Breaking Down Nevada’s Tax-Credit Scholarship Bill
The Friedman Foundation team predicted Nevada would be the state “Most Likely to Succeed” in creating a new school choice program this year, and it appears it’s on its way.
The Nevada legislature has passed Assembly Bill 165, a tax-credit scholarship for children from low-income families. The bill passed the Assembly on a 25-17 party line vote. The Senate passed the bill11-9. The bill now heads to Gov. Brian Sandoval’s desk, where we are confident he will sign it, creating Nevada’s first school choice program.
Gov. Sandoval’s signature will usher Nevada into the school choice family as the 26th state with a private school choice program. With that, more than half of the states in the U.S. will offer some level of school choice to families in need of learning options. The legislation will become active upon passage, and the first scholarships could be granted during the 2015-16 school year.
The Nevada Department of Taxation will administer this tax-credit scholarship program. When a business wishes to make a donation to an eligible scholarship granting organization (SGO), the organization will contact the Department of Taxation for approval to receive the tax credit. The SGO will then accept the donation and provide documentation to the donor to allow for the credit to be received against the Modified Business Tax. The amount of the credit will be 100 percent of the donor’s contribution. The cap on total tax credits will be set at $5 million with a 110 percent escalator for each subsequent year.
The amount of the scholarships students are awarded can be no larger than $7,775, and that number will be indexed to the consumer price index. That means as goods get more expensive, the scholarship amount will rise in response.
These scholarships are funded by private donations, and no state funds of any kind are given to the SGOs to provide scholarships to students. Additionally, the only oversight the state is providing is to randomly audit the SGOs to ensure compliance with the guidelines set out in the legislation.
Students from families whose household income is at or below 300 percent of the federal poverty level ($72,750 for a family of four) are eligible to receive scholarships from approved SGOs.
REGULATIONS ON SGOs
Government-approved scholarship granting organizations must:
- be a certified 501 c 3,
- not own or operate any private school in the state,
- not spend more than 5 percent of its donations on the administration of the fund,
- not limit gifts to a single school,
- not limit gifts to specific pupils, and
- keep records pursuant to the educational environment of the student.
This tax-credit scholarship legislation will head to Gov. Sandoval (R) for signature. He has previously expressed his resolve to provide students access to learning services that best fit their needs right now, when they need it most.
We will only pay for programs that make a difference in the lives of students.
I will again support Opportunity Scholarships, giving tax credits to businesses that provide tuition-based scholarships for at-risk students to attend private schools.
Through the leadership of Assemblywoman Woodbury, the Assembly Committee on Education will introduce this legislation.
I will sign it when it reaches my desk.
-Gov. Brian Sandoval (R), Nevada, in his 2015 State of the State speech
Gov. Sandoval’s dedication to expanding educational options played a major role in the Friedman Foundation’s earlier prediction of Nevada’s success, which we’re happy to report is on its way to coming true.
UPDATE – December 11, 2015
In April, Gov. Brian Sandoval signed this tax-credit scholarship program into law. The program was launched quickly in 2015. For the most up-to-date information on the program, including rules, eligibility, and scholarship amounts, click here to visit the program page.