SPRINGFIELD – Gov. JB Pritzker is pushing to scale back a state income tax refund for private school scholarship donors from 75 cents on the dollar to 40 cents .
The income tax credit was one of several provisions included in a 2017 law that dramatically changed the state’s K-12 education funding formula .
The “Invest in Kids Act” allows donors to receive an income tax credit for donations they make to Scholarship Granting Organizations, entities that provide financial scholarships for low-income students to attend non-public schools.
Eligible students include those from families whose income is less than 300% the federal poverty level, or less than $65,880 for a family of three, and does not exceed 400% of that income after receiving the scholarship, or less than $87,840.
Donors can receive up to $1 million back in tax credits and the Illinois Department of Revenue caps statewide tax credit payments to $75 million in a calendar year.
Former Gov. Bruce Rauner, a vocal school choice advocate, regularly promoted the policy on the campaign trail in 2018.
“When we unleash the power of private-sector investment incentives like Invest in Kids, great things are possible,” Rauner said in a January 2018 press release .
But Pritzker that year campaigned on ending the tax credit and diverting more money to public school finances.
After being elected, Pritzker included phasing out the program and immediately reducing the overall tax credit program from $75 million annually in fiscal year 2020 budget proposal . But that got scrapped in a late-session deal to put Republican votes on a budget and massive infrastructure program.
Two years later, however, Pritzker says the program is unaffordable, along with nearly $1 billion other state tax incentives for businesses, which the governor has taken to calling “corporate tax loopholes,” or even “corporate welfare.”
But advocates of private and religious schools say reducing the scholarship tax credit program will mean fewer donations and, ultimately, fewer kids helped.
Anthony Holter, president of the scholarship granting organization Empower Illinois, said reducing the tax credit level could threaten the “lifeblood of the program.”
“For us, over 80% of our donors are giving $10,000 or less,” Holter said. “These are donors who are concerned that they’re not going to be able to give in the same way, at the same level, in the same capacity with the reduced credit.”
According to Empower Illinois, more than 22,000 scholarships have been awarded since the program began, with a majority going toward students of color.
Jan Williams, the principal of St. Patrick Catholic School in Springfield, has partnered with Empower Illinois to provide scholarships for students. At a press conference hosted by St. Patrick earlier this week, Empower presented an oversized check to Williams representing nearly $200,000 in student scholarship funding for the next school year.
“We’ve already heard from I think we have 10 or 12 donors that have donated to Empower for the next school year — they’ve already donated this year — and they’re not happy at all,” Williams said. “Some of our bigger donors have said they wouldn’t be able to make that big of a donation because what they do is they make the donation, they get the tax credit, and then they make a donation the next year with that money, it affords them to do kind of a continuing donation.”
State lawmakers are also debating whether to extend the tax credit program, which was written as a five-year pilot program, beyond its scheduled end date of January 2023. A Republican House member earlier this month filed a proposal to make the program permanent, but it’s unlikely to see a vote before the legislature’s spring session ends on May 31.