Denise Henderson who Insider Louisville wrote about last month — stressed the legislation would help families meet their kids’ needs.

Two parents said their kids needed schools that focused on severe learning differences, but those schools can be expensive.

“I just about fell out of my chair,” one parent said upon learning the roughly $13,000 tuition cost of the Meredith Dunn School in Louisville. He said he works 60 hours a week to afford it, and a scholarship would help him spend more time with his son.

But multiple superintendents who spoke said the money potentially lost by the legislation could be better used by replacing funds cut from public schools, which should be lawmakers’ top priority.

“Kentucky, we are better than House Bill 205,” Dayton Independent Schools Superintendent Jay Brewer said.

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Olivia Krauth
Krauth reports on education in Louisville, including JCPS, the University of Louisville and state policy. Before joining Insider Louisville, she covered technology and business as a reporter at TechRepublic. She also spent time on the data team at the Austin American-Statesman in Texas as a Dow Jones intern. Krauth graduated from UofL, where she was an award-winning editor of The Louisville Cardinal and obtained a degree in investigative journalism with a minor in Russian studies. Email Olivia at [email protected]