How the HB84 private-school tax credit could affect Alabama families
by Tim Lockette
Mar 10, 2013 | 14623 views |  0 comments | 15 15 recommendations | email to a friend | print
Anniston Star illustration by AnnaMaria Jacob
Anniston Star illustration by AnnaMaria Jacob
MONTGOMERY — Jan Hurd has been waiting a long time for Alabama to set up a school choice program.

“I used to talk about vouchers in a college class I taught 25 years ago,” said Hurd, now president of The Donoho School. “I thought they would be a good thing for parents, but I never thought we’d get them here.”

Hurd may soon get her wish. Earlier this month, the Alabama Legislature passed House Bill 84, a measure that would theoretically allow a tax credit of up to $7,500 for parents of students who opt out of “failing” public schools. While technically not a voucher program, it would do what vouchers do — give parents money to spend, potentially, on a private school education. The bill, not yet signed by Gov. Robert Bentley, is on its way to the Alabama Supreme Court, after the Alabama Education Association challenged the legality of its rapid passage through the Legislature.

HB84 could have a major effect on private schools like Donoho, a college preparatory private school in Anniston with about 400 students. It could also have an effect on the pocketbooks of private-school parents, and parents who want to send their kids to private schools.

But the passage of the tax-credit program, hastily put together by the Republican supermajority a little more than a week ago, caught private-school administrators flat-footed.

“I think it’s a wonderful opportunity, but there are a lot of unknowns right now,” Hurd said.

Hurd isn’t the only one waiting for answers. The legal battle over HB84 dominated headlines last week, but there have been few answers to the question on many parents’ minds: Who gets the tax credit, and how much will they get?

One in 10?

The tax credit wouldn’t go to just anybody. The bill states that only parents of students zoned for “failing” schools would get the money. And the bill offers four different, potentially overlapping definitions of a “failing” school.

Some of those definitions aren’t yet relevant — like the rule that schools are failing if they get a D or an F on the state’s letter-graded accountability system. That system isn’t in place yet.

But the number of “failing” schools is likely to be sizable. The bill says that all schools in the bottom 10 percent in academic performance on state tests will be listed as “failing.” With 1,499 schools in the state, that would seem to make parents in 150 school zones eligible for the credit.

Malissa Valdes-Hubert, spokeswoman for the Alabama Department of Education, said the actual number is likely to be closer to 135, because some schools, including those run by the Department of Youth Services, are exempt from the requirement.

But there’s still no list that picks out schools by name. The Senate Republican caucus circulated a list of 202 “failing” schools last week that included Anniston High, Anniston Middle, Randolph Park Elementary and Tenth Street Elementary, as well as three Talladega City schools and two Talladega County schools.

State education department officials dismissed that list as flawed and said the final list will come from the department.

“You can compile this list 10 different ways,” said Eric Mackey, executive director of School Superintendents of Alabama. “There are probably some schools that would come out as failing no matter how you count it, but there’s still a lot of variation.”

‘A generous credit’

If you’re in a failing school zone, the bill says, you’re eligible for a tax credit of up to $7,500. But $7,500 is the upper limit; the bill sets the tax credit in any given year at 80 percent of the state’s cost for an individual child’s schooling. Right now, that means a tax credit of between $3,500 and $4,000 per year, according to the Association of Alabama School Boards. Sen. Del Marsh, R-Anniston, and House Speaker Mike Hubbard, R-Auburn, in a jointly-written opinion piece, said the credit would add up to about $3,500.

“It’s a very generous credit,” said Adam Emerson, an analyst for the Fordham Institute, a nonprofit based in Washington, D.C. that supports school-choice programs.

And Alabama is unique, Emerson said, in making the tax credit refundable. In other words, if the tax credit is higher than the amount you pay in state income taxes, the state will write you a check for the difference.

That still won’t help parents who don’t have the cash on hand to start private school in the first place. And even with a tax credit, parents will still have some costs to make up. Tuition at The Donoho School, for instance, ranges from $6,445 to $8,425 per year.

Ideally, scholarships would help fill the gap for parents who can’t afford to start private school. The bill offers tax credits for businesses to donate to scholarship funds for students who want to make the transition to private school.

Kids from higher-income families couldn’t get those scholarships, but the limits are somewhat vague. The bill allows scholarships for kids from families at or under 150 percent of the “median” income, but it doesn’t define median income.

“It could be the state median, the national median, the median for your community,” said Denise Berkhalter, spokeswoman for the Alabama Association of School Boards. “It’s not clear.”

At the national level, a household at 150 percent of the median income would bring in about $79,000 per year, according to the Census Bureau. If the state median were used, families could get the scholarship with an income less than $64,000. In Anniston, where the median household income is around $32,000, most families would likely qualify.

But that income requirement is just for the scholarship program. The tax credits are open to anyone — no matter how much money they make.

Finding space

Actually getting the tax credit might be more complicated than it first appears, though. The Anniston Star asked officials from the Alabama Department of Education, the School Superintendents of Alabama and the Alabama Association of School Boards for their interpretations of the law.

The superintendents’ and school boards’ groups agreed on one thing: If your child is already in private school, and you’re zoned for a failing school, you get the tax credit.

After that, it gets fuzzier. The bill allows students from a failing school to transfer to another school within the same district, and requires the district to pay for transportation.

Mackey said the bill doesn’t allow tax credits for cross-town transfer students. Berkhalter said it might.

“If there’s a cost incurred, there could be a tax credit,” she said. Still, with the transportation cost already covered by the district, she said, she doubted there would actually be a cost.

Transferring out-of-district could bring a tax credit, but experts disagree on how much money that credit would bring in. Berkhalter said the credit appeared to cover only tuition or fees charged by out-of-district schools — and might not provide a tax credit if there are no transfer fees. Mackey said those out-of-district students may be able to get the full tax credit.

Still, school policy groups say, students can go to an out-of-district school only if the school will take them.

Some local school systems, such as Piedmont City Schools, already take out-of-district students. Superintendent Matt Akin has said the system could take 100 to 200 more. Jacksonville Schools Superintendent Jon Paul Campbell has said taking additional students could put a strain on the school system.

‘Good questions’

Students who want to go to private school, and aren’t already in, may face the same problem. Getting a tax credit for private school doesn’t mean you’ll be admitted as a student.

Hurd said Donoho has traditionally tried to keep its student body fairly small, in part because it helps focus more intensely on college prep. There’s space for new students now, she said, but a major expansion in the population might call for new buildings and additional staff.

“Would we raise tuition, or would we leave tuition the same?” she said. “When we raise tuition, it’s because of facility needs and staffing.”

Hurd said that if the bill passed and applied to Anniston students, the school’s board of directors would decide whether it should expand and accept more students.

She was quick to point out that the unknowns outnumber the knowns.

“These are good questions for which I have no answer,” she said.

Hurd, who is also president of the Alabama Association of Independent Schools, said her fellow private school directors are also awaiting more answers about what the tax credit bill would mean.

If Anniston parents qualified for tax credits, a private school might be their only option for spending those credits. The city is still covered by a court order dating back to the end of school segregation. Superintendent Joan Frazier has said the order prohibits students in Anniston from attending any public school other than the one for which they’re zoned. The order doesn’t ban students from going to private schools, though.


There are other wrinkles in the plan that weren’t clear in the first days after its passage.

The tax credit probably wouldn’t apply to homeschoolers, experts say. But Mackey said the tax credit would apply to parents who pull out of failing schools and enroll their children in accredited online schools.

“I don’t think that’s something the bill’s authors intended,” he said.

Berkhalter said the Association of School Boards wasn’t convinced the tax credit would apply to online learners, though it was a possibility.

Concerned about what they call a lack of clarity in the bill, education groups have asked Bentley to make executive amendments to HB84, essentially sending it back to the Legislature to be refined.

House Speaker Mike Hubbard, R-Auburn, said in a Thursday interview that he’d discussed the possibility of amendments with the governor, and that there were parts of the bill that “need to be changed.”

It’s possible Bentley will never get the chance. Circuit Judge Charles Price has blocked the Legislature from sending the bill to Bentley for signing, pending a hearing in the AEA lawsuit March 15. Proponents of the bill have appealed to the Alabama Supreme Court, which could lift the order and allow Bentley to sign the bill.

Until then, Hurd and other private school administrators will be watching closely.

“Until it passes, until it’s signed and becomes law, I don’t think we’ll know what the effect will be,” Hurd said.

Capitol & statewide correspondent: 256-294-4193. On Twitter @TLockette_Star.

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