Speaker of the House McCall explains private and home school tax credit bills
The Oklahoma House of Representatives has sent to the Senate two bills that would provide education tax credits for parents with students in private and home schools.
Dick Pryor: This is Capitol Insider - taking you Inside politics, policy and government in Oklahoma. I'm Dick Pryor with Quorum Call publisher Shawn Ashley, and our guest is the speaker of the Oklahoma House of Representatives, Charles McCall, Republican from Atoka. Welcome, Mr. Speaker.
Charles McCall: Well, thank you, Mr. Pryor. Great to be with you today.
Shawn Ashley: Speaker McCall, you are the author of House Bill 1935, which creates the Oklahoma Parental Choice Tax Credit Act. This would provide an annual tax credit of $5,000 per student for private school expenses and $2,500 per student for homeschool expenses. Now, you and your caucus have opposed proposals for educational savings accounts or vouchers. How did you arrive at the idea for income tax credits instead?
Charles McCall: Thank you for the question. And yes, not just myself, but many in my Republican caucus do oppose the ESA (education savings accounts) and the voucher approach because it takes money away from public education funding. Those mechanisms draw money out directly of the education appropriation that the legislature sets aside for common education in the state. And our Constitution calls for the legislature to provide for an education of students and children in our state. The, uh, so that's always been problematic with an ESA or voucher for House Republicans. And we've been very open and honest about that and no bill with that mechanism in it will pass, will garner support for the House.
The other thing that we ultimately arrived at, the tax credit approach, also one of the criticisms of ESAs and vouchers, is there is no accountability around those. You know, it's basically a voucher or an account loaded up with money from the state. And you can go, you know, spend that on education as you see fit. You know, we ran into, you know, an issue with some moneys that the governor appropriated, some CARES moneys to a GEER fund where they loaded that into a digital wallet. And then when there was an audit on the back end, you found out that parents were able to buy gaming consoles and cell phones and things that really aren't academic related with those funds.
The tax credit approach requires every person that wants to claim the credit, they have to prove up those qualified expenses before they can truly receive the credit. So, the tax credit is not the state passing out checks or money to people just because they might ask for it. There is accountability and oversight on those. They'll have to prove up those expenses, submit those to the tax commission for review before the tax credit is granted or recognized.
Dick Pryor: Opponents to this measure have argued the credits will be claimed by parents who are already sending their children to private schools. We've heard that. Do you think your bill will lead to more students going to private schools or being schooled at home?
Charles McCall: Well, I think…I do believe that it is every parent's right to choose the education path for their child. I got to choose that for my children. I chose to send mine to public school. I'm happy with that decision. I think they received a strong education. Both of my children are in college or post-college. They were able to perform well at the college level with their public education. But we understand that there are there are kids that can, you know, that can potentially thrive more and in an environment that, you know, better suits them. I mean, every kid's unique. And parents understand, you know, this child better than anybody else.
Of course, I think they're going to be people who take advantage of the tax credit that are already paying tuition for private school or home schooling or education by other means as our Constitution refers to it and is the appropriate term. But once again, they have to prove those things up. I mean, they have to be qualified educational expenses. We could argue that, you know, somebody who is currently sending their child to private school and does not get the tax credit, they're really facing double taxation because they are paying money to the state that is appropriated to an education, to a public education school somewhere that they're not getting any utilization out of. And so, at the end of the day, I think we have to realize taxpayers are taxpayers and we have to ultimately respect and affirm the decision of the parent where they feel like the child is best suited to learn.
Ultimately, when a child finishes its common education in the state, we need them ready to be a productive workforce member, ready to make a contribution. We want businesses and industry that are looking at Oklahoma that currently are not here to say we've got, you know, Oklahoma produces bright students, and they recognize multiple education paths. So, these are, you know, I think this is in the vein of making sure that every student in the state wins, every school district in the state wins, every teacher in the state wins, every parent in the state wins.
So, I think it's a very smart and thoughtful approach by the legislature, even though we're talking about just the tax credit segment of the bill, I mean the bill provides a historic level of funding for public education as well. It also requires that the legislature continue to fund public education at the historical level going forward or that tax credit gets suspended. So, I mean, there's a lot of provisions and protections in this bill to ensure that all forms of education in Oklahoma are supported going forward.
Shawn Ashley: The expected impact on state revenue collections from this tax credit is around $300 million. That's money the state will not have to fund state government, including education. Can the state afford to do that on an annual basis?
Charles McCall: Shawn, I think so. And once again, I could also make the argument that we're going to we're going to do something with that 300 million this year. We could have cut taxes and lowered the amount of revenue that potentially comes in. And of course, I'm a proponent of when you do lower taxes, you basically just leave more money in people's pocket to spend. And you can look at the savings rates of people in our state. They're pretty low. So, you know they're going to spend it and it's going to bounce around with that multiplier effect and just spur our economy on to become larger and more diverse.
But yes, I think we can afford it. But there's once again, there's provisions in the bill that if we cannot or if there is an economic downturn in the future - and the economy will cycle - the legislature will have to find a way to maintain a high level of funding for public education in order for these tax credits to not be suspended. And those things happen automatically in this piece of legislation. The legislature doesn't have to come in and take a vote to suspend the tax credit if our revenues fall short of hitting this new funding level of, you know, $3.7 billion for public education. And I might add that $3.7 billion in public education funding is a 52% increase in the overall amount of money that we are investing in education over the last six years.
And the legislature's commitment is to - we want to continue to fund and invest in education. We think - we believe - that education is the means by which everybody in the state has socio-economic upward mobility. And through education we can put our children in, and help them put themselves in, a position to really enjoy a higher level of prosperity. And so, it's once again, there's always the questions about how much, you know? Will it cost us money? Yeah. I mean, everything we do up here has a fiscal impact. But it's definitely one that, you know, when we have banked nearly $4 billion in savings right now in reserves we can, and everything is still performing above estimate, sure, this is the time to move a piece of legislation like this.
Dick Pryor: Speaker McCall, you've mentioned the safeguards that could be triggered for suspending the tax credits in the event of a state revenue failure or if the legislature reduces money for common ed. But what if neither of those conditions occur and common education needs a higher appropriation and lawmakers don't have the necessary funds at some future time?
Charles McCall: Well, I think if revenue continues to grow, the legislature and certainly the House of Representatives is inclined. I've been here for six legislatures now - this is my last term - and every legislature that I have served in the House, regardless of the leadership that was leading the institution, education, public education and education as a whole, have always been the top priority for the body. And I think the Senate as well. I think you have to realize that if revenues don't grow at the same rate that they have in recent years or if there's a downturn, I think the reality is the legislature will use its reserves first to stabilize education. Because that's the priority. I think education is the last group that gets that gets cut if revenues fall. But hopefully, you know, these investments are important long term. There is a long-term strategy here as well as a short-term one to make Oklahoma, to better our educational outcomes and produce a student that has lots of options when they come out of school in terms of employment.
Shawn Ashley: Earlier, you mentioned the companion bill, House Bill 2775, which appropriates $500 million to common education, including a $2,500 across the board teacher pay raise.
Charles McCall: Yes.
Shawn Ashley: Is that all the additional money common education can expect to receive during this legislative session?
Charles McCall: Well, I think there's other discussions we can have. Those are the provisions of this particular piece of legislation. I do believe the legislation does not need to be modified in the Senate and sent back to the House. We will continue to have conversations with the Senate. They have some good ideas that we're open to as well. And we will, you know, we will entertain some trailer legislation to this bill where we can find agreement.
Senator Pugh had some good ideas when he held his press conference for his committee in terms of things that he wanted to see addressed in the state. He's a very sharp individual and very thoughtful as well. We've got several weeks left to session. I think we'll continue to have those discussions about. And there's a high probability that there's some additional things done in education in addition to this $500 million. On the teacher pay raise component, I think it's also worth mentioning in the House plan, the $2,500 is the minimum. The school districts can use the money to pay over that if they'd like to, and we hope that they will, for teacher pay raises. But there have been several school districts over the interim that have asked for flexibility to make support staff pay adjustments, and they need that money.
So, the teacher pay raise at $2,500 is just a minimum with our plan, but it gives the local school districts the flexibility to apply the rest of the money wherever it may need to go for academic purposes within that school district. And that was the reasoning on why the House chose $2,500. We set that as a minimum. It could certainly be higher, but if a particular school district needs the money for support staff, curriculum, STEM labs, more desk space for the open transfer that went into effect about a year ago, and we've seen roughly 36,000 students in the state utilize open transfer to move from one public school district to another where those schools have additional capacity to accept those students, all of those things were contemplated and thought through in this bill and in the bill's language.
Dick Pryor: You have frequently expressed concern for rural schools and you've said that your caucus prefers policies that benefit all parts of the state, urban and rural. Taken together, how do these two bills affect education in rural areas? How do they help rural public schools?
Charles McCall: That's a great question, Mr. Pryor, and I appreciate you asking it because I like the opportunity to explain how you find support and how you work through policy in the legislature. Our caucus, the majority caucus, we have 81 members, huge caucus. And those members, we have a lot of rural members in the Republican caucus, and we have a significant number of suburban and some urban Republicans.
And so, when you talk through a policy, you've got to think about how that policy affects those three areas geographically, especially with education policy. And in the House, we've always said, you know, good policy should work everywhere in the state. So, what we contemplated, I mean, the reality with this tax credit is it's going to be utilized more heavily in the urban, suburban areas of the state. It really doesn't have, you know, a tremendous amount of utilization currently in the rural parts of the state. But you have to be considerate of those rural members and our rural citizens. And so, what can you do in a piece of legislation that helps support the education choices in rural Oklahoma?
For rural Oklahoma, the predominant education choices are your public schools and your choice is to be able to move from public school to public school if it's not a good fit for your child. So, this bill contemplates, you know, the funding side for public education that was, you know, contemplated that we would need to find a way to push to marginally push out some additional dollars to rural public schools in the state, while also supporting every public school in the state of Oklahoma. And finding a compromise within our caucus there - that's why you saw a vote the other day for 75 votes in the House, all Republican votes, for the tax credit and 78 for the the public education funding piece, is because we found, you know, we worked together to find a compromise where every kid and every school district in the state, regardless of rural, urban or suburban, you know, would enjoy some type of educational win that win out of this education policy.
Shawn Ashley: You mentioned the bill has passed the House. It's now in the hands of the Senate. What do you think they're going to do with it?
Charles McCall: Well. (laughs) I don't think they're looking at House bills for another couple of weeks. We're certainly not looking at Senate bills for a couple more weeks until we complete the House of origin process. We are, you know, I'm talking to the Senate leader. I spoke with the Senate leader before we even dropped the language and moved it. I've spoken with the governor of the state.
You know, once again, I think there's a lot to like about the bill from a senator’s point of view. The House is certainly open to the Senate’s additions to what they think needs to be focused on in terms of public education or education as a whole. And I think the bill will move forward, and I think there'll be some additional education measures that pass and ultimately become part of the budget and become a part of state law or policy. So, you know, the Senate's got to do their thing and you know, they'll process it in their due time.
Dick Pryor: Speaker of the House Charles McCall, as always, thank you for being our guest on Capitol Insider.
Charles McCall: My pleasure, Mr. Pryor. Pleasure to be with you.
Dick Pryor: We hope to talk to you again later in the session.
Charles McCall: Yes, I'd love that. Thank you.
Dick Pryor: Thank you. If you have questions, e-mail them to firstname.lastname@example.org or contact us on Twitter @kgounews and @QuorumCallShawn. And for an extended version of this interview, go to kgou.org, where you can find the audio and also the transcript. That's Capitol Insider. Until next time, with Shawn Ashley, I'm Dick Pryor.