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Ky. Court Hears Challenge Over Private School Scholarship Tax Credit

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Lawyers argued over Kentucky’s new $25 million tax credit scholarship program for private schools during a court hearing on Thursday.

The new law allows individuals and corporations to get tax credits for donating to “education opportunity accounts,” which can be used to pay for private school tuition and other education expenses.

The Council for Better Education sued to block parts of the measure, arguing it unconstitutionally uses public funds to prop up non-public schools.

Eric Harrington, a lawyer for the nonprofit education group, argued that the measure goes against framers of the state constitution.

“They firmly believed that it was the most vital duty of the constitution and the General Assembly to provide education to all students, regardless of their economic station, regardless of their geographic location,” Harrington said.

The Council For Better Education won a landmark education case in 1989 in which the Kentucky Supreme Court ruled the legislature inadequately funded schools throughout the state.

At least 17 other states have some version of the program, which supporters say allows poor students to afford private education and detractors say saps money from the state’s public school system.

The lawsuit was heard in Franklin Circuit Court, which hears many challenges to the constitutionality of laws and actions of government officials.

House Bill 563 passed out of the Republican-led legislature earlier this year after a contentious debate.

To ensure its passage, sponsors of the bill added a provision restricting the private school scholarships to the state’s nine most-populous counties. Before that, some rural lawmakers had worried the measure would upend public education in their districts.

Harrington argued limiting the measure to certain parts of the state discriminates against some students, calling it “anathema to the framers’ vision of how education is to be delivered in Kentucky.”

Joshua House, an attorney with libertarian non-profit Institute for Justice, said the court could delete that section of the measure if it was ruled unconstitutional.

“The remedy here would be just to strike out the population restriction and the rest of [House Bill] 563 would move forward,” House said.

The Institute for Justice represented Montana religious schools in a U.S. Supreme Court case that killed state constitutional provisions barring taxpayer aid to parochial schools last year.

Franklin Circuit Court Judge Phillip Shepherd said “that does not seem to be a very appealing judicial act in the current environment.”

“I tend to elicit a lot of criticism from some members of the legislature who think I take it upon myself to rewrite their statutes,” Shepherd said.

Republican lawmakers and politicians have criticized Shepherd repeatedly in recent years. Most recently,Shepherd blocked several measures limiting Democratic Gov. Andy Beshear’s powers during the pandemic. The state Supreme Court last month ordered Shepherd to reverse his ruling, allowing the laws to take effect.

Shepherd said he was concerned the private school scholarship tax credit program would create a “two-tiered system” of education in the state.

“There’s going to be a small subset of kids in Kentucky who will get the advantage of this and the rest of the kids in Kentucky are going to be excluded,” Shepherd said. “I guess my concern to some degree is the kids who won’t be able to take advantage of it will be the poorest kids, the kids who don’t have parents who are sophisticated enough to apply for these grants.”

Republican Attorney General Daniel Cameron is defending the tax credit program.

Christopher Thacker, an assistant deputy attorney general, said the measure would help poor communities.

“What this program does to the extent it addresses school tuition […] is give the opportunity for some children of low-income families in our inner cities and more urban areas the opportunity wealthy families already have—to send their kids to private schools,” Thacker said.

Shepherd said he will rule on the case before Oct. 11, when the state Department of Revenue plans to begin approving or denying applications for grant providers. So far the department has received three applications.

Ryland Barton is the Managing Editor for Collaboratives for Kentucky Public Radio, a group of public radio stations including WKMS, WFPL in Louisville, WEKU in Richmond and WKYU in Bowling Green. A native of Lexington, Ryland most recently served as the Capitol Reporter for Kentucky Public Radio. He has covered politics and state government for NPR member stations KWBU in Waco and KUT in Austin.
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