Education

Democrat lawmaker worries about ‘millionaire grandparents’

April 11, 2024

Ray Carter

In 2023, Oklahoma lawmakers created the Oklahoma Parental Choice Tax Credit, one of the nation’s most robust school-choice programs, which provides refundable tax credits of $5,000 to $7,500 per child to help families send a child to private school.

This year, lawmakers are considering legislation that would streamline the tax-credit program and eliminate glitches that have arisen during the first year of its implementation.

Senate Bill 1477, by Senate President Pro Tempore Greg Treat and House Speaker Charles McCall, is one of those bills. Among other things, it aligns the tax-credit program with the school year, makes clear that the tax credit will not be treated as taxable income, and provides a way for homeless children to benefit.

But when that legislation was considered in the House Rules Committee, much of the focus of one opponent centered on concerns that the beneficiaries will include wealthy grandparents who live under the same roof as their non-wealthy adult children and grandchildren.

Families earning up to $75,000 can receive a $7,500 per-child refundable tax credit, while those earning $75,001 to $150,000 get a credit of $7,000 per child.

Those two brackets are considered priority families who are to be served first in the program before other families with higher incomes.

The tax credit gradually declines as income increases with the final tier providing a $5,000 credit for those earning $250,001 or more.

SB 1477 provides the largest credit—$7,500—if the “combined adjusted gross income of the parents or legal guardians of the eligible student” is $75,000 or less.

State Rep. Andy Fugate, D-Oklahoma City, objected, noting current law provides the $7,500 credit to a “household” in which total adjusted gross income is $75,000 or less. He suggested that all income from multiple generations should be considered rather than just the income of a child’s parents.

“If the grandparents pay this student (tuition) then—say they’re millionaires and the parents are living with them, and the parents are just getting started—the parents qualify for the full $7,500 discount,” Fugate said.

But state Rep. Jon Echols, an Oklahoma City Republican who carried the bill in committee, said that example was “arguing to the extreme,” noting that Fugate’s hypothetical is rare or nonexistent in the real world.

Echols noted that while campaigning he has knocked on roughly 25,000 doors throughout his last three election cycles. Typically, a multi-generational household is one of limited financial means who live together out of economic necessity, he noted.

“I’ve met dozens if not hundreds of grandparents taking care of children with adult parents,” Echols said. “I haven’t (met) many millionaires yet. I have met some people that are some pretty amazing grandparents.”

He said the tax credit would significantly benefit many of those families.

“I’ll help the thousands of grandparents for the off-chance that a millionaire decides to have their kids living at home with them as opposed to giving them somewhere else (to live),” Echols said.

Fugate also objected to language in the bill that would provide stability by guaranteeing that families whose children qualify for the tax credit would continue to receive it as the child moves through his or her school years, rather than having to reapply every year with the potential to lose the credit if applications exceed the cap.

In 2024, the Oklahoma Parental Choice Tax Credit program is capped at $150 million in tax credits. In 2025, the cap will increase to $200 million and in 2026 the cap rises to $250 million.

“The hierarchy that is imposed in this says that before we serve needy kids we will serve existing families who’ve already made it through the gates into those private schools at the expense of those needy kids,” Fugate said.

But Echols noted the program already prioritizes low-income and working-class families over those with larger incomes since they are given first dibs on credits.

“There is a hierarchy right now under the cap,” Echols said. “The grandfathering clause never, under any circumstances ever mathematically, would affect needy kids in the bottom two income brackets.”

According to recent estimates, which are not yet finalized, roughly two-thirds of year-one credit funds were allocated to children from families in the priority categories for working-class children.

SB 1477 passed the House Rules Committee on a 6-2 vote that broke along party lines with Republicans in support and Democrats opposed. The bill now proceeds to the floor of the Oklahoma House of Representatives.