Main Points

• Individuals should be able to receive a tax credit to encourage them to contribute to Catholic and Private school scholarship organizations.
• A tax credit would encourage individuals to contribute to nonprofit scholarships and would provide an opportunity for parents with limited financial resources to send their children to the school of their choice.
• Catholic schools continue, especially in the inner-cities, to face difficult economic challenges and a decrease in enrollment.  An opportunity to send more children to a Catholic School would not only help children -- it would also be beneficial to the local community.

Background

Two states – Arizona and Iowa -- allow a tax credit for individuals that donate to a scholarship fund.  The scholarship funds would be used to pay for the tuition of students who otherwise could not afford to attend a Catholic or Private school.

If more students attend nonpublic schools, public schools could actually have more funds per student because their enrollment numbers would decrease.  This proposal also avoids the conflict of using taxpayer dollars to pay for private education.  Economic research has shown that each 1 percent reduction in the price of tuition leads to a 1.1 percent increase in private school enrollments. [1]  Catholic Schools already save the state of Connecticut over $400 million.

How Would an Individual Tax Credit Work?

Individuals would be allowed to donate funds to a scholarship fund that provides aid to students attending a Catholic or private school. 

Scholarships would only be given to children whose family income does not exceed three times the income requirements for the free lunch program.  (A family of four would have an income of less then $78,000 per year.)  Additionally, these funds could only be used to pay for tuition.  State officials in Arizona estimated that if enough students transferred from public schools it would offset the states potential $5 million revenue loss.

The individual making the donation would not be allowed to designate a specific child as the beneficiary and their tax credit would be capped at $500 per person and $1,000 to joint filers. 

Connecticut Federation of Catholic School Parents Position

The Connecticut Federation of Catholic School Parents support legislation that would allow individuals to make a donation to a non-profit scholarship fund and receive a tax credit of up to $500.  

The population served by the Catholic school system is primarily lower to middle income.  The Catholic dioceses of Connecticut already offer financial assistance to many of the students as a means of enabling them to attend Catholic schools.   However, there are still not enough funds to provide financial assistance to every child who wants to attend a Catholic school.

Many Catholic schools continue to face financial demands and an increase in enrollment would help maintain these schools, especially in poorer urban areas.

Results

• From 1998 to 2004, Arizona’s individual tax credit program generated $146 million and provided scholarships for over 98,000 children.  The Arizona Supreme Court upheld the program in 1999. 

[1] James D. Gwartney and Richard L. Stroup, Microeconomics: Private and Public Choice, 4th edition. New York: Harcourt Brace Jovanovich, 1983, p. 114.