The debate on providing private school scholarships for students returned to South Dakota’s legislature.
Senate Bill 159, which uses tax credits from the insurance company premium and annuity tax to fund private school scholarships, passed the Senate Education committee on a vote of 6-1.
SB 159 would provide $2 million in scholarship dollars for students, who meet set income standards, to attend private schools. The funds would be allocated through donations from insurance companies, who can then collect a tax credit up to 80 percent.
ASBSD Executive Director Wade Pogany questioned the constitutionality of the tax credit funding private schools; as the state’s constitution specifies no state appropriation of land, money, property or credit may be used to fund non-public, sectarian education.
The interpretation of “credit” remains undecided. ASBSD opposes the bill.
The $2 million funding for the scholarships would be distributed by one or more independent organizations.
Amendments made to the bill removed an “escalator” clause, which would have allowed the program to grow above the $2 million total funding, and lowered the average value of the scholarships to 82.5 percent, which bill sponsor Sen. Phyllis Heineman said would result in a “zero cost” to the state.
Sen. Heineman noted that if the program were a “tremendous success” the legislature could choose to add the “escalator” clause back to the bill.
No fiscal note was prepared for the amended version of the bill.
SB 159 would also set an average scholarship amount that is based on the current funding formula’s per-student allocation, which based on Gov. Dennis Daugaard’s funding formula adjustment – introduced through Senate Bill 131 – proposal would no longer be applicable.
Sen. Heineman suggested the program may have to use a “per-student equivalent” and noted the fiscal neutrality in the amended proposal could “unravel a little bit.”
“Seems like it may create a real operational issue,” Sen. Blake Curd said.
The bill heads to the Senate floor, but committee members expressed some concern.
“I really have trepidation for the precedent that is being set,” Sen. Bruce Rampelberg said. “I plan to support the bill, but I have concerns about it.”