PIERRE (Joshua Haiar, South Dakota Searchlight) — A legislator lacked evidence Wednesday for his claim that private school scholarships funded by tax credits save millions of dollars for state government.
The scholarship program is South Dakota Partners in Education. It gives insurance companies credits against state taxes on their premiums, equal to the amount of their donations to the program and up to a statewide cap of $3.5 million. Legislation under consideration at the state Capitol would raise the cap to $5 million.
State Sen. Jim Stalzer, R-Sioux Falls, told a legislative committee that the program saves the state $7.5 million annually. He said that’s the amount of state aid that would be required to send the program’s 2,500 students to public rather than private schools. Families of students in the program are required to meet low-income qualifications based on free and reduced price school lunch guidelines.
After the committee hearing, South Dakota Searchlight asked Stalzer for the source of the financial data. He said it’s based on multiplying the number of scholarship-supported students by $3,000, which is an estimate Stalzer said he obtained from state officials of the amount of state aid that would otherwise support each student at a public school.
But in response to South Dakota Searchlight questions, Stalzer said he does not know how many of the scholarship students switched from a public school to a private school, or how many were already attending private schools when they began receiving a scholarship from the program.
South Dakota Partners in Education’s Executive Director Robert Satter also lacked that information but said the program saves the state money.
Meanwhile, a House committee approved raising the cap on the program to $5 million, voting 10-5 to send the bill to the full House of Representatives for its final step in the legislative process. But later Wednesday, the House sent the bill to the House Appropriations Committee — which helps draft the annual state budget — for its consideration first.
About 45 private schools are currently participating in the program, according to Stalzer.
“Of course, most of those are religious-based schools,” he said.
Dianna Miller, a former educator and current lobbyist for large public schools in the state, criticized South Dakota Partners in Education during her testimony to the committee Wednesday, calling it a “veiled voucher program.” That’s a reference to school vouchers — authorized in some other states but not South Dakota — that use public funds to support children attending private schools.
Stalzer disagreed with that assessment.
“This money belongs to the scholarship program, not the state of South Dakota,” he told the House Education Committee.
Rep. Scott Odenbach, R-Spearfish, said the money used for the scholarships never reaches the state’s budget.
“‘Voucher’ is not a dirty word,” Odenbach added. “I’m tired of hearing that, like that’s some scare-tactic word.”
Rep. Jon Hansen, R-Dell Rapids, is sponsoring the bill in the House of Representatives. He said it’s self-evident that low-income families want the program, based on the demand for it.
“Without an increase in that cap, families will be put on waitlists,” Hansen said.
Opponents expressed concern about the program’s reduction in premium tax revenues to the state, and its potentially negative impact on public school enrollment, which can impact the amount of state funding paid to public schools.
Rob Monson, executive director of the School Administrators of South Dakota, called it hypocritical for the committee to pass the bill after defeating a separate bill Monday that would have expanded free-lunch programs for low-income students in public schools at an annual cost of $579,000.
“How can we have it both ways?” Monson said.
Stalzer said if public school advocates had it their way, “everyone would go to a public school.”
The Legislature created the scholarship program in 2016. The participating private schools are responsible for ensuring families meet the required income threshold, according to bill proponents. The names of the insurance companies and how much they donate are treated as confidential tax information by the state Department of Labor and Regulation.