New tax credits that made South Carolina’s first private school choice program possible have proven popular with taxpayers.
Demand for the tax credits has outpaced the supply, leading a state senator to say he will try to triple the value of the credits available, expand their use and also offer tax deductions to parents who home-school or send their children to private schools.
Taxpayers have claimed all of the $8 million in tax credits the General Assembly OK’d for donations made to nonprofits that help students with disabilities pay for private school.
“There is tremendous support for a program like this,” said state Sen. Larry Grooms, R-Berkeley, a leading advocate of private school choice who will push to raise the tax credits to $25 million a year and extend the private school grants to students living in poverty.
First approved in 2013, the tax credit program was a victory for private school choice advocates, including Grooms whose previous proposals had failed to pass year after year.
However, limiting the program to helping special needs students pay for private school paved the way for smooth passage of the tax credits in the General Assembly.
In the program’s first year, 513 taxpayers – mostly individuals and couples – claimed $5.9 million of the total credits authorized, capped at $8 million, according to the S.C. Department of Revenue.
Four hundred and five children received private school grants from five nonprofits authorized to collect donations and distribute grants for private school tuition, a S.C. Education Oversight Committee report says. The grants cannot exceed the cost of tuition or $10,000, whichever is less.
Last summer, lawmakers approved another $8 million in tax credits to offer through June 30.
By mid-November, 266 taxpayers had applied to claim all of the $8 million in tax credits, granted on a first-come, first-serve basis. Twenty more applicants were rejected because all the tax credits available had been claimed, a state Revenue Department spokeswoman said.
“It's really gut-wrenching and depressing that the cap was met because I know there are still students who want and need scholarships ... and donors who want to give,” said Neil Mellen, a private school choice advocate who launched a nonprofit to help families and schools navigate the program.
The tax credit is designed to encourage donations to the scholarship programs. Donors can use the credit to reduce the taxes that they owe by up to 60 percent.
With no more credits available, would-be donors must wait to see whether lawmakers extend the latest one-year program.
Grooms has proposed a bill that would make the program permanent.
His bill also would open up the private school grants to students living in poverty. It would raise the tax credits for donations to $25 million – $10 million for special needs students and $15 million for children living in poverty.
Grooms’ bill also would offer taxpayers deductions of $4,000 for each child’s private school tuition, $2,000 for each child home schooled, and $1,000 for each child attending public school outside their home district. A parent who home schools one child could save $140 on their taxes if they pay the state’s 7 percent tax rate.
However, lawmakers might not have much of an appetite to adopt Grooms’ proposal in full. Similar proposals have died in the Legislature previously.
Grooms said he would be happy if lawmakers decided to expand the existing program in any way.
“If enough folks could take advantage of it, you could give parents another choice.”