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South Dakota’s Voucher Gambit: Re-Route Public Funds to Private Schools Via Tax Credits

November 5, 2016

An article in yesterday’s Sioux Falls Argus describes the Sioux City School Board’s vote to repeal of a recently passed South Dakota law that allows insurance companies to donate funds to a scholarship pool that parents can draw from to pay for their children to attend private schools. It demonstrates the lengths voucher advocates will go to in order to divert tax funds away locally elected school boards toward privately operated schools, some of which may be religiously affiliated. Here’s the way the gambit works:

The legislation in SD allowed insurance companies to underwrite a group called Partners in Education in lieu of paying taxes. That group, in turn, provides “scholarships” to students who attend private schools. The cap on the tax breaks is $2,000,000. But here’s the catch: “Under state law, insurance companies do not have to disclose donations, and the Partners in Education group does not have to release any details about the process for awarding scholarships.” So the amount awarded to any individual student is unknown, the schools they are attending is unknown, the mechanism for awarding the funds to students is unknown, and the insurance companies are not required to disclose how much tax revenue they are effectively diverting from public education toward private education. All of this leads me to ask the question of cynical bloggers: what could possibly go wrong?

Predictably this is being cast as a case of the pro-choice “David” against the public school monopolists… but without any information on who’s getting the scholarships it’s difficult for any reasonable person to swallow that argument. It is just as likely that the funds are going to parents whose children already attend a private school or to parents who could arguably afford the tuition…. but without disclosure the public will never know who is the beneficiary of the legislator’s largesse. We also have no idea how much of a tax break the insurance companies are receiving… but it seems likely to be substantial since tax breaks are often used to attract and retain businesses at the expense of the public. The net effect of this is unarguable: it is diverting funds that could be used to help public schools who desperately need the money to improve. If the legislators wanted to offer a tax break to insurance companies and improve educational opportunity, they should consider giving the funds to the schools that serve underprivileged children in the State… and South Dakota rural poverty and underserved schools for Native Americans who could use an additional $2,000,000— the amount that could conceivably be drained from the public coffers.

Meanwhile, the Sioux City Board is looking for at the very least a change in the reporting requirements associated with the law:

It’s painful to not be able to have that money for something we would need,” said school board President Todd Thoelke.

Thoelke also wants to see the law repealed, but he said that requiring more transparency would at least require private schools to “play fair.”

At the same time as the scholarship law took affect, legislators also increased transparency requirements for public schools with a broad conflict disclosure law. Pogany said that, while districts aren’t opposed to more disclosure, they’d like to that same level of disclosure follow the diverted tax dollars.

“It seems to be a double standard,” Pogany said. “That’s what board members are concerned about.”

From 2000 miles away, the new law doesn’t SEEM to be a double standard… it IS a double standard… but that’s the way “reformers” want it: deregulation for their schools and eve tighter regulations for everyone else.


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