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North Carolina General Assembly: House Bill 388: 2007-2008. Tax Credits for Children with Special Needs. Benefits of Providing Parents with Choice. Prepared for House and Senate Members. Representative Paul Stam. Understanding House Bill 388 .

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North Carolina General Assembly: House Bill 388: 2007-2008

Tax Credits for Children with Special Needs

Benefits of Providing Parents with Choice

Prepared for House and Senate Members

Representative Paul Stam


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Understanding House Bill 388

Comparable Programs

Slide Order

Voters’ positions on this issue

Programs in FL & AZ

Select a slide to view or click Next Slide to begin show

Support from all Backgrounds

Who would qualify?

Fiscal impact of tax credits

Sample Form for Tax Credit

Allocation of educational funds

Beneficiary – Case Study #1

Fiscal impact of tax credits

Beneficiary – Case Study #2

Fiscal impact of tax credits

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Beneficiary – Case Study #3


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Understanding House Bill 388

  • The bill is the product of a bipartisan* effort to provide parents of children with special needs the ability to choose which school is best for their child.

  • The bill allows an individual income tax credit for part of the expense of each eligible child who is educated in a nonpublic school. The education expenses credit is equal to the amount paid for tuition and other educational and therapeutic expenses, not to exceed $3000 per semester.

http://www.ncleg.net/Sessions/2007/Bills/House/PDF/H388v1.pdf

* Representatives Glazier, Lucas, Stam and Wiley

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Voters’ positions on this issue

Voters’ positions on this issue

(800 actual, proven, North Carolina voters)

Bipartisan Support

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Poll support from all backgrounds

% Support for tax credits for children with special needs

  • With African Americans supporting tax credits at 83%, and Caucasians at 84%, tax credits for special needs enjoys support across all backgrounds.

  • The proposed tax credit is “refundable,” meaning it can be claimed even if a filer does not owe income tax.

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Fiscal impact of tax credits

  • Determining whether allowing tax credits for parents of children with special needs is an economically feasible option requires answering key questions:

  • Will the proposed tax credit per semester be less costly than educating the student in public school, and how many parents are predicted to utilize this option?

  • Will it be feasible to allow tax credits for special needs children already in private schooling to qualify for the program?

  • Will North Carolina state and local governments save money by allowing parents educational options?

Legislative Fiscal Note

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Allotment of educational funds

$8766.69

$4168.19

$4168.19

As the North Carolina Department of Public Instruction detailed in their February 2007 Budget Analysis, a child with special needs is devoted over two times as many resources, in base funds, as a child without special needs.

When other funding requirements are brought into consideration, such as additional funding to students falling behind grade level achievement, the actual cost to educate a child with special needs in our public school system can soar to more than $14,500/year, almost three times what a child with no additional needs requires, at $5,158/year.

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Fiscal impact of tax credits

  • Estimates by Fiscal Research show that a tax credit would cost the state of North Carolina a couple million dollars while saving counties about $6 million per year, a net gain to the state and local governments of about $4 million each year.

  • With tax credits for special needs children (who are the most expensive to educate) the government would actually save thousands of dollars if a family decided to use the program.

  • Using the middle range of estimates, about 3,000 students with special needs will be provided alternative education through this program. The public school system will be able to save time, energy, and resources. In addition, the taxpayers will be able to see their tax dollars more efficiently spent.

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Legislative Fiscal Note


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Fiscal impact of tax credits

$6,978.96 is the predicted operational “savings” to the State that results from each student with an IEP transferring from the public schools, with $2,100 local expenditures savings.

The number of eligible students participating in the program will determine how much state and local governments will save each year, as more parents take advantage of the program the long term savings will continue to increase.

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Legislative Fiscal Note


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Fiscal impact of tax credits

We currently fund nearly 200,000 children with special needs in our schools. This headcount leaves out a number of children with special needs who are not in the public schooling system. The state has an obligation to assist these children who have a right to be enrolled in public education.

Allowing tax credits for children with special needs will provide a small reprieve for those children whose circumstances have drawn them away from a public school system which they are entitled to be in.

This bill could assist parents who are not able to easily afford alternative means of education, and if the financial situation is such that the family is struggling, the family may be able enroll their child in a public school for a year before transferring them to a school that is better equipped to suit their child’s needs.

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Other States with comparable programs

Florida, Ohio, Utah and Arizona all have programs that are comparable to the proposed tax credit program in North Carolina for children with special needs.

Ohio’s Autism Scholarship Program, Utah’s Carson-Smith Special Needs Program, and Arizona’s Pupil’s with Disabilities Program all allow credits of around $3,000.

The programs allowing school choice have been so successful that nearly 30 states have considered school choice legislation within the last year.

Allowing parents the freedom of school choice is proving an effective way to address the needs of the exceptional students in our country.

Of the programs Florida’s stands out as one of the effective and best performing and is very similar to the proposed North Carolina tuition tax credit.

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Florida’s Scholarship Program

Florida’s Tax Credit Program

  • The McKay Scholarship Program for Students with Disabilities:

  • 370,000 Children statewide are eligible for the scholarship, 16,812 participated in the program

  • 47 Percent of participants were harassed often at their previous public schools because of their disabilities, compared to 5% at McKay schools

  • The average McKay scholarship in Florida’s successful program is worth $6,117 annually, just $117 more than the projected tax credits available for special needs children in North Carolina. The program allows between $4,805-$20,703 to be given in credits annually

Even though Florida’s particular program was designed to provide school choice – not to save money…

The McKay Scholarship Program has saved the state of Florida $139 Million

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ABCs of School Choice


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Arizona’s Tax Credit Program

  • Governor Janet Napolitano signed a HB2678 into law in 2006, allowing tax credits for pupils with disabilities.

  • Under this program the funding provided is equal to the “base support level” of state funding that student would have generated if he or she had remained in public school.

  • For most students it is equal to about $3,000. The value of the voucher may not exceed the actual tuition and fees paid to the private school.

  • Like the proposed North Carolina plan, students are eligible only if they have been enrolled in public school for the previous school year and are in special education

  • A cap on the Arizona credit program will allow only about 830 students to benefit from the option.

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ABCs of School Choice


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Who would qualify?

  • Beyond being certified with an IEP*(Individual Education Plan), to qualify for the tax credit the student would need to fit several criteria.

  • The student must have been enrolled in public school the previous year (i.e. Fall Semester then Spring Semester or Spring Semester then Fall Semester)

  • The student must require daily services outside the classroom.

  • The student must be under the age of 21.

  • *An IEP specifies:

  • the services the student will receive

  • modifications the student requires for classes or testing

  • whether the student needs alternate assessments

  • which regular education classes the student will take

  • how much of each school day the student will spend with non-disabled peers

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Sample form to receive tax credit

A simple, straight forward, form is needed in order to receive the tax credit.

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Program Beneficiary – Case Study 1

A young adolescent male from Charlotte is having difficulty getting along with students in his class at school, he was diagnosed with Oppositional Defiance Disorder (ODD), is on medication for his condition, and has to see a behavior specialist daily. Being prone to behavioral problems he is often unable to cooperate with his teachers and fellow students, and is often removed from the classroom to be dealt with because the teachers do not know how to handle his temperament.

His parents are concerned that he is not learning to his grade level, and that his problems are not able to be addressed to in the classroom.

With a tuition tax credit his parents would be able to afford to send their child to a school understanding of his specific needs.

Within their county is The Keys of North Carolina School, designed address behavioral deficiencies in adolescents

If the parents were able to afford this option, their son would have already been enrolled. With a tuition tax credit they will finally be able to enroll their son in a school where he will be understood.

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Program Beneficiary – Case Study 2

The Smith family in Raleigh has a daughter who has recently been diagnosed with autism; she is one out of every 73 children in North Carolina suffers from autism.

Having had their daughter enrolled in the first grade the previous year they are worried about keeping their daughter in public schools after hearing a number of cases where autistic children were picked on and unable to keep up in classes.

In Cary North Carolina Mariposa School recently opened. Mariposa’s service is dedicated specifically to autistic children.

Learning of the tuition tax credit they are excited about the possibility of enrolling their daughter in a school where her special needs will be directly addressed, avoiding having their daughter placed in a classroom with special needs students requiring differing treatments.

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Program Beneficiary – Case Study 3

Parents of special needs children like the Petruks in Charlotte are examining their educational options and are finding out that they have very few. Their son’s placement in a classroom with 23 other special needs children leaves little time for the one on one instructional and physical environment needs that are necessary for his specialized learning requirements. He has an average IQ, but has a difficulty learning when there are more than a handful of people in a room. It is disheartening for their family to know there are non-public educational opportunities and services that are structured specifically for their child’s particular disability but they are unable to enroll their child because of financial limitations. The price is simply too high.

With the proposed tax credit the Petruk family, along with potentially hundreds of other families, will be provided the freedom to choose where their son is educated.

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Presentation prepared by Dan Henson - Intern


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