NASHVILLE — Tennessee families who participate in Gov. Bill Lee's private school voucher program would have to report and possibly pay federal taxes on the taxpayer-provided support, state Education Commissioner Penny Schwinn acknowledged Monday.
Her comments came in response to questions posed by House Minority Leader Karen Camper, D-Memphis, during House Finance Committee hearings on Lee's upcoming fiscal year 2020-2021 budget.
Camper, who had opposed the Republican governor's school voucher law last year, noted that there is "concern" as to whether or not parents provided money to send their children to private schools may have to report the money on their federal income taxes.
"Are you familiar with that?" Camper asked Schwinn. "Have you heard any conversation around that, around whether or not they would be taxed?"
Replied Schwinn: "My understanding is yes, this is taxable."
Schwinn later told reporters that her understanding was based on discussions with Tennessee Attorney General Herbert Slatery.
The Tennessee Journal reported Monday that as enacted, the law approved by majority Republicans in the General Assembly included a provision that says "funds pursuant to this part do not constitute income of a parent of a participating student under title 67, chapter 2 or any other state law."
But those are state laws.
The Tennessee voucher law, modeled on other states such as Arizona, will be operable only in Metro Nashville and Shelby County as a result of changes forced on Lee to exclude several counties from its provisions.
Excluded counties include Hamilton County.
As passed, the law allows lower-income families in Metro Nashville and Shelby County schools who earn up to 2.6 times the federal poverty level — it's $76,500 for a family of five — to attend private schools with money that ordinarily would go to a public school under the state's education funding formula.
Qualifying families would be issued debit cards annually loaded with $7,376, which is the average amount of state and local tax dollars provided per student under the state's Basic Education Program funding formula to public schools.
Lee's voucher bill passed the House by a controversial one-vote margin. A number of lawmakers thought the bill would take effect in the 2021-2022 school year. But the governor is pushing to get it started in the school year that begins next fall.
Schwinn kicked off the House Finance Committee's hearings this week on state departments and agencies. A second round of hearings is scheduled later in December.
Contact Andy Sher at firstname.lastname@example.org or 615-255-0550. Follow on Twitter @AndySher1.