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New school choice program hands out $210K in scholarships

Posted November 22

— A South Dakota organization helping students attend private schools under a state-backed tax credit program has given out 280 scholarships totaling nearly $210,000, a program organizer said Tuesday.

Since the school choice program's start in July, two companies have donated a total of $250,000 for the scholarships, supporter Sen. Phyllis Heineman told members of a legislative oversight committee.

Under the law, insurance companies can get an 80 percent tax credit for total contributions to a grant organization that provides the scholarships. The total amount of credits is capped at $2 million each budget year.

Organizers are talking to a lot of insurance companies, said Heineman, a retiring Republican lawmaker from Sioux Falls who sponsored the bill during the 2016 legislative session to create the program.

"I mean, $2 million would be our goal," Heineman said of fundraising through December. "We're thrilled with where we're at just because it's such a brand new program and a new concept."

The tax credits target businesses that pay an insurance company tax in South Dakota because it is a stable source of revenue that shows consistent growth.

Supporters say the law gives parents the opportunity to make a choice about where they want their children to go to school.

Critics argue the state has an obligation to provide public education and that the measure could unconstitutionally direct public funds to religious schools. They worry it could lay the groundwork for a larger program that would siphon a significant number of students and support from public schools in the future.

Rob Monson, executive director of the School Administrators of South Dakota, said the main concern is transparency in the program. Under the law, the identities of companies that provide contributions are confidential unless the businesses say otherwise.

"I think that we would certainly like to see it cleared up in the actual law that the transparency is there," Monson said.

The $250,000 in contributions so far went to Great Plains Education Foundation Inc., an Aberdeen organization registered to provide the private-school scholarships to K-12 students.

Students under the South Dakota program are eligible for the scholarships if their families the year before made up to 150 percent of the income standard used to qualify for free or reduced-price lunch, among other conditions.

So far, the scholarships have gone to children attending 38 different schools, Heineman said. The average scholarship amount is about $750.

Des Moines, Iowa-based insurance holding company Sammons Financial Group Inc. provided a $150,000 donation. Sioux Falls-based Avera Health Plans has contributed $100,000, Heineman said.

Heineman said another company has committed funds, but the money hasn't been received yet.

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