South Dakota committee pivots after school choice bills fail: education property tax credits

Yahoo

12-02-2025

Four members of the Senate Education Committee passed a bill Tuesday that would establish an education property tax credit program.
Sen. John Carley, R-Piedmont, brought Senate Bill 190 after other school choice finance bills failed this session. Carley said his primary goal with the bill is to give families more schooling options by offering coverage for their educational expenses.
Opponents said SB 190 would result in less revenue for counties and school districts to make their budget, and said it diverts public funds from public education with no accountability that students who opt for this school choice finance option are being educated.
More: South Dakota House Education Committee kills both school choice, voucher bills
SB 190 would give property owners a property tax credit they can use to cover education expenses for any child age 5-18 who attends a nonpublic school or receives alternative education.
Eligible education expenses for the property tax credit include tuition, fees for sports or fine arts programs, textbooks, curricula, instructional materials, educational therapies, tutoring, test registration fees, transportation from home to school and technological devices.
Property owners would submit applications for those education expenses to their county's director of equalization before Jan. 1 each year with the student's name and school enrollment information. Carley said it will be like turning in a receipt, then receiving a credit toward one's property tax, and no money would be sent out or exchanged.
The amount of the property tax credit may not exceed 80% of the total amount of school district taxes owed to that school district by the owner for that year, the bill states.
The total amount of property tax credits can't exceed 80% of the per student equivalent for that year, either, the bill states. The current per student equivalent is $7,405.19 and 80% of that would be just over $5,900. There are 15,185 private school students and 11,489 alternative education students in the state as of this fall, according to South Dakota Department of Education counts.
More: Alternative education on the rise as South Dakota Legislature eyes school choice bill
Carley said a fiscal note he saw for the bill, which hasn't yet been published publicly online, estimates it will reduce public education funding by $14 million to $21 million.
The Department of Revenue would be in charge of the program and promulgate its rules to specify the forms and filing procedures.
Carley presented ideas and options for the bill in which landlords could potentially write checks to a tenant's child's nonpublic schooling, or that retirees or people who don't have school-age children could help a neighbor with their child's private school tuition, for example.
He received support for SB 190 from lobbyists with Families for Alternative Instruction Rights in South Dakota, South Dakota Citizens for Liberty, Americans for Prosperity and a homeschool parent from Chancellor.
More: South Dakota Education Secretary worked on ESA bill opposed by Public Schools Coalition
The lobbyist from FAIR-SD said his organization preferred this type of tax credit to other school choice finance proposals because this has less strings attached and is an 'immediate, noninvasive way to support education choices' that is 'free of government interference.'
SB 190 faced opposition from lobbyists with the Department of Revenue, Sioux Falls School District, Large School Group, South Dakota Retailers, Association of County Commissioners, School Administrators of South Dakota, United School Association, Associated School Boards and South Dakota Education Association.
They largely argued that SB 190 would take money directly from school district budgets, has no mechanism to keep districts 'whole,' doesn't require that students are educated or hold their educators accountable. They also argued South Dakota already has school choice — between public, open enrollment, private and alternative education — and already has a school choice finance option with the South Dakota Partners in Education tax credit program.
'What this does is it allows me as a citizen to take 80% of what I pay, and leave folks going to the public school system holding the bag,' Sioux Falls School District lobbyist Sam Nelson said.
More: Sioux Falls school board warns of 'detrimental impact' vouchers have on public education
Large School Group lobbyist Dianna Miller shared an analogy that funding school districts is like filling a glass with water, and that the first pour is 'local effort,' like property taxes, while the remainder is state and federal aid. She said the state would end up pouring in, or paying, more.
Sens. Sam Marty, R-Prairie City, Lauren Nelson, R-Yankton, Sue Peterson, R-Sioux Falls, and Curt Voight, R-Rapid City, voted in favor of the bill.
Peterson called it a 'comprehensive, well-thought-out plan' and said this school choice finance option has the 'least government interference' with it.
Nelson questioned, 'When will public schools have enough money?' as she pointed to an argument the public education lobbyists made about the bill diverting public funds they need for school district budgets. She asked them to provide a dollar amount that would increase test scores.
More: South Dakota's NAEP results on par with 2022, but show achievement gaps
Sens. Stephanie Sauder, R-Bryant, Jamie Smith, D-Sioux Falls, and Kyle Schoenfish, R-Scotland, voted against SB 190.
Smith said he opposed the bill because it diverted money from public schools and wasn't convinced SB 190 included any accountability for private or alternative education.
Schoenfish said he would resist the bill because he still had confusion on who could take the credit, and what districts property owners could divert funds from if they own land across multiple counties or districts.
This article originally appeared on Sioux Falls Argus Leader: South Dakota committee OKs new education property tax credit program