Explaining Florida’s Private School Tax Credit Scholarship

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Archbishop Curley/Notre Dame High School is one of 270 Miami-Dade County private schools which accept tax credit scholarship students.

U.S. Sen. Marco Rubio has proposed a federal tax credit to help fund private school scholarships. The proposal is similar to a Florida program created in 2001.

Florida is one of 11 states with a tax credit scholarship. Here’s how it works.

Students are eligible for the program if:

• Their family household income is no more than 185 percent of the federal poverty level. That’s about $43,500 for a family of four.
• Were enrolled in a public school the previous year. The Legislature will consider a bill ending this requirement.
• Are attending kindergarten or first grade.

Businesses can take a tax credit for donations to eligible “nonprofit scholarship funding organizations,” according to state law. Businesses can claim credits for corporate income taxes, insurance premium taxes, alcoholic beverage excise taxes, direct pay sales taxes and oil and gas severance taxes.

Florida’s tax credit is more generous than many states, offering a dollar-for-dollar credit for donations. Other state credits range between 50 percent and 100 percent of the donation, according to the National Conference of State Legislatures.

A 2008 state analysis found Florida saved about $1.50 in state education costs for every dollar claimed in tax credits.

Currently, Tampa-based Step Up For Students is the only state-approved nonprofit to accept scholarship donations. The group awarded $151.9 million in private school scholarships in 2012, according to its financial reports.

Awards are capped at $4,335. Students can also receive up to $500 for transportation to attend public school in another district.

About 1,000 private schools participate in the program, according to Step Up For Students. Tax credit scholarship students account for about one-quarter of students in those schools.

More than 50,800 students are receiving scholarships as of January 1, according to the most recent quarterly report.

Miami-Dade schools have the most students participating in the program, with 13,166 students attending 270 private schools. Orange, Duval, Broward and Hillsborough county schools round out the top five districts.

The state may only award $286 million in tax credits in 2013. Lawmakers increased the total in 2012, and the limit increases automatically if Step Up For Students collects donations totaling 90 percent of the cap.

Step Up For Students is paid a fee to manage the scholarship program.

Step Up for Students spent $1.2 million on administrative costs, $1.2 million on fundraising and nearly $800,000 on communications, policy and public affairs, according to the group’s 2012 financial statements.

State law limits administrative expenses at 3 percent.