South Dakota Bill Allows Insurer Tax Credits for Private School Scholarships

A bill that would give insurance companies tax credits for contributions to help lower-income students in South Dakota attend private schools is headed to Gov. Dennis Daugaard after passing through the state Legislature.

The House voted 45 to 23 to approve the bill after using a procedural move to revive it. The measure had passed through the Senate, but had stalled in a House committee.

Daugaard has said that he would consider the measure if it is neutral to the state’s budget.

Supporters say the measure would give parents the opportunity to make a choice about where they want their children to go to school. Such programs have been “very successful” in other states, said House Republican leader Brian Gosch, the main House sponsor of the measure.

Robert Wehde, president of Sioux Falls Catholic Schools, said he is “pleased and excited” for families that will benefit and the students that private schools will be able to serve.

“It’s monumental,” Wehde said. “It is (a change) that provides an opportunity, and I think it’ll open up new doors in South Dakota.”

Students would be eligible for the scholarships under the bill if their families in the year before entering the program made up to 150 percent of the income standard used to qualify for free or reduced-price lunch at school. Supporters say the proposal wouldn’t drain state dollars because the average scholarship amount would have to be lower than what the state would spend on a child attending public school.

The proposal would allow insurance companies to get an 80 percent tax credit for total contributions to a grant organization that would provide the scholarships. The total amount of credits would be capped at $2 million each budget year.

The measure would allow insurance companies to contribute to the community and do something that would be good advertising for them, Gosch said.

Democratic Rep. Karen Soli, who opposed the measure, said the bill is “rather insulting” to public schools who are committed to educating all students.

“These public schools have need of every penny of state support we can give them to help them do this essential task,” Soli said.