Saturday, December 17, 2022
The Kentucky Supreme Court ruled this week that a state private-school funding program violated the state constitution. The ruling ends the program, unless and until state voters approve it in a ballot initiative.
The program created a nearly dollar-for-dollar tax credit for Kentucky taxpayers (individuals and corporations) who contribute to account-granting organizations (AGOs). AGOs then allocate taxpayer contributions to education opportunity accounts (EOAs) for eligible students. Students can use EOAs for qualifying educational expenses, including public school tuition, tutoring services, textbooks and instructional materials, and the like. In the eight state counties with more than 90,000 residents, students can use EOAs for private-school tuition. The court described the program more simply:
In simple terms, taxpayers, whether individuals or business entities, who otherwise owe state income tax can instead send that money to nonpublic schools via an AGO, reducing their tax liability and the state coffers by a corresponding amount. As the circuit court correctly observed, the legislation "allows this favored group of taxpayers to re-direct the income taxes they owe to the state to private AGOs, and thereby eliminate their income tax liability." This diversion of owed tax liability monies is made possible by the significant amount of state resources employed to create and operate the EOA program.
Kentucky's high court ruled that the program violated Section 184 of the state constitution. That provision says that state public-school (or "common school") funds can be used only for public-school education, unless Kentuckians vote otherwise. It reads,
The interest and dividends of said [common school] fund, together with any sum which may be produced by taxation or otherwise for purposes of common school education, shall be appropriated to the common schools, and to no other purpose. 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, and the majority of the votes cast at said election shall be in favor of such taxation. . . .
The court said that the program violated the plain terms of the Section by diverting public funds to private-school education.
The court noted that state voters could approve the program, pursuant to the terms of Section 184. If so, the program could come back. For now, though, the ruling ends the program.