Education Advocates Warn New Tax Plan and Increased Deficit Will Lead to K-12 Cuts

By Joetta Sack-Min

LFA members representing teachers, superintendents and school boards speak out against tax reform, warning of the impact on public school funding and future deficits

Updated December 20, 2017

LFA organizations sharply criticized the tax reform measure that cleared the Senate and House this week because it jeopardizes federal K-12 funding and allows deductions for private schooling and other expenses. 

National Education Association President Lily Eskelsen García said, “Hypocrisy is at the heart of the tax bill approved by Congressional Republicans. It reveals the ill-conceived and misguided priorities of Republican leaders in Washington. It is nothing more than a massive transfer of wealth – a giveaway to corporate special interests and the wealthy paid for by working families and students."

In a December 15 letter urging lawmakers to kill the tax reform bill, AASA, the School Superintendents Association, estimates that a tax reform measure would impact these programs and funding:

State and Local Tax Deduction: State and local funding accounts for approximately 90 percent of funding for K12 schools. Reduction of state and local revenues—an all but certain reality under this tax plan—would mean certain cuts to public education. We remain opposed to any changes to the original SALT deduction and urge Congress to ensure that any comprehensive tax reform preserve the SALT deduction as a matter of national priority. 

529 Accounts: We urge Congress to maintain current law regarding 529 plans that limit these savings accounts to families for use at institutions of higher education. We strongly oppose the proposal to expand the definition of "qualified higher education expenses" to include up to $10,000 a year in elementary and high school tuition and incentivize families to educate their children in private schools.

Construction Bonds and Debt Refinancing: We are opposed to how this bill would reform how state and local governments, including school districts, can issue tax-credit bonds for school construction projects and tax-exempt advanced refunding bonds (ARBs) for refinancing debt. Tax credit bonds, including the Qualified Zone Academy Bonds, are effective and provide critical financial support for modern and technologically and energy efficient schools and classrooms. Tax-exempt ARBs allow districts to save hundreds of thousands of dollars through debt refinancing, allowing districts to reinvest dollars saved into classrooms and student learning.

Tax Plan Pay For: Any tax bill must act prudently to ensure the plan is paid for—not adding to the federal deficit—and that in looking for pay-fors, work to preserve parity between defense and non-defense discretionary funding. Congress already struggles to avoid deep cuts to important education programs as they work to comply with existing federal funding caps and constraints; a deficit-financed tax bill will only exacerbate this tension and the depth of cuts to important education programs.

Randi Weingarten, president of the American Federation of Teachers, said the tax bill would reward wealthy donors and corporations while sticking it to the middle class: “Study after study showed how this bill would benefit the wealthy at the expense of the middle class, blow a hole in the deficit, rip healthcare away from millions of families and starve local public schools and services," she said. "But big donors and the rich demanded a tax break, and Trump and Republicans in Congress delivered.”

And after the Dec. 20 vote sending the bill to the White House for signature, Daniel A. Domenech, AASA executive director, said his organization was “deeply frustrated with and disappointed by today’s actions on Capitol Hill.

"Adoption of the tax bill is an affirmation of failed federal policy that exacerbates the wealth gap, does nothing to address inequities, and fails to support and strengthen our nation’s middle class," he said. "This policy may be a win for the wealthy, but it is an absolute defeat to our nation’s public schools and the students they serve.”

Tom Gentzel, executive director and CEO of the National School Boards Association, said the organization was “deeply troubled” by the Senate’s recent action in this statement, adding: “While it’s unclear, the full extent of the impact the proposed changes will have on local decision making and resources available for public services, the threat it poses to students, parents and communities is very real. Limiting the current State and Local Tax deduction and providing tax-advantages for private school tuition accounts are misguided efforts and a significant step in the wrong direction.”





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