Administrative costs for Idaho’s private school tax credit rise to $675,000

The cost to administer Idaho’s new “Parental Choice Tax Credit” program is more than twice as much as previously estimated.

The Idaho Legislature’s Joint Finance-Appropriations Committee on Tuesday approved a $675,000 request from the State Tax Commission to administer the tax credit enacted by House Bill 93 — more than double the $255,800 called for in the bill that the Legislature approved and Gov. Brad Little signed. 

The administrative costs would come out of the $50 million earmarked for tax credits, according to appropriation language approved by JFAC. This means $49.3 million will be available to students who qualify for the funds.

House Bill 93 created Idaho’s first private school choice program, making non-public school students eligible for tax credits that cover education expenses. Starting this tax year, private school students and home-school students can claim up to $5,000 each, or $7,500 if they have special needs. 

The divisive bill promised up to $50 million in tax credits, but the cost to implement and administer the new program has been more dubious. When the House approved it on Feb. 7, the bill identified a one-time, $125,000 investment in “programming and coding” to set up the tax credit. It also said the program would require two full-time administrators whose salaries would be covered with unfilled Tax Commission vacancies — at no ongoing cost to the state.

When it reached the Senate on Feb. 12, however, the bill’s fiscal note — an attached statement that explains how each bill would affect state spending or revenue — had been updated. It called for a third full-time administrator along with five seasonal employees, bringing the total administrative cost to $255,800. This was the cost estimate when the Senate approved the bill on Feb. 19 and Little signed it into law eight days later. 

Tuesday’s Tax Commission budget request hiked the employee count again. Now the agency needs $550,000 to pay seven new full-time administrators on top of the $125,000 setup cost.

Idaho State Tax Commission sent letter to bill sponsors suggesting updated fiscal note

JFAC members overwhelmingly approved the spending Tuesday, but not without some grumbling. 

“I will support the motion, because this is where we are right now,” said Senate Assistant Minority Leader Janie Ward-Engelking, D-Boise. “But originally, House Bill 93 did not have the seven additional staff listed as part of its fiscal note.”

It’s unclear at what point House Bill 93’s legislative sponsors knew that the fiscal note was insufficient. 

Rep. Wendy Horman, JFAC’s co-chair and a House Bill 93 co-sponsor, took credit for the initial estimate — that it would take two-full-time employees to administer the program. But she said the fiscal note was out of her hands by the time it reached the Senate. 

The Tax Commission hadn’t produced an analysis of staffing needs prior to a Feb. 3 House committee hearing on the bill, Horman told Idaho Education News. At the time, she looked to the existing $30 million Empowering Parents microgrant program, which has one staffer, as a model and doubled it for the $50 million tax credit program. 

Horman said she doesn’t believe the initial estimate misled her House colleagues, who approved the bill when it called for $125,000 in administrative costs. And she blamed the Tax Commission for the incomplete figure. 

“I put the best information I had at the time,” Horman, R-Idaho Falls, said by phone Tuesday. “The Tax Commission was not forthcoming with details. That’s been one of our ongoing problems this session. We’re having difficulty getting information out of some agencies.”

Sometime between the Feb. 7 House vote and a Feb. 12 Senate committee hearing, the Tax Commission sent a letter to bill sponsors suggesting an updated fiscal note, according to Senate Majority Leader Lori Den Hartog, who also co-sponsored the bill.

Den Hartog, R-Meridian, didn’t respond to a request for comment from EdNews. But she told the Senate Local Government and Taxation Committee last month that the updated fiscal note —  which included three full-time employees and five seasonal workers — was in response to the Tax Commission’s letter.

Idaho EdNews has not obtained a copy of this letter. It didn’t appear in a public records request asking for correspondence between the Tax Commission, Den Hartog and Horman spanning more than a year through Feb. 11. In fact, none of the email correspondence between the Tax Commission and the bill sponsors mentioned House Bill 93. 

In a Tuesday statement, Tax Commission spokesperson Renee Eymann didn’t provide clarity on the timing of the agency’s suggestion for additional staffing for the program or how many employees the commission recommended. 

“The initial staffing estimate was updated closer to the passage of the bill,”  Eymann said by email, before pivoting to the latest seven-employee figure. “We believe this budget more closely represents what it will take to implement the Parental Choice Tax Credit envisioned by the Legislature and Gov. Little.”

Ward-Engelking Tuesday said the commission had actually recommended 10 new employees to administer the program, but the governor’s office pushed for seven. 

Joan Varsek, Little’s spokesperson, said a collaborative effort produced the seven-employee figure. 

“The governor’s office worked with legislators and the Idaho State Tax Commission to determine seven staff members as the appropriate number to effectively implement the new program,” Varsek said by email. 

JFAC’s approval of the $675,000 in administrative costs is preliminary. The full House and full Senate will have the final word. 

In the meantime, the “Parental Choice Tax Credit” is now in effect, and prospective applicants should begin keeping receipts for their education expenses, says a new Tax Commission web page. The application process begins Jan. 15.