Bill Summary – FastDemocracy

Division of the Budget
Landon State Office Building                                                                             Phone: (785) 296-2436
900 SW Jackson Street, Room 504                                                                         adam.c.proffitt@ks.gov
Topeka, KS 66612                                 Division of the Budget                                http://budget.kansas.gov
Adam C. Proffitt, Director                                                                            Laura Kelly, Governor


                                                   February 21, 2024


          The Honorable Adam Thomas, Chairperson
          House Committee on Education
          300 SW 10th Avenue, Room 218-N
          Topeka, Kansas 66612
          Dear Representative Thomas:
                    SUBJECT:      Fiscal Note for HB 2730 by House Committee on Education
                  In accordance with KSA 75-3715a, the following fiscal note concerning HB 2730 is
          respectfully submitted to your committee.
                  HB 2730 would amend the Tax Credit for Low Income Student Scholarship Program
          (TCLISSP). The bill would change the definition of a “eligible student” to include a child who:
          (1) was enrolled in kindergarten or any of the grades one through eight in the previous school year
          in which an educational scholarship is first sought for the child; or (2) is eligible to be enrolled in
          any public school in the school year in which an educational scholarship is first sought for the
          child and the child is seven years of age or under. In addition, the public school that the student
          attended in the immediately preceding school year had more than 50.0 percent of the students
          enrolled achieve a score that was in either of the two lowest achievement levels in mathematics,
          English language arts, and science.
                   According to the Department of Education in its filing of the TCLISSP January 2024 report
          to the Legislature, during Tax Year 2022, a total of $7.3 million in contributions were made to
          scholarship granting organizations (SGOs), which generated $5.2 million in tax credits. For Tax
          Year 2023, an estimated $7.8 million in contributions are expected to generate $5.8 million in tax
          credits. As of the 2022-2023 school year, 1,162 students are utilizing the program in 125 qualified
          private schools. The credit is equal to 70.0 percent of the contribution made to a scholarship
          granting organization during the taxable year for tax years beginning January 1, 2015, through
          December 31, 2022. For tax years beginning after December 31, 2022, the credit is equal to 75.0
          percent. The credit can be claimed and deducted from the taxpayer’s tax liability during the tax
          year in which the contribution was made. If the amount of credit exceeds the contributor’s tax
          liability in any one taxable year, the remaining portion of the credit may be carried forward until
          the total amount of the credit is used. Total contributions cannot exceed $500,000 per contributor
          for any one tax year.
The Honorable Adam Thomas, Chairperson
Page 2—HB 2730

        Under current law, contributors that are eligible to make contributions to a designated SGO
include: (1) for taxable years commencing after December 31, 2016, individuals filing an income
tax return pursuant to the Kansas Income Tax Act (2) C Corporations filing a corporate income
tax return pursuant to the Kansas Income Tax Act; (3) taxpayers filing a privilege tax return; and
(4) companies filing an insurance premium tax statement.
        Although HB 2730 would not change the existing statutory yearly aggregate cap of $10.0
million in tax credits, the Department of Revenue estimates that 320,375 students may qualify for
the scholarship program if HB 2730 would be enacted. The Department of Revenue was silent on
the potential number of additional contributions to SGOs, which would generate additional tax
credits if HB 2730 would become law; however, based upon current participation rates and the
estimated number of students who would be eligible, the Division of the Budget states it would be
likely that the cap on the total tax credits of $10.0 million would occur sooner than without the
enactment of the bill.
        To compute the additional calculations to qualify the additional students to participate in
the TCLISSP contained in the bill, the Department of Education estimates it would require
additional expenditures totaling $74,716 and 1.00 FTE Public Service Executive position in FY
2025. Of this amount, $72,216 would be for salaries and wages (including fringe benefits), and
$2,500 for other operating expenditures, including information technology, phone and internet
service, copier usage, and office rent. Any fiscal effect associated with HB 2730 is not reflected
in The FY 2025 Governor’s Budget Report.
        The Kansas Association of School Boards indicates that the enactment of the bill likely
would cause additional students to leave Kansas public schools, as additional students would
qualify to participate in the TCLISSP. However, the organization cannot estimate a fiscal effect.

                                                     Sincerely,

                                                     Adam C. Proffitt
                                                     Director of the Budget


cc: Lynn Robinson, Department of Revenue
    Gabrielle Hull, Department of Education
    Angie Stallbaumer, Kansas Association of School Boards
Statutes affected: 
As introduced: 72-4351, 72-4352, 72-5132, 72-3712