KY State Sen. Ralph Alvarado Files Scholarship Tax Credit Legislation

January 7, 2016
For Immediate Release
Contact: Kaylee Carnahan, 832-878-2904

KY State Sen. Ralph Alvarado Files Scholarship Tax Credit Legislation
New way for citizens to expand educational opportunities for students from all walks of life

(Frankfort) State Senator Ralph Alvarado filed legislation (SB 44) that would create scholarship tax credits in Kentucky. The bill is called “Opportunities in Education” and would provide more choices to lower income Kentucky students. This bill creates a nonrefundable tax credit beginning January 1, 2016 which may be applied against the individual income tax, corporation income tax, the limited liability entity tax, or the bank franchise tax, for donations to scholarship granting organizations or a fund to improve public schools.

“I am excited about this idea, which has been enacted and working in some form in 16 other states,” Alvarado said. “We owe it to our children to give them the best education we can, especially ones from lower incomes families who often feel like they cannot afford a different solution for their child.

Jason Hall, Executive Director of the Catholic Conference of Kentucky, said this bill is an attempt to expand educational choice and bring together advocates for public and non-public schools.

“This bill provides tax credits for Kentucky taxpayers who wish to donate to either nonpublic school scholarship organizations, or to a fund that would be used to improve public schools. Truly, we are trying to empower citizens to get financially involved in offering more educational choices and improving our public education system,” said Hall. “This is a win-win for education activists who value a role for nonpublic and public schools in Kentucky.”

Charlie Leis, vice chairman and chief executive officer of Brandeis Machinery & Supply Company, is supporting the effort and is a member of EdChoice Kentucky, a coalition of educators, business owners and citizens who want more choices for Kentucky students.

“The fact is that wealthy families have school choice already, as they can afford nonpublic schools or to move to a different public school district. But poor families lack those choices, and providing greater access to scholarships would level the playing field for Kentucky kids regardless of their socio-economic background. Getting this right is critical to developing an educated workforce designed to compete in the 21st century economy,” Leis said.

The Friedman Foundation, a non-profit education think tank, has conducted a fiscal analysis of the legislation.

“This proposal, if enacted, will have a negative estimated net impact of $2.4 million on the state General Fund and a positive estimated net impact of $15.5 million on school district revenue for FY 2016-2017. The net combined impact would be positive, equal to $13.1 million,” according to the analysis, which looked at three buckets:

  • State impact: The state would experience a decline in revenue of $25 million (the maximum credit allowed under this bill). This would be offset by $22.6 million in reduced state aid (SEEK) expenditures. After factoring these savings, we estimate there will be a net negative state impact of $2.4 million.
  • Impact on local property taxes: There will likely be no impact on property taxes, at least in the short run, because they are set locally and independent of enrollment. In the long run, districts that experience significant enrollment change may choose to adjust property tax rates.
  • School district impact: Local public school districts would experience $22.6 million in reduced SEEK revenue from the state. This reduction would be completely offset by $38.1 million in cost burden relief for students diverted from public schools. Thus, there will be a net positive local impact of $15.5 million.

“This bill expands choice, is supportive of nonpublic and public schools, saves the state money, infuses money into local public school districts, and gives lower income families hope that their children can get the best education available. For so many reasons this is a good idea, and we are hopeful that this is an education reform Republicans and Democrats can rally around in Frankfort as a common-sense, bipartisan solution,” Hall said.

Read more about this proposal at