NASHVILLE — A Tennessee legislative panel on Monday approved rules for the state's controversial school voucher-like program following a fierce debate in which one Republican critic charged proponents last year deployed "every dirty trick in the book — bribes, threats, everything else to get it passed."

The assertions made by Rep. Kent Calfee, R-Kingston, capped more than an hour of fighting on the GOP-led Joint Government Operations Committee hearing over Republican Gov. Bill Lee's administration's proposed rules for governing the program.

It came as Lee seeks to start by next fall the Education Savings Account program, even as critics vow to mount an effort to repeal it.

Other flashpoints during the hearing included continued debate over whether parents of the estimated 2,500 lower-income students in the Metro Nashville and Shelby County public school systems expected to use the estimated $7,100 in per-child funds during the program's first year would be subject to federal income tax. Or at least be required to file 1099 forms with the IRS.

The money will be used for private school tuition and fees, as well as other expenses, which will be subject to any federal income taxes. When fully implemented, the Education Savings Account program is estimated to cost about $25 million.

And there were questions about whether the state Department of Education had authority to enter into a two-year, $2.1 million contract with Class Wallet to oversee parents' expenditures to curb potential fraud.

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Questions and charges about hardball tactics deployed by the program's advocates and the Lee administration have clouded Lee's signature legislative achievement since it squeaked through the House last year on a 50-49 vote after the bill was hung up for 40 minutes on a 49-49 tie.

There was considerable horse trading on the bill. Critics charged there was a $4 million slush fund created to benefit wavering Republicans on the bill. One Democrat, who serves as a colonel in the Tennessee National Guard, later confirmed he had an offer made to elevate him to general in exchange for his vote.

WTVF-TV reported last year the FBI had become interested in deal making. But Lee and then-House Speaker Glen Casada said there was no wrongdoing. There was $4 million going to legislative projects that at least some GOP lawmakers who voted yes said they were getting. Such horse trading, while maybe unseemly to the public, isn't in and of itself illegal and sometimes can depend on whether a lawmaker personally benefited.

Republicans ignored Calfee's bombshell charge about outright "bribes" to pass the bill.

On another front, state Board of Education and Department of Education officials did challenge questions raised by House Democratic Caucus Chairman Mike Stewart of Nashville that parents using Lee's Education Savings Account program could find themselves dealing with the IRS.

Deputy Education Commissioner Amity Schuiler said "what we are clear on is that taxability in any case is going to be very rare for students. The IRS is clear that tuition and other fees towards a school is not considered a taxable expense."

Other expenses such as parents buying a computer were a little more vague. An Arizona Department of Education official told the Times Free Press late last year that officials there tell parents to check with their financial or tax advisers first.

Schuiler said "tuition comes first," later adding that because there will be very little if any money left after paying private school tuition and fees, there would be "very few cases," and parents won't have money "left to purchase an iPad."

(MORE: Tennessee families getting private school vouchers would have to report to feds as taxable income)

Democrats also pounded away at the state's use of funds to push up implementation. As Democrats continued to raise issues, education officials said Tennessee Attorney General Herbert Slatery signed off on the State Board of Education's rules.

Critics also questioned the Class Wallet contract, questioning whether it required approval from the legislature's Fiscal Review Committee, an oversight panel that examines and approves unbid contracts.

But in the end, the new rules were approved. Seven of eight Senate Republicans, including Sens. Mike Bell, of Riceville, and Janice Bowling, of Tullahoma, voted to approve the rules. Among House members, eight Republicans voted aye, while three Democrats and Calfee voted no.

Contact Andy Sher at or 615-255-0550. Follow him on Twitter @AndySher1.