Judge rules tax-credit scholarship program violates Ky. Constitution
A Franklin County judge ruled Friday that the state’s new controversial tax-credit scholarship program violates the Kentucky Constitution. The ruling is a blow to advocates of K-12 school privatization.
The Republican-led legislature narrowly passed the Education Opportunity Account Program earlier this year. It would allow individuals and corporations to donate to a scholarship fund run by a nonprofit “account granting organization,” or AGO. The donor would receive a state tax credit of up to 97% in return. Low- and middle-income families in the state’s nine most populous counties would be able to apply to the AGO to use those funds for private school tuition.
The nonprofit public education advocacy group Council for Better Education sued to challenge the program in court in June, representing two Kentucky school districts and a group of parents.
Circuit Court Judge Phillip Shepherd agreed with the plaintiffs that the Educational Opportunity Account Program violates provisions in the Kentucky Constitution that prevent tax dollars from going to private schools.
Shepherd cited a constitutional provision that states, “No sum shall be raised or collected for education other than in common schools until the question of taxation is submitted to the legal voters.”
Attorneys with the national libertarian think tank Institute for Justice, which intervened to defend the program, argued that because the would-be tax dollars never enter the state’s coffers, the funds should be considered private, charitable donations.
“Here, applying the plain language of the Kentucky Constitution, the income tax credit at issue raises a sum of money for private education outside the system of common schools. That it does so through a tax credit rather than a direct appropriation is not relevant, applying the plain language of §184,” he wrote.
Shepherd also struck down the law on the basis that it violates the state’s anti-favoritism laws, because it limits certain provisions to counties with more than 90,000 people.
The judge also echoed the plaintiffs’ concerns that the program could send funds to private schools that discriminate against certain students. The law prevents the state from forcing participating private schools to change their “creed, practices, admissions policy, or curriculum.”
“Accordingly, the funds can be paid to schools that exclude children with learning disabilities, and educational providers can discriminate on any basis they choose, and still receive EOA funds. It appears education providers are exempt from all of the safeguards and accountability measures that the legislature has enacted that apply to public schools,” Shepherd wrote.
The leader of the state’s teacher’s union welcomed the ruling.
“We applaud the decision of Judge Shepherd today for upholding the constitution of Kentucky against an attempt to divert tax dollars from our public schools and students into the pockets of big corporations and wealthy individuals. This is a victory for our public schools, our public school students, and our Commonwealth’s constitution,” Kentucky Education Association president Eddie Campbell said in an emailed statement.
Meanwhile, proponents of private schools were swift to attack Shepherd’s decision.
Andrew Vandiver, president of EdChoice Kentucky, said the group was “disappointed” with the decision. EdChoice is an advocacy group that promotes charter schools and public funding of private schools.
“Stakeholders and legislators invested considerable time and effort to design a workable program that will help Kentucky parents access the right education for their children. Today’s ruling represents an unnecessary delay with the potential to leave Kentucky’s students in classrooms that just don’t work for them.This is not the end,” he wrote in an emailed statement.
“Today’s ruling treats private donations as if they are government money,” Institute for Justice Attorney Joshua House said in an emailed statement. “It holds that when private individuals donate their own money to education-related causes, and receive tax credits for those donations, it is in effect the government raising and spending money on education. That’s just wrong.”
The Institute for Justice said it plans to appeal the ruling.