Ed tax credit for public schools maxed out within minutes, raising equity concerns

Money for public schools capped at $1M; private school donation not quite as brisk

By: - January 5, 2022 7:22 pm

(Photo illustration by Getty Images)

A former public schools superintendent and Montana legislator said the increased limit on a tax credit for education is creating unequal benefits after the cap for one program hit its maximum $1 million within minutes it was available.

“If you go back to the historic lawsuits for education funding and questions about equality and equitable opportunities to education in the state of Montana, I think we’re running afoul of those court decisions,” said Rep. Mark Thane, D-Missoula.

But schools and programs that are benefiting from the donations should already have money in hand, according to the Montana Department of Revenue. The department’s Jason Slead said state statute requires that school districts and scholarship organizations have a donation before they seek preapproval for credit.

This year, the Montana Legislature increased the cap on a tax credit for education from $150 to $200,000 for donors, with $2 million allowed in all in 2022. The dollar-for-dollar credit goes to two separate programs, private school scholarships and innovative programs in public schools.

As first reported by the Montana Free Press, the credit for innovative programs in public schools hit its $1 million ceiling within minutes it was available. The Department of Revenue said the limit was met at 8:05:35 a.m., and nine school districts received preapproval for 23 donations, from $1,000 to the maximum $200,000. A KTVH story noted Big Sky Public Schools was receiving $694,000.

The Department of Revenue said as of midday Wednesday, $165,500 had been preapproved for the private scholarship credits, and $834,500 was still available. Thane, former superintendent at Missoula County Public Schools, said he anticipates the maximum to be reached for private scholarships this year as well.

“I think that you’ll see this same scenario play out with the tax credits that are afforded to those who donate to the scholarship funds that will be funneled into private schools,” he said. “And I think it’s problematic.”

During the legislative session, proponents of the “school choice” bill argued it was difficult to raise money for private scholarships at $150 a pop, but opponents said only rich people could take advantage of it, and the result would be less money for state coffers. Rep. Seth Berglee, a Joliet Republican who sponsored the bill, could not be reached Wednesday via voicemail for his perspective on whether the outcome is playing out as intended or needs adjustment.

However, Thane, who said the interim Revenue Committee will be reviewing the tax credit later this month, raised a couple of concerns with the way it is playing out. He said nothing prevented a donor from making a contribution to a public school in the past.

Now, though, he said a person who believes they’ll owe $5,000 a year to the state over the next three years, for example, can simply cut a check to their district of choice for $15,000 rather than contribute any dollars at all to the state for that period. But he said they should have skin in the game.

“I’m essentially playing with house money,” Thane said. “I wouldn’t be out any more than I would have been if I had just paid my tax bill. Yet I’ve directed very specifically where my tax dollars go.”

Secondly, he said this year, the vast majority of the tax credits for public schools went to benefit an affluent, or relatively affluent, school district, Big Sky. He said that creates an inequitable distribution of state resources.

“I know others might argue those are not state tax dollars because they haven’t been collected by the state yet,” he said. “But in my mind, it’s deflecting state tax dollars from the general fund coffers to a special school district.”

In an email, Slead said some school districts could not get all of the donations they received preapproved because the $1 million cap had been met. He said the department is determining the amount of donations that would have been made above and beyond that limit.

“We are working on getting that information by reaching out to school districts shortly,” he said.

He also said the donation portal opened on Dec. 15 for school districts or student scholarship organizations to register in advance, and users who created accounts could then log in on Jan. 3 and register the donations they received from taxpayers.

Education dollars are going here:

Public programs:

Big Sky School K-12                     

Bonner Elementary                        

Great Falls Elementary                 

Kalispell Elementary                      

Kalispell HS                                        

Livingston Elementary                  

Montana City Elementary            

Shepard Elementary                      

Somers Elementary                        

Whitefish Elementary                


12 donors received preapproval for private scholarships:

Ace Scholarships SSO, MT LLC 5 donations       

Holy Spirit Catholic School        2 donations       

St. Matthews Catholic School  5 donations       


  • For the innovative educational program, there were 20 individuals and three businesses that had donations preapproved.


  • For the student scholarship program, there were 12 individuals and no businesses that had donations preapproved.

Source: Montana Department of Revenue 


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Keila Szpaller
Keila Szpaller

Keila Szpaller is deputy editor of the Daily Montanan and covers education. Before joining States Newsroom Montana, she served as city editor of the Missoulian, the largest news outlet in western Montana.