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Bill increasing tax credits for private schools defeated at end of session

Legislation that would have increased the proceeds from state tax credits available to private schools died a quiet death late in the just-completed 2024 session.

The proposal to increase the tax credits available through the Children’s Promise Act was defeated in the 52-member Senate with 21 yes votes and 16 no votes. Since the proposal dealt with taxation, it needed a three-fifths majority to pass.

Since 2020, private schools have been receiving money through the tax credits with limited state scrutiny or accountability, according to the Department of Revenue, which certifies schools that can participate in the program.

In response to written requests from legislators, the Department of Revenue recently reported, “DOR does not know how the funds were used.”

When asked the number of children served through the Children’s Promise Act, DOR said, “This information may be provided with the original application but is not updated annually or maintained by DOR.”

In the original application, “DOR reviews the information provided and issues a letter ruling advising whether they qualify or not.  The original request is covered under confidentiality statues.”

Under the Children’s Promise Act, a person or corporation can make a donation to one of the private schools certified by the Department of Revenue and receive a dollar-for-dollar tax credit for up to 50% of the donor’s state tax liability.

The maximum a private school currently can receive through the program is $405,000 a year.

The program was initiated in 2019 and billed as a mechanism to provide additional money to non-profits that care for foster children. But a provision to provide tax credits to private schools was tucked into the bill.

Currently under the law a total of $9 million a year in tax credit money can be doled out to private schools.

Original legislation filed during the 2024 session by House Ways and Means Chairman Trey Lamar, R-Senatobia, would have significantly increased the amount of the tax credit money the private schools could have received.  The original House plan would add another $6 million for the current year and then would reach a total of $24 million for 2025.

But in negotiations with Senae leaders during the final days of the session, an agreement was reached where the private schools would have been able to receive an additional $3 million, for a total of $12 million. But that compromise was voted down in the Senate. After it was defeated in the Senate, Lamar did not bring up the compromise for a vote in the House.

Under the current law, private schools are eligible for the tax credits if they educate:

  • Children in the foster care system.
  • Children who have a chronic illness or physical, intellectual, developmental or emotional disability.
  • Children eligible for free or reduced meals.

Nancy Loome, executive director of the Parents Campaign, said technically if the school has one student with a speech impediment, for instance, it could receive the tax credit money.

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