Battle over devoting public funds for private school scholarships returns to State Legislature

Nebraska one of only two states without school choice; public education advocates say that’s a good thing

By: - February 3, 2023 8:49 pm

State Sen. Lou Ann Linehan testifies in favor of her bill that would provide $25 million a year in tax credits for private school scholarships. (Paul Hammel/Nebraska Examiner)

LINCOLN — The annual battle over whether to devote public funds to private schools was renewed Friday at the Nebraska Legislature, with testimony extending into the evening.

Nebraska is one of only two states that doesn’t allow “school choice” by extending public state funds to private schools. Backers of parochial and private schools said Friday that the state should provide tax credits for donations to private school scholarships to help families have that choice.

“Private schools in Nebraska are turning away thousands of kids because their parents can’t afford it,” said State Sen. Lou Ann Linehan, the sponsor of Legislative Bill 753, the Opportunity Scholarships Act.

“Public schools are not the best fit for every kid,” she said.

The bill, Linehan’s fifth attempt at the idea, includes a new provision this year, one that seeks to prioritize the scholarships for low-income families and for children with special needs or those who have experienced bullying.

Opponents said that LB 753 creates a more generous tax break for donors to such scholarships than for other causes and that about 70% of such aid benefits current – and not additional — private school students.

Fully fund public schools

“These scholarships would not help all low-income kids like public schools can,” said the Rev. T. Michael Williams, a Baptist pastor from Omaha who testified on behalf of the NAACP.

If you want to help children, fully fund public schools,” said Williams, voicing a comment repeated by several opponents of the bill. They included Superintendent Cheryl Logan of the Omaha Public Schools and former State Sen. Brenda Council.

Friday’s debate before the Legislature’s Revenue Committee repeated many of the same arguments as in the past:

  • Proponents maintain that not all students thrive in public schools and that parents, particularly those with lower incomes, should be able to choose private schools as alternatives. LB 753 doesn’t lower funding for public schools.
  • Opponents say such legislation drains funds that could be used to help public schools — which educate 90% of the state’s students. They point out that private and parochial schools, unlike public schools, aren’t open to all students, especially LGBTQ+ students.

While critics say studies in Indiana and Louisiana show that school choice laws have resulted in declines in educational outcomes, a trio of parochial school students testified Friday that private school turned their lives around.

The Opportunity Scholarship bill might have more momentum this year given a slightly more conservative Legislature.

More cosponsors this year

Linehan has 30 cosponsors for LB 753, almost double last year’s bill, and that doesn’t count the Speaker of the Legislature, Sen. John Arch, who has supported the idea in the past. That leaves LB 753 one vote short of fending off an expected filibuster against the bill if, as expected, it gets to the floor of the Legislature.

Plus, new Gov. Jim Pillen has made the bill part of his priorities for tax cuts and increased aid to education. Over and over, public education supporters were reminded that Pillen was planning to invest an additional $1 billion into a new fund for K-12 schools. The implication was that they should be willing to give a little — $25 million a year — for opportunity scholarships.

The 2022 elections also saw increased spending from education groups.

A major national school-choice organization, the American Federation for Children, which was founded by former U.S. Education Secretary Betsy DeVos, gave more than $710,000 to a Nebraska affiliate that poured $833,000 into eight key state legislative races. It contributed to wins in five of those races.

‘Expect a payout’

“With that kind of investment, they expect a massive payout,” said Tim Royers, who was defeated in a west Omaha legislative race by Sen. Kathleen Kauth. Kauth, a member of the Revenue Committee, got $173,000 from the Nebraska Federation of Children

By comparison, the Nebraska State Education Association, the state teachers union, contributed more than $150,000 to legislative races across the state, including $20,000 to Royers.

An independent committee, Preserve the Good Life, which gets money from NSEA, unions and other groups, contributed an additional $300,000 to candidates who support public education.

Linehan, whose daughter Katie is communications director for the American Federation for Children, said DeVos founded the organization because she realized that substantial funds needed to be given to candidates who support school choice to counter spending by the teachers union and others.

She said there was a lot of “misinformation” about her proposal. Linehan insisted that private schools do not reject some students and said they educate nearly as high a percentage of special education students as public schools — 12% of all students are special needs, vs. 16% in public schools.

The bill calls for an initial cap of $25 million a year in state income tax credits, but it could increase by 25% a year if all the money is utilized. 

Opponents of LB 753 said it could ramp up quickly, gobbling up funds that could help public schools. But Linehan said that could happen only if at least 90% of the available funds were utilized in one year, and she didn’t expect that.

Critics of the bill, however, said it was more about benefiting wealthy donors than about helping children and that the tax break was much more generous than for other charitable contributions.

Under LB 753, a donor who gave $50,000 for opportunity scholarships and had $100,000 in state tax liability could get a $50,000 tax credit, for the contribution — a 50% nonrefundable credit. The OpenSky Policy Institute calculated that a similar $50,000 gift to another nonprofit would garner a tax deduction of $3,320.

Access in rural areas

Linehan said tax credits are more generous than tax deductions, but Nebraska has 30 different tax credit programs that provide millions in benefits for job creation and research.

She also maintained that rural students would have ready access to private schools, a point disputed by an official with the rural public schools association, Jack Moles, who said there’s no private high school west of Kearney.

Earlier in the day, Josh Cowan, a Michigan State University professor who has evaluated school choice programs nationally, said such programs have inspired the establishment of some low-end private schools to take advantage of the choice funds.

He compared such schools to “borderline predatory lenders,” operating on a shoestring and providing substandard outcomes. 

Cowan also said that such programs don’t require enough accountability from the private school recipients and don’t guarantee that they won’t discriminate in admitting students.


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Paul Hammel
Paul Hammel

Senior Reporter Paul Hammel has covered the Nebraska Legislature and Nebraska state government for decades. A native of Ralston, Nebraska, he is vice president of the John G. Neihardt Foundation, a member of the Nebraska Hop Growers and a volunteer caretaker of Irvingdale Park in Lincoln.