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Council for Better Education sues over tax credit bill


Kentucky School Advocate
August 2021

By Brenna R. Kelly
Staff writer

Next month a judge is set to hear arguments in a lawsuit filed by the Council for Better Education (CBE) over a new law that will provide tax credits to people who donate to accounts which can then be used for private school tuition.

The CBE, a nonprofit made up of 168 of Kentucky’s public school districts, contends in the suit filed June 7 in Franklin Circuit Court that the tax credit portion of House Bill 563 is unconstitutional because it sends public dollars to private schools through the tax credits.

The state constitution “demands that public funds be used to improve public schools in Kentucky and prohibits public money from being shifted to unaccountable private schools,” CBE said in a news release announcing the litigation.

In 1984, CBE filed a lawsuit over public school funding which resulted in the 1989 landmark Kentucky Supreme Court decision in Rose v. Council for Better Education.

In that ruling the court said the General Assembly had an obligation under the state’s constitution to provide for and oversee an efficient system of common schools.

In the new lawsuit, the group contends that the state’s “constitution requires any programs that fund schools other than the common schools be approved by Kentucky voters,” said Tom Shelton, CBE spokesman.

Along with CBE, Frankfort Independent Schools and Warren County Schools, whose boards of education recently voted to join the litigation, are co-plaintiffs along with three parents of public school students, including parents from Franklin County Schools and Jefferson County Schools. The lawsuit names the state Department of Revenue

Under HB 563 the state will forgo up to $25 million annually for five years in tax credits to donors who give to organizations that award funds to education opportunity accounts. Donors can recoup up to $1 million per year in state tax credits.

Students who reside in counties with at least 90,000 residents will be allowed to use these accounts to pay private school tuition.

The complaint claims that the accounts are a workaround “to avoid the plain constitutional prohibition against the public funding of unaccountable private schools” but the result is the same, “state expenditures will impermissibly fund private schools.”

The CBE had asked Franklin Circuit Judge Phillip Shepard to prevent the Kentucky Department of Revenue from approving the tax credits on June 28, the day the new law took effect. But the CBE withdrew its request when the department said it would not start approving the credits until at least October.

A hearing in the case is scheduled for Sept. 16 in Franklin Circuit Court.

When he vetoed the bill, Gov. Andy Beshear predicted that someone was likely to challenge the bill’s constitutionality, as did some proponents of the bill as it moved through the legislature where Beshear’s veto was overturned.

Though KSBA is not a party to the lawsuit, the association noted in a statement that the lawsuit is not “the first time our state courts have weighed in on public education funding questions. A body of jurisprudence has formed over many decades, staking the parameters of school funding, including what the state or local boards can or cannot do with funding.”  

Boards that have approved a resolution in support of CBE lawsuit:
• Barren Co. Schools
• Berea Ind. Schools
• Bourbon Co. Schools
• Campbell Co. Schools
• Carlisle Co. Schools
• Clinton. Co Schools
• Cloverport Ind. Schools
• Danville Ind. Schools
• Daviess Co. Schools
• Elizabethtown Ind. Schools
• Hardin Co. Schools
• Henderson Co. Schools
• Hopkins Co. Schools
• Frankfort Ind. Schools
• Fulton Ind. Schools
• Jefferson Co. Schools
• LaRue Co. Schools
• Martin Co. Schools
• McLean Co. Schools
• Montgomery Co. Schools
• Morgan Co. Schools
• Shelby Co. Schools
• Union Co. Schools
Source: CBE

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