Lawsuit challenges scholarship tax credits of new Kentucky education law

Published 5:44 am Tuesday, June 8, 2021

Kentucky’s new law allowing scholarship tax credits to support private school tuition drew a court challenge Monday from an education group, which argues that the program is unconstitutional and undermines support for public schools.

The legal showdown has been expected since the state’s Republican-dominated legislature passed the measure — House Bill 563 — over Democratic Gov. Andy Beshear’s veto in March.

The Institute for Justice, a national legal advocate for school choice, said Monday night that it’s ready to help defend a law that it said many Kentucky families “desperately need.”

The lawsuit was filed in Franklin County Circuit Court by the Council for Better Education. The same group sued over inequities in Kentucky school funding more than 30 years ago. That case led to passage of the landmark Kentucky Education Reform Act.

The council’s new legal action focuses on a key part of the new law creating a form of scholarship tax credits — referred to by advocates as education opportunity accounts. The lawsuit calls it a “diversion of public revenues to private schools” and asks that it be struck down.

“To avoid the plain constitutional prohibition against the public funding of unaccountable private schools through direct expenditures, the General Assembly concocted a complicated tax credit scheme to move state revenue through a private grant program,” the suit said.

“But both the aim and the result are the same: Under the Voucher Program, state expenditures will impermissibly fund private schools,” it added.

Under the new law, private donors backing the accounts would be eligible for tax credits. The grants, managed by third-party groups, could be used for an array of educational expenses — including private school tuition in several of the state’s most populated counties.

Opponents warn the tax credits will cost the state treasury up to $25 million a year — money they say could go for public education.