Tax credit program to cost $9M

The price tag during the course of four years for the state of Montana to run a greatly expanded schools tax credit program would be nearly $9 million, according to a budget analysis attached to House Bill 279.

“Talk about growing government,” said Amanda Curtis, president of the Montana Federation of Public Employees, in a quick aside about the cost during her comments in opposition to the bill.

This week, the House Education Committee heard testimony on the bill, which would push a cap on tax credits for both private school scholarships and innovative programs in public schools from $150 to $200,000. The bill also includes an escalator clause, which at maximum capacity, would increase the total allowable credits from $3 million the first year to as much as $5.2 million the fourth year for just the scholarship program.

Supporters of the legislation, one of several “school choice” bills in the legislature this year, included Office of Public Instruction Superintendent Elsie Arntzen, who said she as a legislator voted in favor of the program and appreciated the opportunity for families. Republican Gov. Greg Gianforte’s policy director Glenn Oppel also testified in favor of the bill and said parents would benefit.

“It allows them to have choice in that marketplace of education services,” Oppel said.

Sponsor Rep. Seth Berglee, R-Joliet, said current system has limitations that stymie the programs. The purpose of the bill is make it easier to raise money for private school scholarships and make execution less cumbersome, he said.

“The goal of the program is to fully fund it, so to open it up as much as possible,” Berglee said.

Other backers included representatives of private schools and organizations that manage private school scholarships, along with people involved in the lawsuit, Espinoza v. Montana Department of Education, which went to the U.S. Supreme Court and opened the door to expanding the program. Jake Penwell, with ACE Scholarships, was among supporters of the bill, and he estimated the demand in private schools at roughly 3,200 seats.

“More students could access this if the aid were available,” Penwell said.

Kris Hansen, founder of Big Sky Scholarships and former legislator, said her program can give some 30 students $500 scholarships a year. If HB279 becomes law, she believes the scholarships could grow to $2,000 or $3,000 each – the actual cost of tuition, she said – and that “many, many more” children would receive them.

“You can imagine the difficulty we had in raising thousands of dollars for scholarships at $150 a clip person by person,” Hansen said. “It was a struggle to actually do the fundraising.”

Matthew Brower, head of the Montana Catholic Conference, said public education is right for some students, but not all. Catholic schools have a long tradition of providing high quality education, especially to students on the margins, and they also enroll 35 percent of students who are not Catholic, he said.

“HB279 seeks to expand these opportunities and empower parents, specifically those of lesser financial means, to choose the means of education they think best fits the needs of their child,” Brower said.

Cost was among the concerns raised by opponents, but it wasn’t the only one.

Gary Stein, a teacher at Sentinel High School in Missoula, said he went to private schools, but he didn’t think taxpayers needed to foot the bill. The public school teacher also suggested voters look at a recall of Superintendent Arntzen, a Republican, for her support of HB279.

“Ms. Arntzen as the Superintendent of Public Instruction should not be speaking in favor of this bill,” Stein said.

Former schools superintendent Rep. Mark Thane wanted to know if educational providers had to serve all students, including ones with specific or significant learning disabilities. Thane, D-Missoula, did not reference Petra Academy, supported by Gianforte, in his testimony, but at least in the past, the private Bozeman school did not accommodate students with learning disabilities.

Rep. Berglee said Hansen, with the scholarship organization, could better answer the question. Hansen said it’s up to parents to inquire with specific schools; generally, she said educational providers must follow the laws and all human rights and anti-discrimination regulations.

“There aren’t any additional requirements on them,” Hansen said.

Curtis, with the Montana Federation of Public Employees, mentioned the costs of administering the programs as just one concern. The fiscal note outlined equipment costs, operating expenses, and personnel for both the Department of Revenue and the Office of Public Instruction. The costs were estimated to be $1.6 million in the 2022 fiscal year, the first year, and nearly $3 million in fiscal year 2025.

But Curtis also said the design of the program was problematic. For example, to benefit from the credit, a school could be located anywhere in the world, she said, and the bill also eliminates testing and accountability requirements.

“Public funds should not pay for an education over which the state cannot have oversight,” Curtis said.

The state would be out $8.1 million in just 2024 with both programs, or $24.75 million over four years, according to the fiscal analysis of the proposed increase on the tax credit cap. Rep. Moffie Funk, D-Helena, wanted to know if there was a plan to backfill K-12 education as a result.

“This is taking a lot of money out of our general fund,” Funk said.

Oppel said the governor’s budget had accounted for the tax credit but did not plan to backfill public schools: “There’s no funding in the governor’s budget to replace that, whatever might be lost, to the school system.”