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Oklahoma passes tax credit for private school scholarships

By Steve Olafson

OKLAHOMA CITY (Reuters) -- The Oklahoma House passed a bill on Tuesday supporters said was designed to increase the number of low-income students who can attend private schools by creating a state tax credit for gifts made to scholarship groups.

The lawmakers passed the bill, which already cleared the state Senate, by a vote of 64-33.

Because the House version was slightly different, however, the bill now heads back to the Senate. If, as expected, that chamber passes the revised version, it will head to the desk of Governor Mary Fallin.

Proponents of the so-called "Oklahoma Equal Opportunity Education Scholarship Act" touted the measure as a way for some poor students to escape their substandard public schools by increasing the money available to help pay for private-school tuitions.

Opponents said the bill would hurt funding for the cash-strapped public school system and won't provide enough scholarship money for truly poor students to pay the full tuition at private schools.

Under the bill, individuals, married couples and businesses will receive a 50 percent tax credit for contributions to organizations that give scholarships to private schools or organizations that make educational grants to public schools in rural areas.

Individuals are limited to $1,000 gifts, married couples $2,000 and businesses $100,000.

Total contributions are capped at $5 million per year.

Because contributions don't go directly to private schools but to organizations recognized by the Internal Revenue Service as charities, Republican Representative Lee Denney of Cushing, the bill's co-author, said the measure is not a voucher program.

She received some support from Democrats, including Representative Rebecca Hamilton of Oklahoma City, who said the state's inner-city schools are "dangerous and dehumanizing."

"The number one thing lacking in my district among my students is hope," she said. "I can't turn my back on those it will help."

Democratic Minority Leader Scott Inman, however, said the bill will do little to help poor students.

"What this bill says is, `We give up.' It cherry picks a few kids and says to the rest, `Good luck.'"

With some private schools charging as much as $10,000 to $15,000 annually, Inman said truly poor students won't be able to muster enough money to make up the difference between the scholarships, capped at $5,000, and full tuition.

Inman also charged the bill has no high-end income limit for wealthy families whose children already attend private schools and who live in inner-city neighborhoods where the local public school has landed on the state's "needs improvement" list.

Students eligible for the scholarships must either come from families who make no more than 300 percent of the income level that qualifies for free or reduced lunch programs or who live in areas where the local school has been identified as in need of improvement.

(Editing by James B. Kelleher and Jerry Norton)