Interview with Lindalyn Kakadelis

Family North Carolina Magazine—July/August 2008

On Air With . . .
Lindalyn Kakadelis is the director of the North Carolina Education Alliance, a project of The John Locke Foundation. A former teacher and school board member from Charlotte, she is a frequent guest on talk radio and television news programs throughout North Carolina. Her articles have been published in a variety of newspapers and journals, including the Raleigh News & Observer and the Carolina Journal.

Following is an edited transcript of an interview with Lindalyn conducted by Bill Brooks, President of the North Carolina Family Policy Council (NCFPC). The interview aired May 10, 2008 on the NCFPC’s weekly radio program “Family Policy Matters.” Lindalyn discussed a new report from the North Carolina Education Alliance, entitled Innovation in Education: Education Tax Credits in North Carolina.

This interview can be heard in its entirety here: Listen (.mp3) — (Real)

Bill Brooks: Education tax credits are often confused with vouchers. Are they different from vouchers, and if so, how?

Lindalyn Kakadelis: Well, first of all a credit or deduction means that there would be a line item on your state tax form, and you would put in what you spent, and then you could deduct that from your tax liability. Basically, what this would do Bill, is you send money to Raleigh, and then the bureaucrats would turn around and send it back out to you in some kind of a form. Well, a voucher would go to the school versus a tax credit just being a line item. It stays where the donor or the individual lives. The money would not go to the school but would stay with the person that’s using the money for education. The other interesting thing is that with a tax credit, the accountability stays in the Department of Revenue versus trying to get the Department of Public Instruction involved in giving vouchers out. It is a simpler way to provide educational options for families.

BB: Lindalyn, you mentioned vouchers and the tax credits. I want to ask about a third thing that achieves about the same effect. Did you look at the system that’s used currently in North Carolina with regard to private college education, where when a student enrolls in a college that is accredited, that school basically gets the money directly from the state. There’s not a voucher that goes directly to the parent. There’s not a tax credit that goes to a parent. But the fact that the student is enrolled in that college means that the state, upon verification of the residency of the student, will send the money directly to the school, which helps lower the tuition payment.

LK: Right, now you’re talking about at the university level.

BB: That’s right.

LK: We did look at that. The only problem with that, Bill, is some of the schools are concerned that if the money goes directly from the state to the school, then there will be more regulations. And if you will look at that even in our state, the higher education institutions that we see, those monies, they have regulations that they have to keep up in order to have that privilege.

BB: You highlight two types of education tax credits in the report. First, what are family education tax credits, and how do they work?

LK: Well, that’s simply an individual tax refund, a family refund, and if you spend a certain amount of money on tuition, or whatever you spend for educational purposes, you would get to take that off of your state tax liability. It could be a refundable tax break. It depends on how our legislation is written and when this really gets to the General Assembly level.

BB: What about philanthropy education tax credits? Explain how they work and their relationship to scholarship organizations.

LK: These are tax credits mainly for corporations. They can give to a scholarship granting organization and the scholarship granting organization then, in turn, will work with lower income families and assist them with their tuition payments to private schools. Now we already have somewhat of an example of this in North Carolina. In Charlotte, there is the Children’s Scholarship Fund. That is a charitable organization, and anyone, corporations or individuals, can contribute to this scholarship organization, and they’ll get some tax deduction, simply because it’s a charitable organization. You don’t get a lot, but you’ll get some. What we would like to do is increase that amount of tax credit and deduction that a corporation would give and make it more of an incentive to give to these scholarships because we know education is such a high priority, and also, K-12 education, is one of the biggest line items on our state taxes.

BB: Lindalyn, you say in the report that education tax credits would fit nicely with North Carolina current tax incentive system. How so?

LK: Well, families already currently claim a tax credit of $100 per dependent child. You can get a tax credit of 10-13 percent of expenses for children under seven for childcare. Even for special education, dependents who are physically or mentally unable to care for themselves, you can receive a tax credit for that. Amazingly, even in North Carolina, if they collect bushels of oyster shells donated to the Division of Marine and Fisheries, the Department of Environment and Natural Resources will give you a credit of $1 per bushel that you turn in. There are all kinds of tax credits. You can get one for rehabilitation of a historical structure, for a disabled taxpayer, dependent, or spouse.

BB: How many other states currently offer education tax credits or incentives to parents, and how successful have these states been?

LK: Well, first of all, let me tell you what states currently have them. Iowa, Illinois, and Mississippi have a tax credit program for families. Arizona, Florida, Iowa, Pennsylvania, and Rhode Island currently have corporate tax credits that you can give to scholarship granting organizations. What they have found, Bill, is not only is this a win-win for the families—in that they can get their child’s educational needs met, but without having to pay twice, once through their taxes and once through tuition. But also it saves the taxpayer and the state money. We have found that over $200 million has been saved from these various state budgets by allowing families to choose a school where their child may go. I can explain that by [pointing out that] in North Carolina, our state pays approximately $5,000 per child to go to public school. Let’s say a family would rather send their child to a non-public school, a private school, and the private school’s tuition may be $4,000. Well, that family could deduct that from their taxes, and the state then would not have to pay the $5,000 that they normally pay now for expenditures at the state level. So that’s how you save money on the state budget by doing this proposal.

BB: And we’re talking about $5,000 per year in this instance?

LK: Exactly.

BB: The report contends that education tax credits would actually save North Carolina money in the long run, but those who oppose education tax credits claim that they would drain money from public schools. How do you respond to this?

LK: Well, I think the way to respond is look at these other states. Nowhere has the amount of taxes going to the public school gone down. It has constantly gone up. It does it yearly here in North Carolina. We’re paying more and more for education. So nowhere has it drained money from the public school system, but it has saved money on your overall state budget, and the win-win part is it allows families who couldn’t afford these options to be able to afford them.

BB: What about parents who choose public schools. Would they be eligible for tax credits under such a program or is it strictly for parents who choose private schools?

LK: Well, it would solely depend on the way the legislation is written for North Carolina, but what we have seen in these other states is that, for example, in Iowa, the parents can choose to spend it for tuition or textbooks. Sometimes in public school you may have to pay for a particular textbook. Well, this would cover that. In Minnesota, what’s interesting is the tax credit goes for tuition, after school programs, academic summer camps, music lessons, musical instruments, purchasing of tutoring, instructional materials. So it covers a lot of different educational needs that can help anyone, whether they go to a public school or a private school.

BB: And of course what we’re talking about is not an unlimited tax credit but one that has a cap.

LK: Exactly. Like in Minnesota, they may deduct up to $2,500 for children in grades 7-12 and $1,625 for children in K-6th grade.

BB: A big question for lawmakers may be whether education tax credits are constitutional, particularly in North Carolina. Are they constitutional?

LK: Yes, they are. In fact, two years ago, the Alliance teamed up with the Institute for Justice, and we had scholarly attorneys there look at our constitution and say, okay, are there any problems that you see? Do we have the Blaine Amendment, which is an amendment that’s in some state constitutions that can cause problems with school choice issues? The North Carolina constitution is extremely clean from any language that would prevent the General Assembly from doing anything like this. In fact, what history has shown is, in North Carolina, we have added to the basic education that is listed in our constitution.

BB: Lindalyn, some might argue that North Carolina already offers parental choice in education through charter schools. Would you agree? Are charter schools enough?

LK: Charter schools do provide some choice, but the problem with charter schools is the General Assembly capped our charter schools in the state at 100, and that was back in 1996, and so for years we have not been able to have more charter schools in the state, and the ones we have, they’re even limited by the enrollment by the Department of Public Instruction. We have thousands of families across the state on waiting lists to even get in to a charter school, and then on top of that, I think there’s about half of our counties that don’t even have one charter school in them. So, does it provide a choice? Yes. Is it reasonable to think that it’s adequate enough? Not at all. On top of all that, Bill, let’s just say a family would like to have a religious education. They’d like to send their child to a Christian school. Simply because they’re poor, does that mean they can never send their child to a Christian school? We need to be able to provide, especially for our lower income families, educational options that include religious school, and that needs to stay in the private sector.

BB: We’re nearly out of time for this week. I know you are also offering a guide on education tax credits for parents. Where can our listeners go to get copies of these reports, and to find more information on school choice in North Carolina?

LK: Bill, thanks for asking that. We have copies of both of reports—the parent’s guide and the policy guide—on our website, and that’s at www.nceducationalliance.org. And you can download a PDF file with both of those reports.