Despite the spin from some, Nevada business people care deeply about education in Nevada and routinely donate millions towards K-12 and higher education. Unfortunately, politicians also routinely force “contributions” by raising taxes, including the largest tax hike in Nevada history during the last legislative session.
For decades, business owners and employees have paid more and more, only to see the quality of public education, and its results, remain flat.
The good news is that the 2015 Legislature also passed a program that allows firms — at no net cost — to support an education program that boasts a proven track record of success.
The program is the Nevada Educational Choice Scholarship, created by Assembly Bill 165, and it’s the 20th tuition tax credit program in the country.
How does it work? Businesses get dollar-for-dollar tax credits against the amounts they owe to the state for the Modified Business Tax if they contribute to designated nonprofits, commonly called Scholarship Granting Organizations (SGO).
Those SGOs then distribute the money, as scholarships, to qualifying students. Worth up to $7,755, the scholarships can fund tuition at private schools.
Donating Nevada firms may carry their MBT credit balances forward for up to five years.
This means that businesses can make Nevada public schooling more competitive at no net cost. Unlike tax deductions, where the savings to a business only constitute part of the amount donated, businesses donating to a SGO receive a dollar-for-dollar tax credit.
In the first year, the amount of tax credits available is capped at $5 million, with the cap to rise 10 percent every year after that. If the SGOs provide full scholarships, the cap limits the number of children who may participate in Year One to approximately 650.
Interested in donating to a SGO? The list of approved organizations can be found on the Department of Education website. As the program picks up steam, participating businesses can expect positive public recognition for their donations.
Once funds are donated, SGOs, such as the Academic Achievement Accessible (AAA) Scholarship Foundation and the Education Fund of Northern Nevada, can begin awarding the scholarships to students who qualify.
Because the Nevada Educational Choice Scholarship program is specifically designed to assist Nevada’s underprivileged student populations, only children from families that earn less than 300 percent of the Federal Poverty Level — less than $69,775 for a family of four in 2014 — are eligible.
Given Nevada’s stagnation in student performance despite decades of increased per-pupil spending, this new program will also benefit businesses in the long term. While spending on Nevada public schools has failed to produce positive returns, school choice programs across the country have proven to be good investments.
Over 90 percent of students who participated in the D.C. Opportunity Scholarship Program graduated, compared with 70 percent of those who stayed in the public school system. Of a dozen empirical studies that examined the effect of school choice on student outcomes, 11 found that more options improve student performance. The twelfth study found no impact.
Because school choice creates a climate of competition among all schools, even students who remain in public schools benefit from choice, according to nearly two dozen empirical studies that have examined the impact of school choice on public schools.
It’s clear that Nevada’s one-size-fits-all education system has been failing children for decades and costing businesses countless sums in increased taxes to fund programs like class-size reduction that are not cost-effective. The new choice programs approved last session allow for the individualized education that students have long desired, and this program in particular allows businesses to at last positively transform Nevada public education.
Opportunity Scholarships now allow Nevada businesses to make direct investments in the students who may one day become their employees. Firms can create the educated workforce they need to make Nevada better for generations to come.
Chantal Lovell is communications director of the Nevada Policy Research Institute.
