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State Supreme Court strikes down scholarship tax credit law

State Supreme Court strikes down scholarship tax credit law

Kentucky School Advocate
January 2023

By Brenna R. Kelly
Staff writer

A program created by the legislature to offer nearly dollar-for-dollar tax credits in return for donations to scholarship accounts which could then be used for private school tuition is unconstitutional, the state Supreme Court ruled on Dec. 15.

The court, in a unanimous opinion, said that House Bill 563 and its “education opportunity accounts (EOA)” program would raise and spend public money for education outside the common schools in violation of Kentucky’s constitution.

“We respectfully decline to construe the Constitution in a way that would avoid its plain meaning,” wrote Justice Lisabeth Hughes, writing for the seven members of the court. “Taxpayers who owe Kentucky income tax owe real dollars to the state and when they are not required to pay those real dollars in the first instance or have them refunded because an EOA tax credit reduces or eliminates their tax bill, the public treasury is diminished.”

The opinion noted that many taxpayers would be subsidizing a choice by some taxpayers to send donations to the scholarship accounts “for use at nonpublic schools.”

Having Kentucky Department of Revenue employees administer the complex program of tax credits also spends public dollars on private education, the justices said.

“Simply stated, it puts the Commonwealth in the business of raising “sum[s] . . . for education other than in common schools,” the opinion states.

Section 184 of Kentucky’s constitution prohibits raising or collecting money for nonpublic education unless approved by voters.

The ruling affirms the decision of Franklin Circuit Judge Phillip Shephard in the case brought by the Council for Better Education (CBE) and several public school parents. Shepherd also ruled that the law’s provision to allow the scholarship account money to be used to pay for private school tuition in only some counties – Boone, Campbell, Daviess, Fayette, Hardin, Jefferson, Kenton, and Warren – also violated the state’s constitution. The Supreme Court said that since the law violated Section 184, the other issue was moot.

CBE and public education advocates argued that the education opportunity account program was akin to giving state-funded vouchers for private school tuition.

“Every student, no matter what he looks like or where she lives, deserves access to a high-quality public education,” said Tom Shelton, CBE executive secretary. “Spending money on voucher programs means denying students the opportunities they deserve in their neighborhood public schools because vouchers steal away scarce funding from public schools and give it to private schools that have no accountability or transparency.”

Shelton also noted that the law did not prohibit the scholarship money from being used at schools that discriminate against students based on race, gender, sexual orientation, disability or religion.

“Public dollars should never be spent to create an education system that allows, encourages or perpetuates discrimination,” he said.

Shelton also thanked the school boards, superintendents, co-plaintiffs and attorneys who worked on the case and its related issues.

Gov. Andy Beshear, whose veto of HB 563 was overturned by the legislature, said the decision should put an end to the legislature’s attempts to spend public money on private schools.

“My hope is people will read this opinion, as clear as it is, not just as striking down these accounts that the General Assembly tried to create, but as saying very clearly that the Supreme Court believes public dollars can only go to public schools, period,” he said. “No end run is available.”

Proponents of the program said it would give low- and middle-income parents a choice in where to send their children to school. Attorney General Daniel Cameron, whose office defended the law for the state, said his office is committed to ensuring the best educational opportunities for students.

“We’re saddened that parents across the Commonwealth won’t be able to use the needs-based funding provided by Kentucky’s Education Opportunity Account Program to expand learning opportunities for their children,” he said.

EdChoice Kentucky, which supported the program, said the decision means Kentucky will remain an outlier in the country in allowing school choice.

“Courts across the nation – from state supreme courts all the way to the U.S. Supreme Court – have universally upheld similar school choice programs as legitimate expressions of parents’ fundamental rights over their children’s education,” said EdChoice Kentucky President Andrew Vandiver.

In its opinion, the Kentucky justices acknowledged the proponents’ argument that similar programs in other states have been upheld by those states’ courts.

“Those other jurisdictions do not have constitutional provisions regarding education that are comparable to Section 184 of the Kentucky Constitution,” Hughes wrote, “and that alone renders their cited cases unpersuasive.”

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