Tax Credit Scholarship

SCHOLARSHIP TAX CREDIT

TRIPLE WIN FOR TAXPAYERS, STUDENTS WITH DISABILITIES, AND THE UTAH BUDGET

BY KIM COLEMAN

It’s hard to say which is more exciting, that taxpayers now get to choose to direct their state income tax obligation, or that students with disabilities will benefit from that choice.

A new scholarship program created by the legislature (HB 4003, 2020) for students in K-12 with disabilities has recently launched, with a 100% nonrefundable state income tax credit for donors to the scholarship fund. Utah joins 20 states with similar programs, but Utah’s 1-to-1 tax credit is especially appealing as it does not compete with other charitable giving. Donations may come from individuals or businesses, and there is no limit on the amount that can be donated. However, there is approximately $6 million in available tax credits that may be distributed, and it’s not uncommon for states to reach credit limits early each year.

The Children First Education Fund (visit the website at childrenfirsteducationfund.org) is the state-designated nonprofit “scholarship granting organization” that manages the fund, including fundraising, issuing the tax credit certificates and awarding and disbursing the scholarships.

This new scholarship program comes at a time when support for education choice has never been higher. A large number of the scholarships will pay for tuition for students to attend one of 35 private schools across the state, while

EdChoice.org

EdChoice.org

the rest will pay for related therapies and educational services and materials for students who are in regular public schools, charter schools or homeschool. As with other education choice programs, tax credit scholarships benefit the regular public education system through savings on public investment, as much as 3 to 1. The current $6 million in tax credits represents only about .10% of overall public education expenditures and will serve an estimated 1,000 students of the approximately 80,000 eligible students, and 1/600 of the overall population of K-12 students.

The Children First Education Fund is now accepting donations and is required by law to issue the tax credit certificate within 30 days of the donation. Donors may carry forward the tax credit for three years.

This program is in addition to and similar to the 15-year running Carson Smith Scholarship Program, which also provides scholarships to students with disabilities to attend private schools. Key differences in the two programs is the CSS is publicly funded through annual legislative appropriations and publicly managed by the State Board of Education. The Children First Education Fund is privately funded through tax credit donations and managed by a private nonprofit. CSS awards scholarships based on levels of need of services, while CFEF awards are based on family income and offers a broader range of eligible expenses. Families may be entitled to different amounts under each program, so they are encouraged to review their potential benefits from each. Families may only receive a scholarship from one program. n Children First Education Fund was co-founded by Kim Coleman, who serves as executive director, Doug Holmes, and Jordan Clements. Together, they bring extensive experience in education choice and advocacy and organizational management and governance in both private and public sectors.

Kim Coleman is a former member of the Utah Legislature. As founder of one of Utah’s longest running charter schools, she pioneered bond conduit financing for capital projects, now a national model. She holds degrees from the University of Utah, and is the 29-year wife of Joel and mother of 5.