Stadium Reserve Calculation / Small Business Investment Credit / Tuition K-12 Education Credit

[Music] is thursday march 4th 2021 the senate education or the senate tax committee uh will come to order uh from a former education chair there um members today we have four bills on the agenda and uh the first bill is one we've had um i know that you're familiar with uh it happens to be my bill 1322 and so you can see the gavel here passing this over to senator miller who's going to chair here for the first two bills so chair miller all right thank you chair nelson and members of the first bill up in committee is senate file 1322 senator nelson take it away thank you senator miller so members um i know that this bill has been before the tax committee before because not only have i brought it in various years but i know other members have too and this has to do with charitable gaming something that is so important to so many of our communities a charitable gaming exists to provide contributions and donations to those community programs that are so important to our communities whether it be our veterans organizations our youth sports uh youth hockey and the girl scouts we just have so many organizations uh that benefit from charitable gaming but over the years there's been an erosion in their ability to fulfill their mission uh and i'll give you just a couple uh statistics in 2014 charities paid 22 of their net receipts that would be the sales minus the prizes to the state for taxes and fees and by 2020 that percent had grown to 27 percent and then in in 2017 charities reached the point where they had paid more in taxes and fees than they had available for donations to their community and mission so currently after paying 27 percent uh taxes and expenses uh for a total of 53 percent the average charity has only about 20 percent left to contribute to mission and community uh this equates to only about three cents per dollar wagered available for the mission which is charitable contributions and so without much needed tax relief the charitable organizations will continue to see state taxes consume more and more of the charitable gaming dollars thereby limiting their ability to contribute to their mission and community and mr chair and members that is why you have senate file 1322 in front of you today to rectify that situation and so with that mr chair i would like to move senate file 1322 uh be laid over for possible inclusion and also i would like uh to offer the a4 amendment mr chair it is my first stop okay senator's amendment senator nelson has an author's amendment it's the a4 amendment members it was included in your packet to the a4 amendment senator nelson uh mr chair uh the a4 amendment uh i'm going to let uh staff uh i think i'm not sure to be mr wills or miss pollock uh describe the amendment who's gonna who's gonna help us out here miss pollock um mr chair and members um i think mr wilms could help uh with a a couple of items on this amendment but generally um the first portion of the amendment so that would be lines 1.2 to 1.4 um as you'll see in the bill there are blanks uh inserted there the the amendment fills in the number amounts that reflect the um what needs to be uh the change that needs to be made to the um to the the to the base amount that that is changed because of the reduction in tax revenue from the reduction in tax rates from the bill and these numbers would uh hold the stadium reserve account harmless due to the due to the change in tax revenue and then the next section of the amendment starting on line 1.6 um this modifies the the current section three in the bill um maybe uh senator nelson can kind of speak to the to the um rationale for for modifying the um the the the reasoning for changing the star rating but um i believe this was um kind of seen as a more effective and and accurate way to measure the the star ratings for the organizations and then finally mr chair the amendment deletes section four of the bill thank you miss pollock uh mr williams anything to add um mr chair and and committee members um the that's a good summary of the amendment one thing i would uh add is is that uh one of the key differences in the star rating is that it removes the calculation of taxes paid um to determine the star rating and focuses more on the ratio of lawful purpose expenditures to uh you know to to allowable expenses without taxes added into that calculation thank you mr wilms uh senator nelson anything to add before we take a vote on the a4 amendment or open it up for discussion all right no i'm ready for that okay members any discussion on the a4 authors amendment seeing none on the a4 all those in favor uh please unmute and show us a thumbs up or a hand if you're supportive so all those in favor of the a4 please say aye aye aye oppose say no the motion prevails and the a4 amendment is adopted all right senator nelson any further discussion before we open it up to uh testifiers no thank you mr chair uh and i believe you have the list of testifiers there mr lund will start us off i do have the list uh mr lund welcome to the senate tax committee please state your name for the record and proceed with your testimony thank you mr chair members my name is alan lund i'm the executive director of allied charities of minnesota we're a 501c6 trade association that represents licensed gaming organizations in minnesota thank you for your time today i'm here today to speak in favor of tax relief proposed in senate file 1322 charitable gambling has been a statewide safety net for more than 75 years the relief in this bill will help us continue to serve our mission and community into the future in fiscal year 2020 taxes took an average of 20 percent as senator nelson had said and that was 84 million dollars that we paid in taxes and fees and after paying our expenses taxes and fees we were left with 63 million dollars there is a common misconception that only mega large outlet uh multiple the charities pay the high taxes i'm a member of the osseo lions and the osseo-american legion both organizations have only one site and the lions actually share a site with another charity in fiscal year 2020 the legion paid 33 of their net receipts in taxes and fees or 192 thousand dollars leaving us with a hundred and fifty one thousand for veterans and community the lions paid thirty one percent of our net receipts or a hundred and sixty thousand dollars leaving us with ninety five thousand for mission and community we ask for your support of the relief in this bill it will help us continue to do the work we do in our communities all throughout the state thank you for your time thank you mr lund and members we have a couple more testifiers what i'd like to do is listen to all the testifiers and then open it up for questions and discussion after that uh the next testifier on the list that i have is mr hiki mr hickey welcome to the committee please state your name for the record and proceed with your testimony thank you mr chair and members my name is mark hickey i'm the gambling manager for rochester youth hockey association our organization includes over 2 700 youth skaters parents and coaches the lawful purpose of our gambling proceeds is to build hockey arenas for southeastern minnesota as an organization we choose to donate 100 of our gambling funds to olmsted county so that they can build ice arenas for rochester and the surrounding communities without burdening the property taxpayers gambling tax relief in the combined receipt tax would allow us to put more dollars towards our lawful purpose we are a five-star organization and we make every effort to get our dollars towards donations yet every year we pay almost twice as much in taxes as we are able to donate to our lawful purpose so i'll say that again we're a five-star organization with the highest rated organization and we're run very efficiently yet we pay almost twice as much in taxes as we're able to donate towards our lawful purpose last year we paid eight hundred and ten thousand dollars in in gambling tax and we had at the end after other expenses we had 441 000 left to donate to olmsted county and part of the problem is that most of our expenses are dictated by statute not allowing us the discretion to put more towards donations in recent years much of our revenue has come from electronic pull tabs which has been a great source of revenue so in electronic pull tabs 85 percent of the money goes back to the players and that money never comes to our office of the 15 cents on the dollar that are left uh for most of the year 36 goes to the state for tax 31 goes to the etab manufacturer and 15 goes to the bar so that leaves us 18 to cover all other expenses including office rent utilities staff salaries and all other expenses and in the end that leaves us about three and a half cents on the dollar for our donations to our lawful purpose you'd heard from senator nelson that the average is about three so we're beating the average so dropping that top tap gambling tax rate which we pay most of the year from 36 to 32 would allow us to put that many extra money directly towards our lawful purpose and further our mission to build ice arenas without burdening the olmstead county property taxpayers subject to your questions this concludes my remarks and thank you very much for your time thank you mr hickey next on the list that i have is miss jenner hi welcome to the committee please state your name for the record and proceed with your testimony thank you my name is rachel jenner and i am the ceo of destination education a scholarship foundation we have been providing college scholarships to high school seniors attending both two and four-year programs for over 30 years the scholarships that we provide offer students additional resources to help pay for their college education we have been blessed to hear from many of those students who have been grateful to have had a scholarship provided to help them pay the rising education costs under the current tax structure we are in danger of not being able to continue providing these scholarships in fiscal year 2020 our average tax rate was 33 percent so we are about 6 percent above the industry average and much of that comes from our e-gaming business it has been a boost to our business but it comes at a great cost after paying 33 in taxes our etab manufacturer takes 31 percent for the games and then we pay the bar the 15 that they're allowed by law in rent that leaves us just 21 of the funds we deposit to run our business and make our donations i've often heard um that charities need to donate more for their missions by reducing expenses and while i agree with that unfortunately after 79 is taken out in taxes rent and the cost of our games that leaves us very little to work with we operate every day being mindful of every cost that we have because if we don't we won't have scholarships to provide and as a small business owner myself i can tell you that there are very few businesses that can operate on these kinds of margins our site is located in the city of saint paul which means we pay a higher minimum wage for our few employees and offer paid sick leave and while we want the best for our employees we have to strive to keep those expenses low and to maximize our ability to provide scholarships i'm not paid as the ceo i'm a volunteer as are the rest of our board members and without this tax relief i'm very concerned that our organization will not be able to continue to serve our community our costs will continue to rise each year and we have very little ability to reduce the majority of those costs taxes are our single largest expense and a tax reduction would be such a great help to us to increase our donations and be able to continue our scholarships thank you for your time thank you for your testimony senator nelson before we open it up for discussion i think it might be a good idea to have fiscal staff go through the revenue estimate if that works for you yes uh mr chair i think we they should go through the revenue estimate and uh if if need be we can also have miss pollock uh do a walk through on the bill mr chair uh mr will uh let's look at the revenue estimate first and then uh we can turn it over to miss pollock thank you uh chair and committee members the revenue estimate published march 3rd 2021 indicates that the annual reduction over the forecast period from the combined net receipts tax ranges from 13.5 million in the first year to 17 million in uh the last year and that is corresponding to the growth in uh revenue from the combined net receipts tax the the other thing that i would note about the revenue estimate is that there are two uh charitable gambling taxes you know one is a flat rate and and the other that this is dealing with is the graduated rate uh the combined net receipts uh and so that's that's the one that's being affected uh by this proposal and it's where the the vast majority uh 90 or more of the taxes is collected uh each year to the state of minnesota um and i think uh you know the amendment that nora or ms pollock walked through described the changes to the stadium reserve um i think you know if anybody has any questions i'm happy to discuss that but i think that that kind of sums up the gist of the revenue estimate thank you mr wilms uh miss pollock would you like to give us a quick overview of the the bill itself as amended sure mr chair and members section one of the bill um is the is the uh part that reduces the the rates within the four uh brackets of gross receipts revenue um so in the uh the first bracket is reduced from nine to eight percent the second from 18 to 16 the third from 27 to 24 and then the fourth from 36 to 32 percent um section two of the bill um is the is the section that um uh the amendment modified again to insert the the correct numbers to reflect the the base amount in the current fiscal year and then three following fiscal years um that is proportionate to the reduction in the in the uh the tax rates under the section one of the bill and the purpose of this is to hold harmless the stadium general reserve account balance and then mr chair section three of the bill as amended modifies the star rating thresholds for the the charitable gambling organizations um these these are ratings that are modif or evaluated every july first for the percentage of lawful perfect purpose expenditures made compared to gross profits um and and under the amendment the and or under the bill as amended that the rating would be based on the ratio of lawful purpose expenditures to allowable expenses um and as mr wilms mentioned earlier um part of this the calculation of this ratio is modified by taking out payments of various state and local and federal taxes and then also the fees that the organizations pay to conduct lawful gambling in minnesota so so those amounts are taken out of the equation and then finally um the the the final aspect of the star rating system is modified by saying that organizations that had gross receipts of over 750 000 in a fiscal year but uh spent less than 20 percent of their allowable expenses on lawful purposes would be um uh put on on probation this you know that that last item mr chair is is not necessarily a tax issue but it was included in the um in the amendment and the bill just as a another way of modifying the star rating system thank you miss pollock now we will open it up for discussions and or questions i am not seeing oh i see a couple uh first hand i saw is senator klein thank you mr chair and thank you senator nelson for bringing forward the bill yeah i've heard from organizations like mr hickeys and others uh in my district uh that are trying to do good community work and feel that this tax burden is uh excessive so it's a good subject for our discussion and these organizations clearly are doing good community work perhaps an unintended effect of the bill is noted in the revenue report which is that there are sort of appropriations within this legislation for compulsive gambling treatment programs which i think is good that we sort of balance this process with some treatment for people who have addiction issues and that appropriation would be reduced under the bill as amended by about six hundred thousand dollars perhaps an unintended effect of a you know about a thirteen million dollar a year um uh tax uh decrease and so as this goes forward i understand madam chair you wanna sort of lay this over for consideration that might be something that we could discuss trying to protect going forward and again thank you for bringing the bill um senator nelson oh just to i just wanted to uh thank uh senator klein for bringing that that piece forward uh we do want to make sure that we uh continue to fund uh the um the gambling uh uh protection board i think i said the name correct i'm not exactly correct but we want to make sure that uh we have the um those resources to help uh prevent and uh stop um addicted gambling and i would note though that and so i i i think your point is right on senator klein um and interestingly enough i got a note just last evening that uh it it i did not realize this until last night but the governor's budget actually removes some of the funding and closes one of the um gambling not the gambling control board but the board to deal with addicted gambling so i think that's something that we need to be sure that we watch here in the senate and make sure that we have those protections in place and i will do that as we go forward senator chamberlain thank you mr chair and senator nelson this is long overdue as you know it's been struggled with and fought over for uh many years but just a quick question for mr williams and i have a quick comment mr wilms could you confirm the annual cost was it about 14 or 15 mil at this point with this proposal mr williams mr chair and senator chamberlain yes that's correct uh for fiscal year 22 it's 13 and a half million and fiscal year 23 14.7 million okay thank you so much mr chair just have one quick follow-up good uh thank you yeah again this is fantastic if we have any money in tax i think it should go to this i will relay one story uh a kind of a i have a natural bias for this in the district i serve we have the largest operator of charitable gaming in the state the number one revenue generator that revenue generator is for a adult day service to help and support adults with disabilities think about that think about that the number one uh revenue producer the number one largest charitable gaming operation in the state is for adult day services think about the impact another 500 000 or a million dollars would have on them every year that's what we're talking about that's what we've been trying to do for years there's no reason we shouldn't get this done it's not just because those people that didn't that business is in my district the district i serve but this is the same throughout the state there's no reason this should be left on the cutting room floor again after end negotiations it's got to be in the package so thank you very much everybody thanks for uh working for this thank you all right members any other discussion before we turn it over to senator nelson for final comments i don't see any senator nelson any final words of wisdom thank you mr chair thank you members for hearing this uh proposal um and as you know it has been worked on for many years by many legislators bipartisanly and i think we do have a good proposal here that will allow our charitable gaming to actually get back to their missions which is why they are in existence uh it it will also uh protect the stadium reserve i want to make sure that is clear and uh and it may it may be in other portions of uh legislation that we'll need to make sure that we have um problem gaming problem gambling uh funding in place as well so thank you uh mr chair and committee members all right members senate file 1322 as amended will be laid over for possible inclusion the next bill up is senate file 1323 senator nelson oh thank you mr chair again this is one of these issues that um has been around for far too long and i would say is has been exacerbated uh by the pandemic and that has to do with student loans the large number of student loans and i've put my favorite graphic up i hope you can see that this is you know a pictures worth a thousand words and this is exactly this picture explains exactly why i am bringing senate file 1323 to you today far too many of our young people are trying to start their careers become homeowners still i believe the best form of um gaining wealth in our country and their careers and their families and it's like a ball and chain around their ankle that student loan and so that's why you see senate file 1323 before you today um i will let um our it's pretty straightforward but i will ask a miss pollock if she would like to give a brief explanation of the bill and then obviously i'll have a few more comments and testifiers miss pollock mr chair and members um yes just to give a little a background on the current law and then what this bill does so um as as we've discussed before in the committee forgiveness of of indebtedness is generally included in gross income under under the internal revenue code and there are some exceptions to that one of the exceptions generally is when student loan debt is forgiven student loan debt in some limited circumstances can be forgiven um for example if students or if borrowers participate in programs for which they would have to apply and be certified and then serve a requisite number of years in a particular geographic area a particular profession that is in need of workers in that area so one example would be rural health providers or rural dental dental providers but but generally when student loan debt is forgiven it is required to be added back to taxable income and there are a handful of programs federal programs that allow um a different payment schedule for federally held student loans um though also although those um those payment plans under those payment plans loans may be forgiven um at the end of the payment period the the for amount of the forgiven of the amount of the forgiveness is added back to gross income so while some borrowers may be able to extend their payments out over a longer period of time and pay less each month at the end of that longer period of time of course interest accrues and that all goes into the amount that's added back to taxable income in the year that the loan is forgiven so in 2017 minnesota implemented a piece of legislation that would say that if you had your loan forgiven under one of these handful of federal payment programs or one state teacher loan forgiveness program that forgiveness amount could be excluded from your minnesota minnesota taxable income so what this bill does is to say that um if your loan is forgiven as part of that the teacher loan for the state teacher loan forgiveness program that remains in the law or any um federal loan forgiveness program that that would be excluded for purposes of uh minnesota taxable income so it's essentially um um removing the the um and the specifically named programs that are in current law and saying essentially any federal student loan uh forgiveness program would be exempt under uh forgiveness under any student federal student loan program would be exempt for purposes of calculating your minnesota taxable income thank you miss pollock and mr wilms it looks like we have a unknown revenue estimate can you run through that for us very quickly yes mr chair and committee members um the revenue estimate came back as unknown um and i think the the reason that uh why that happened is stated in the last bullet point um i think there was some ambiguity in terms of the terms and what these programs might look like and it's kind of forward-looking without a specific program identified so therefore the budget impact was estimated as unknown due to the absence of those factors thank you mr williams uh senator nelson any uh comments before we go to our testifier no i'll save my comments till the end okay i show one uh testifier on our list uh miss odden uh welcome to the committee please state your name for the record and proceed with your testimony yes uh before i begin i would like to give thanks to madeline hoy and senator nelson for inviting me on such significant matters i would also like to thank other committee members mr chair and guests my name is mimuna aden i am 17 years old and i am a senior at john marshall high school yet i do post secondary at rochester community technical college where this will be my second and final year and i am the current and residing vice president of the student government i am here because of senate file 1323 which specifically draws upon the extenuating circumstances regarding student loan debt we cannot deny the fact that there is a mounting debt for students as students we take out loans in hopes of our education springing us into financial stability only to be left feeling vulnerable student loans impact everyone but i would like to share a few the heartbreaking commentary i've received regarding the situation these are real people but i will disguise their names ashley is a 21 year old college student who attends one of the minnesota colleges and is a single mother of a five-month-old daughter she hopes to become a nurse but is struggling with paying for diapers and taking out a loan for her placement in college she says i'm not sure what to choose to give my daughter food now or in the nearby future tell her no because of the debt i'm afraid of having tyler has graduated college yet is faced with an immense amount of money he has to pay back towards the college he says what do i tell my dad that i can't afford to grab groceries because of the loans i have it would break his heart tyler's dad has been diagnosed with stage two lung cancer what many don't comprehend is how these loans affect the lives of current and former students going forward there is decision making involved throughout this entire process many are confused and believe that students are free to choose whatever except there is a bill to be paid and someone has to pay it so while we start our families and journey to graduate school we keep in mind that everlasting debt that continues to grow for many of us 10 to 20 years into the future and many have haven't still paid off these loans as a black somali american woman i fear for myself especially hearing how black graduates owe six percent more than what they have borrowed compared to other graduates or the fact that many african americans pay off their student loans slower many first generation americans are the bread winners of their family and to see this debt take their paychecks and hold weight over them it's heartbreaking to see lower income families struggling to secure spot into top schools only to be denied the scholarship and have to take out a loan not because we want to but because it is our only option especially in a time where many have deferred their acceptance because of this ongoing pandemic and are fearful for their future senator nelson is introducing this bill and i am behind her all the way my fellow peers are standing with her as we want this bill to be passed minnesota senate to take action against the fear many minnesotans face about college and to be the step towards change for the next generation mitigating student loans is an efforts that will be deeply appreciated by my generation and others following thank you i yield my time to the chair uh thank you miss adam for your testimony uh senator nelson any uh any further comments before we open it up for discussion or questions now i think miss adam's comments uh really put a very personal face on the reality of why this piece of legislation is so important uh discussion senator dietzick um thank you mr chair um i agree with senator nelson and thank you ms aiden for testifying and for sharing your story i think you did a very you did a great job and personalizing it and it is impacting so many people i know we heard in taxes a few years ago i think senator miller had a bill and senator classen had a bill showing how much debt is out there and what students across minnesota owe and it is crippling them i hear from the students all the time where it is impacting what jobs they choose and where they live and this is pre-pandemic and this has only kind of made it worse so um i think this is something that we should go go forward it doesn't resolve all of their debt but it helps it helps a certain amount of students a little bit or a lot so um thank you further discussion on the bill senator chamberlain thank you uh yeah i like the idea i'll start out with that um we've had similar things up in the past as well um but i will must remind people sort of deduction and credit which is helpful to the students is forgive me for saying is that it's these things are ultimately a subsidy for those institutions that are charging such exorbitant rates and fees for their services so i may step on a few people's toes but that is uh that's the root of the problem and we've discussed many times that can't help out tax policy can help out people and that's good but ultimately it's not the solution to the problem the problem uh this is simply a treatment to that i don't want to open up a large discussion about uh what we can do to do manage all that i understand it but i'm just trying to get to the simple point that ends up being a subsidy to uh to those larger institutions who are not then held accountable for for what they're doing but i think this is a good idea overall we have to continue to address the the cost of those institutions so i don't mean to open up our larger problem can of worms i understand there's other issues out there just want to keep it focused on this just a thought thank you and uh thank you testifier are there any other questions or comments on senate file 1323 before we turn it over to senator nelson for closing comments i don't see any senator nelson i thank you mr chair thank you members i miss aidan again phenomenal uh personal uh testimony and uh to to senator chamberlain's point there are broader issues here the high cost of higher education and those issues are much broader than the bill before us but i do want to note that this bill this initiative provides support to the students who have these student loans so the cost isn't of those higher educations is another issue that will be addressed in many ways in many committees over great time i'm sure but this is one step one thing that we can do today that is going to have a meaningful impact on our young our younger generation who are now in higher education or actually quite frankly many middle-aged minnesotans are still paying off their college educations and so this is one way to empower minnesotans empower their families uh and um i believe education is the great equalizer but they shouldn't have to pay for it for the rest of their life so i asked for a favorable vote um i know today we're going to lay this over for possible inclusion and omnibus bill and i appreciate all the good support from the committee today all right thank you senator nelson and before we do laid over senator chamberlain i just want to confirm that you got all your comments and because your hand is still up i think you just forgot to lower it uh we'll give him a second to respond that is correct i'm sorry no no problem senator chamberlain okay members uh with no further discussion uh senate file 1323 will be laid over for possible inclusion and senator nelson we will uh turn things back over to you great thank you for sending that gavel back over uh senator miller members our third item on the agenda is senator icorn's bill and that is senate file 1153 senator icorn welcome to the committee thank you madam chair i appreciate the opportunity and thank you for accommodating my schedule today so i could have my hearing and veterans as well which went very well so we appreciate that senate file 1153 in front of us i would like to thank my co-sponsors senator jacinsky chamberlain coleman and yourself madam chair um senate file 1153 under current law individuals may subtract up to specified amount of education related expenses for purpose of calculating minnesota taxable income this bill clarifies the language limiting the k-12 expense subtraction to expenses not claimed in the credit increases the subtraction to 2 600 for each qualifying child in kindergarten through grade 6 and 3 900 for each qualifying child in grade 7 through 12 adds tuition to the allowable expenses and increases the k12 credit amount to 1500 and the income threshold the 50 000 and modifies the phase out schedule and requires the credit be adjusted annually for inflation the education tax credit was originally passed in 1997 and the amounts for the credit and deduction have not been updated since 2001.

the bill increases the amounts of the credit and the deduction to help families pay for additional education expenses that they incurred this year needed more now than ever due to the pandemic during the last year of distance learning we know that those students are already struggling under the worst achievement gaps in the country and they have lost grown this bill helps address the achievement gap by allowing families to use the tax credit and or deduction for tutors summer camps and other education enrichment opportunities to make up for these learning deficits this bill ensures education equity middle class families have been able to take the deduction for tuition for years but low-income families cannot use the tax credit for tuition many low-income families or we should give low-income families the same opportunities that middle-class families have had for years and allow parents to make the best choices for their children's education i know man i'm sure you've heard other bills similar to this i believe senator rest has one coming up after me so this just gives you a lot of tools in your toolbox as you go to to put your omnibus bill together and this is just something we think is a tangible way we can help families this year in this tough time i mean there's so many kids in in all of us can have a story from our district i'm sure about a kid that's been out of school that is going to need that extra help and this little piece will go a long way to help those families get their kids caught up whether it's part of a summer school or something else or other enrichment opportunities i think this is an important piece so i really appreciate the opportunity to present this today and have this discussion and that's what i have for now and would like to hand it over to the testifiers thank you uh senator icorn um our first testifier is don beavers a parent from stillwater welcome to the committee miss thank you madam chair members of the committee for your time this morning my name is dawn bevers and i'm here as a parent of a middle schooler living in the east metro area i'm a former public high school science teacher assistant principal and varsity coach i stopped teaching when our daughter arrived 13 years ago and then we moved to ohio and then here to minnesota our daughter has gone to a public charter school and to a local public school and the start of the pandemic when schools were shut down we saw a huge shift in our daughter and her motivation our daughter's an only child and an extrovert and she needed some social interaction when we thought that school closures were just for a short time we encouraged her to hang in there and to go outside socialize with friends six feet apart of course in the fall when our school district started back hybrid the students actually learned in their individual computers in their homeroom class we continued to see our daughter's mood attitude and motivation decline she started seeing a therapist for depression she all of a sudden hated school our straight a honor roll student was struggling because she was not doing as well as she did in in-person learning and that gave her great anxiety she could not see her teachers face to face and didn't feel comfortable asking questions on her zoom meetings she kept saying how dumb she was when the talk of closing down our hybrid model started her therapist suggested that we consider a private school for her at least until the pandemic was over she saw additional anxiety with even the discussion of moving to full-time distance learning again the day our district decided to move to full distance learning was the day that we switched her to a private school the difference hit for her has been extraordinary so much so that no matter what happens next year she won't be returning to public school so i feel that our daughter is a very prime example of why all children don't always do best in the public school setting even though that's where i taught i feel that parents should be able to choose the best best path for their child and should not have to worry about the financial burdens of a quality education that every child deserves the legislators just support this bill to expand the current tax credit will allow families struggling to pay for necessary educational expenses whether that is in public private or charter school if any year has taught us that one size does not fit all when it comes to education it's been this past year madam chair members of the committee thank you so much for your time and for listening to our story thank you miss beavers next our next testifier is ordola taylor a parent from saint paul welcome to the committee please introduce yourself for the record thank you thank you so much um madam chair and members of the committee my name is oridella taylor i'm a parent i'm living in st paul i'm a single mother of three sons i have my oldest is in high school he's a sophomore in central high school my middle is in charter school at afsa academy for science and agriculture and my youngest i had to put in private private school this year i work outside the home and when kobet started last year i had my youngest in a in a in a public school um online he um i couldn't expect my my oldest to my older two to come and support him because i don't work in the home um so i i decided um in the fall to put him in private school it was a very tough decision especially because i'm taking money away from the um the the high schooler that i would be investing in college and putting in five in his um college savings plan and i'm giving this now to the to the youngest so it was a tough decision to make um but it turned out to be a very good decision um he i you know we discovered working with the school he's behind um so we had to i worked with him actually every day to help him catch up um and it has helped his education quite a bit so having the opportunity for parents like me we don't have a choice we have to work outside the home or various situations even if you know even if it was in person he actually has been um supported by the private school um i'd like that opportunity for my other kids i'm just not aware not being day-to-day you know involved with their education what is going on perhaps they're behind um perhaps they'll have better opportunities at private school so having an opportunity to pay for these services of private school has been is very important um and so we certainly do support this effort uh thank you miss taylor your testimony is very powerful and uh just really points to the power of parents and thank you for for making those decisions um our final testimony testifier is simon glazer an english teacher from john adams middle school in rochester thank you madam chair senator right i'm sorry well you're the committee thank you so madam chair senator icorn and members of the committee my name is simon i am an english teacher at john adams middle school in rochester public schools i have been a professional educator for 28 years 16 of which as a teacher in e-12 schools i am here today to express strong opposition to senate file 1153 covet 19 has shown that public schools are at the very center of the community despite what some have said our schools have not been closed for the past year not only have schools been open we have been providing more services than ever before at this time about a year ago rochester public schools joined a partnership providing boxes with 30 pounds of free food to any member of the community john adams the school where i teach has for the past year provided free child care to health care workers law enforcement and other frontline workers rochester public schools have adapted from hybrid to distance learning to in-person and will continue to do so to meet the academic social emotional and health needs of our students employees have made countless home visits to promote wellness and academic success delivering supplies as well as smiles my colleagues and i have not been on vacation in fact most teachers i know say they have worked harder this year than at any point in their careers and yet i believe that tax policy reflects our values as a society we pay for what we value as i read through sf 1153 it struck me that there is provision requiring the commissioner to increase maximum amounts for each qualifying child commensurate with inflation this struck me because in the last funding cycle public education was not valued as highly after an opening position of 0.5 percent the senate eventually supported yearly increases of 2 percent which was below the rate of inflation tax policy reflects our values as a society public schools are a public good the same cannot be said for private schools private schools were not subject to the unfunded mandate to provide child care for essential workers they do not provide costly special education and language learner services they were not required to become food distribution centers they are not required to meet the state's accountability standards or rigorous teacher licensure expectations funding vouchers to private schools does not serve minnesotans instead of shifting millions of dollars from the state's budget into vouchers the state should first focus on fully funding public education if this pandemic has served any purpose it has been to shine a spotlight on the inequities of our current system we cannot meet a health crisis without a school nurse in every building we cannot meet the social emotional needs of our students without school counselors social workers psychologists we need to invest in community schools which provide the wraparound services that our students need to thrive as professional educators we know how to help students in need we know how to narrow the achievement gap we know how to support young people who are struggling what we lack what we have always lacked is the funding to support that knowledge it is irresponsible to use taxpayer money on vouchers an education strategy with no documented history of improving educational outcomes and with no public accountability the priority of the state legislature should be to fully fund public schools our constitution demands it i urge the committee to oppose this bill thank you i thank you mr glazer for your testimony just to let the record reflect uh the education bill actually surpassed the cost of inflation in the last session and governor walsh signed the bill as well saying it was a terrific education bill so clearly over 20 billion dollars was funded surpassing the cost of inflation um but um mr uh uh senator icorn um i don't read this bill as a voucher bill uh is this bill about vouchers uh senator icon madam chair thank you for the question and it's absolutely not uh it seems as though and we've heard this and you've heard this as well when you were the chair of the education committee it seems like every time there's a bill that education minnesota doesn't like its vouchers and that's really unfortunate this is not about vouchers and if you look at the credits i don't know what family is going to pay for private school for fifteen hundred dollars a year or a thirty six hundred dollar credit on their taxes that's not going to pay for a private school education this isn't meant to nor will it take away from public schools but this will provide those additional enrichment opportunities for families and children who have been harmed by cold wood and are dealing with this horrible achievement gap this is going to allow them to get those extra enrichment opportunities they're still going to be able to be in the public schools and almost all of them still will be in the public schools this isn't going to transition people to private schools in any way there's it's there's not enough money for that to even be the case but this will help our students get that extra learning they need to help them get caught back up so no to answer the question directly this is not about vouchers and it is not vouchers no matter what anybody says i think you uh senator icorn um mr glazer uh regarding your uh testimony i wanted to note um are you testifying on behalf of yourself are you testifying on behalf of education minnesota um can you and also uh mr glazer are you opposed to the uh the bill the bill which actually allows a tax credit for parents who have been in many cases augmenting working with their public schools but educating their children at home as well and quite frankly are going to need a lot of [Music] there's a lot of learning loss that i think everyone is quite concerned about so are you opposed to increasing the amount of the uh of the education tax credit it hasn't been um increased for years perhaps uh perhaps decades but are you opposed to increasing the amount of the credit mr glazer sorry uh thank you senator nelson um i i for to answer your first question uh i am here both as a public school teacher and as a member of the rochester education association uh and for full disclosure i do sit on the executive board of that body um as uh i can't speak as an expert on tax policy i'm here because it seems to me that any bill or proposal that moves our public priority on education away from the public schools towards finding ways uh to channel that money into private education i believe is against the you know the the public good and i believe that our focus should be elsewhere it is not about harming particular students many of which i'm sure are helped by the provision uh i would like to say that by placing all of our trust in public schools we result in students like miss addon who i should point out has a brother at my school and is a product of rochester public schools and i'm not sure that removing resources from those schools are to our public credit and i do not put words in her mouth and i do not presume to know how she feels about this bill as i said i'm not here as an expert on tax policy uh only as an expert as i believe in education who i believe this i believe this is a first step towards changing the priorities of of the state away from public education and that's the piece that i that i oppose i thank you mr glazer well i can speak as the chair of the tax committee and the former chair of the education committee public schools are critically important uh to our state 90 of our kids are in public schools and we better have great public schools for every kid in every district our future depends on it and so i appreciate your support of public schools i think it would be helpful senator icorn if we had our fiscal staff perhaps shed some light on the exactly what senate file 1153 does regarding tax credits uh what they currently are and what your bill proposes and so i'd like to i see you have a your hand up uh uh senator icon so i'll take that first as the author of the bill and then i'd like to turn it over for more in-depth a fiscal um study of really what the interaction is in this bill senator eichorn was actually thank you madam chair was actually kind of a question for you and maybe you might be able to answer this as the former education chair maybe senator chamberlain can also answer part of this but there seems to be the narrative that we're we're taking away from public schools to do this and i assume that's not your intent i don't think that senator chamberlain's intent it's certainly not my intent but if we pass this bill as it stands today and is included in your omnibus bill does this in any way take away from our public schools uh does this in any way take away from senator chamberlain's budget for k-12 it doesn't say that in the bill there's no intention of that and uh if you had to ask me it does not take away it just adds to the opportunities that are out there ah thank you uh senator icon now uh to say that this bill would take away from education would be to say that any expense in the state budget would be taking away from uh public education so um that that is uh is not is not accurate but um let's get down to the nuts and bolts of what we're talking about with this tax credit and um so mr wilm could you explain precisely the moving pieces in senate file 1153 yes thank you madam chair um so as you know there are quite a few quite a few moving pieces in the bill um i'll start by saying that the current credit and subtraction the expenditure for both is approximately 25 million annually it's about uh 16.5 million for the subtraction and then 9 million for the credits the subtraction is used by more filers um and and um is broader and um and then the credit and so the credit is is used by fewer filers um the credit is refundable and allowed equal to 75 of eligible education expenses for qualifying children k-12 and the household size adjustment is based on the number of children so you know families of two children receive more uh of a credit maximum than families with one children and so on and so forth uh and and what the bill does um is you know in several parts it increases the the credit amount by five hundred dollars or fifty percent um from one thousand to fifteen hundred um it also softens the slope of the phase out so right now under current law the phase out range for the maximum credit is increased by 2 000 for each additional child this bill would bring that to 4 500 so a longer phase-out range it also as noted allows the credit for private school tuition which currently those expenses qualify for the subtraction but not the credit um and then the changes to the subtraction is that it increases the maximum subtraction uh by about 60 percent um in the first year and then 56 percent or 1400 in the second tier on the revenue estimate it notes that the total impact is an additional approximately 23 million uh per year in a general fund effect to the state and so that's roughly the same scope and size of what's currently in law so it would effectively double the expenditure that that is existing um and then lastly uh the bill also provides for inflation so over time what you know once when this credit had was enacted originally over time the inflation has kind of eroded the number of filers and the amounts that people have qualified for and so this would um sort of stop that and and inflate the credit and subtraction annually mr wills i i just want to make sure so the um k-12 subtraction k-12 credit has not been indexed for inflation in other words this when's the last time that we increased this credit or subtraction madam chairing committee members um the the deduction was first enacted in 1955 but then in 1997 the deduction was expanded for tax year 18 and that's also the same time as the credit was established and those were last modified um around you know 2000 i i uh i would have to get back to you on on the exact date of those um but there were some budget saving modifications um in there but really the last significant changes were around 2001. thank you mr wilms so actually we're seeing it it it has been 20 years maybe two decades uh before until we have touched um really updating the uh the credit um or the deductions and and then just to clarify just to make sure our public testimony is very clear here um these credits uh the 1153 currently our current k12 subtraction and credit and the 1153 is proposed um are not um these are i would assume that these credits are eligible to all students that would be 90 of minnesota students that are in our public schools and also eligible to those students in private schools and i would just like to clarify that maybe that's something either mr wilms or miss pollock uh can can clarify for the record um that uh these i i believe are not just expenses or credits that are eligible for private school students i believe they're eligible uh all minnesota families who have uh school-aged children are eligible for these expenses uh madam chair members correct i mean the the subtraction and the credit are for expenses paid for um qualifying items so um textbooks instructional materials um tutoring music lessons transportation those kinds of things so but you know those would apply regardless of where a student or a qualifying child was in school um the the only uh difference um and which is you know addressed in this bill is that the uh the subtraction for k-12 expenses um is allowed to be taken for tuition uh payments the credit is not and in this bill the uh the tuition would be an eligible expense for the credit i thank you uh uh um miss so that is an expansion uh in eligibility there then for that particular use uh thank you very much correct um all right uh we'll go to some further questions i think the first person i saw was senator klein senator klein well uh thank you madam chair i i don't want to date myself but i do remember when we did this back when arne carlson was governor and i just you know there's a letter circling from a number of organizations that are opposed to senator eicorn's bill uh i don't expect anybody uh that's one of the testifiers today to answer this but uh it would be interesting to know if we took tuition the word tuition out of senator icon's bill and we just increased the credit i'd be interested to know how those groups that oppose the bill might respond so if uh somebody certainly is watching this from one of those organizations if someone could maybe send us a letter how they feel about the bill if the word tuition was taken out i can tell you madam chair i think they should support it uh the reality is uh this is a way to get more money into k-12 without senator chamberlain having to argue for a target so a committee chair should always be looking for ways to get more money into their budget and this would put an extra 23 million dollars a year uh into the hands of parents for a k-12 education so uh i i think people need to think about that rather than the old traditional every dollar has to fall on the k-12 formula maybe there's other ways to get some money uh in into the k-12 system so a little creativity there but but someone sent us an email or a letter saying if we took the word tuition out how would all those organizations respond thank you madam chair and i remember we i think we tried to add summer school one time when we weren't successful with that and i don't think that i didn't see that in uh in senator icorn's draft at least not the quick look i took at it let me just suggest senator icorn might not be the worst idea to add summer school uh into this program uh uh you know not all parents if summer school is going to be offered this year it's going to be offered in a big way uh i think uh and uh we've got a lot of one-time money to be able to do that clearly our kids have gotten significantly behind over this last year and we're going to have to spend some money to help do what we can to help them catch up but in the in you know that money of ours probably is going to touch every student in every building so making sure that every kid in the state has an opportunity to do summer school if somehow this tax credit helps with that i think that's probably worth having a conversation about that's it madam chair thank you uh thank you senator bach um clearly uh we do need to have that clarification i did not see any of those opposition letters but um clearly uh the majority of the bill addresses on all students so thank you for that we'll look for that clarification um i think the next hand i saw was senator klein thank you madam chair for hearing the bill thank you senator icorn for hearing the bill by the way i love your choice in shirt and tie today um and senator bakker your question about what if we eliminated uh the word tuition from the bill i think we'll get a chance to discuss that with the next bill so which senator nelson has kindly put on the agenda uh which is a similar sort of update in the credit for k-12 expenses without that one particular provision but i do have a question for mr williams when you when you generated the the revenue note on this do you know the amount of cost that was generated in the bill by that provision around private tuition that is uh credits for private tuition what what what do you estimate those are going to end up costing the state in tax mr uh sorry excuse me uh madam chair and uh senator um klein uh the the revenue estimate published by dior um actually indicates that line item um on the k-12 education credit um it shows the reduction uh for that portion that provision has approximately 10 million annually so about half of the proposal is related to that specific provision so follow up madam chair uh senator klein so yeah i guess i would just then ask a quick question of senator acorn and i understand that we don't want to call these vouchers because that's generates a debate that's been running around the legislature for many years but uh it's 10 million dollars in tax relief for private school tuition i guess um what do you want to call it and what's your intention i guess with putting that in this particular bill if not to sort of generate interest in transfers from public to private institutions senator icon the interest is creating addition madam chair sorry senator klein the interest in this is creating additional education opportunities for students again there's going to be summer school in a big way as senator bach had mentioned the state's certainly going to pay for some of that but there's going to be gaps going forward there's going to be gaps i could foresee this being an opportunity obviously into the future this isn't something that's going to take kids out of the public school it's not creating a voucher system we can call it whatever we want but there is no voucher system created under the bill but into the future um you know there there aren't a lot always of summer school opportunities within the public school system there are enrichment and other education opportunities sometimes out of the school system that doesn't say the public school system can't do it but it's an additional way to help kids get ahead and that's the real goal of this thank you senator icorn um i believe in uh mr wilms is your hand up for some further clarification yeah uh thank you madam chair one other thing i forgot to add is um on the revenue estimate it identifies that when um more filers take the credit there will be savings to the subtraction so um a portion of the credit for tuition a small portion um you know ish the the amount is shifted into the credit and so there's savings on the subtraction so it's it's roughly 10 million but give or take based on that shift you know about 750 000 or so so i just wanted to clarify that for the record yes and mr wilms uh just to be clear there is currently um a uh credit for uh tuition or subtraction either which one is it yes so currently the the the tuition is allowed under the subtraction and does not qualify for the credit thank you yeah thank you um next i see uh senator uh thank you manager i would just also like to um encourage senator icon to look at summer school like senator box said because i think we are going to have a lot of students that um either need that ketchup or just for their social emotional growth want to be around their friends and especially if we as we go hopefully the pandemic slows down so we can go in person and then joe nelson you're aware there's summer academic enrichment programs which are a little different and i don't know if they qualify for the credit and so those are schools that usually comes through office of higher ed but they are particular programs that there is a process that they go through to get qualified and to qualify for that program and they are pretty rigorous um coursework and so that might be something that also is um interesting to some students that maybe we want to consider adding to here i don't know i'd have to look at it more but i'm just suggesting it and willing to work with you if that's something that we want to consider uh thank you senator dietzing yes there there is great learning loss uh amongst our students and there is going to be intensive summer school i am also glad to know the federal government is well aware of this and anticipating about 128 billion dollars sent out for our public schools across the nation it looks like perhaps an additional 2 billion that's just very rough uh to minnesota and and they have sent um over a billion already but you know we're going to need those um those federal uh dollars they they have the levers you know in the state of minnesota we have to balance our budget and that's tough it's good i'm glad we have that requirement but it makes for tough decisions uh now the feds on the other hand they can kind of send out that money um and uh and they don't have that balanced budget uh requirement so we are going to be looking to our federal partners but we should be doing what we can do in the state of minnesota as well and um my intent today is to uh hear senator rest's bill as well take in all the comments uh the committee has been phenomenal uh with with these comments and really fashioning something that is going to to help our uh students so um with that uh senator icon do you have any closing comments i am not seeing any uh further comments from members so senator icorn to closing comments tha

2021-03-05 19:44

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