Minnesota’s Private-School Parents Await Decision in Tax Case

By Nancy Paulu — June 15, 1983 9 min read
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Imogene and Herbert Treichel’s 17-year-old son, Kent, just graduated from Minnehaha Academy, a private school in Minneapolis. His annual tuition was $2,550.

But the financial bite for this middle-class St. Paul couple was not as deep as it might have been. Minnesota law allows families like the Treichels to deduct up to $700 per child from their gross income for tuition and other school expenses.

When they file their 1983 state-tax forms, the Treichels expect to deduct the full $700 allowed. In past years, with two children enrolled in private schools, they have deducted $1,200--$700 for a child enrolled in a private secondary school and $500 for one enrolled in a private grade school.

Whether the Treichels can continue taking these deductions will soon be decided by the U.S. Supreme Court, in the lawsuit known as Mueller v. Allen.

The concept of offering tax advantages to families of children who attend nonpublic schools is an emotional issue among educators across the country, and in recent months the debate has quickened in response to President Reagan’s repeated calls for legislation to permit tax credits for such families.

Here in Minnesota, the concept of a tax break related to educational expenses has been in use since 1955, when the Minnesota Legislature passed a tax-deduction law that has since become the only such law upheld at the federal appellate level.

Separation of Church and State

Local critics of the deduction, including the Minnesota Civil Liberties Union (mclu) and public-education groups like the Minnesota Education Association and the Minnesota School Boards Association, staunchly oppose the law on the grounds that it violates the constitutional separation of church and state.

But the law has been defended both by private-school groups and by the state chapter of Citizens for Educational Freedom (cef), a Washington-based national organization that since 1959 has fought for tuition tax deductions, tax credits, and vouchers on the state and federal levels. Imogen Treichel is the executive director of the Minnesota cef

Critics of the law frequently cite the church-state issue. “No one should be forced through the power of the state to finance his or her church, or anyone else’s church,” said Matthew Stark, executive director of the mclu “A tax to support a parochial school is a tax to support the church.”

But the same critics seldom charge that the deduction has had a negative impact on Minnesota’s public schools. On the contrary, local public- and private-school educators more or less agree that the deduction has not accelerated the decline in public-school enrollments and has not worked as a significant drain on the state’s treasury. The educators say that is because the maximum deduction allowed is relatively small.

For the same reason, the deduction has neither affected the tuition and financial-aid policies of private schools nor led to increasing state regulation of such schools, according to the educators.

When it was first passed in 1955, the law allowed parents to deduct up to $200 for the a child’s educational expenses; the ceiling was raised in 1976 to $500 for grade-school expenses and $700 for high-school expenses. (The legislature subsequently passed a tax-credit measure, which was in effect from 1971 to 1973 but was struck down by the Minnesota Supreme Court in 1974.) Deductible items include tuition, transportation, and textbooks, provided they do not contain religious doctrine. A partial list of other deductible costs includes those for tennis shoes and sweatsuits for physical-education classes; rental fees paid to schools for musical instruments; cameras for photography classes; ice skates for use in school; and fees associated with driver-education classes.

Minnesota’s tuition tax law was quietly pushed through the legislature by a “relatively small but influential” group of lawmakers, according to Van Mueller, professor of educational policy studies and administration at the University of Minnesota and a plaintiff in the suit now before the Supreme Court.

Mr. Mueller contends that the deduction was tacked onto another tax bill passed in the waning hours of the legislative session. Most legislators later said they didn’t know that they had voted for the deduction until several weeks or months later, and the newspapers carried no accounts of the bill at the time it passed, according to Mr. Mueller.

Less Opposition Than Expected

Since its apparently unremarked enactment, the law has met with less opposition than might have been expected. Observers of state education politics offer several reasons for that.

First, as Gene Mammenga, lobbyist for the Minnesota Education Association, explained, “We’ve never had a group of legislators in this state who are strong advocates just of nonpublic education. People who are nonpublic advocates are also public-school advocates. They’ll fight for bills on each side.”

“The guy who is in there fighting for a voucher bill or to boost the amount allowed for the tuition tax deduction is also fighting for money for public education,” he added. “So it’s not politically wise for a guy like me to get them upset in any personal way.”

All the public-education groups, including the mea, are on record as opposing the tax deduction. “At the hearings on the deduction, we get up, talk about separation of church and state, are just as articulate as can be, then we sit down,” Mr. Mammenga said. But the groups do not work as hard as they might to defeat its continuation.

That, according to the lobbyist, is because they do not want to alienate the legislators--such as State Senator Gene Merriam from Coon Rapids and State Representative James Pehler of St. Cloud--who have introduced bills supporting both public and private schools. (Both Coon Rapids, a north Minneapolis suburb, and St. Cloud, in central Minnesota, are predominantly Democratic and have many Catholic voters.)

Furthermore, the deduction bill is a relatively small-ticket item in the state budget, costing $4.1 million in lost revenue in 1980, for example. Projections show that the cost of continuing to allow the deduction will be $5.6 million for the fiscal year 1984 and $6.3 million for 1985.

‘A Drop in the Bucket’

Compared to the $1 billion that the state is expected to spend on public schools this year, the $4.1 million “is a drop in the bucket,” Mr. Mammenga said.

“We could create tremendous pressure against these bills,” he continued. “But it’s generally thought that it’s not worth it for us because the legislative elders have quietly decided that nonpublic aid will be kept to these levels.”

Other educators suggest an additional reason for the lack of strong opposition to the deduction: the strength of the state’s public schools. The scores of Minnesota students on standardized tests have always been well above the national average, a fact Mr. Mueller said has made public-school supporters less concerned about the tuition deduction than might otherwise be the case.

The last--and perhaps most important--key to the deduction’s longevity has been its availability to parents of students in both public and private schools. The Treichels have claimed as a deduction their children’s private-school tuition. But in the past, their children attended public schools, and the parents deducted the rental fee for a cello that one son played in school and the wood a second son used in his shop class.

Mrs. Treichel said she has saved far more by deducting the private-school tuition than she did as a public-school parent, because the latter expenses were so small.

That is also said to be the case with other Minnesota parents who claim the deduction. No studies have yet been done to determine exactly who uses the benefit. Nor is anyone certain how many people claiming the deduction are public-school parents and how many are private-school parents.

But Carole Wald, research analyst for the Minnesota Department of Revenue, said she suspects that private-school parents claim larger deductions, but that at least half, and perhaps two-thirds, of the total number of people taking the deduction have children in public schools.

Of the 85,749 returns on which taxpayers took the deduction in 1980, 29,470 claimed from $1 to $100. Another 15,431 claimed from $101 to $200, and another 8,524 claimed from $201 to $300.

Parents Claiming Deductions

Tuition now averages about $600 at the state’s Catholic elementary schools, about $1,400 at Catholic secondary schools, and more than $4,500 at some independent schools. Ms. Wald said these averages suggest to her that parents claiming deductions of under $300 have children enrolled in public schools.

Her figures also indicate that taxpayers who earn more deduct more. In 1980, those earning between $5,000 and $10,000 who claimed the deduction took an average of $245. The same year, taxpayers earning between $75,000 and $100,000 took an average deduction of $1,018.

More parents living in the Minneapolis-St. Paul area than elsewhere in the state claimed the deduction in 1980, which Ms. Wald said is because that area includes the largest concentration of nonpublic schools in the state.

Her comments on the data jibe with those of local tax-preparers. Jan Wittenberg, who works for the H & R Block Co. in the firm’s district office serving affluent suburbs of Minneapolis, said parents of private-school students claim much larger deductions than do public-school parents who take the deduction.

But Ms. Wittenberg said she has noticed an increase recently in the number of public-school parents who are familiar with the deduction. She speculated that the poor economy has provided an incentive for more taxpayers to read the fine print of their tax-instruction booklets, which point out that the deduction is available to both public- and private-school families.

The deduction apparently has not affected student enrollments. Enrollments in both private and public schools have dropped since 1955. In the 1957-58 school year, the first for which figures are available, about 19 percent of all Minnesota students attended private schools.

The proportion rose just slightly to 19.7 percent in the 1961-62 school year, then dropped to a low of 9.3 percent in 1975-76. It is now 10.6 percent.

Joel Sutter, senior research analyst for the education statistics section of the Minnesota Department of Education, said the fluctuations are too small to draw any correlation between the availability of the deduction and enrollment shifts.

The big drop in private-school enrollments was due largely to a decline in Catholic-school populations, as families moved from the cities to the suburbs, Mr. Sutter said. The decline continued during the two-year period in which the state’s tuition tax credit was in effect, but enrollments rose slightly after the deduction’s ceiling was raised in 1976. Today, about 91,000 students attend the state’s private schools; about two-thirds of these 91,000 attend a Catholic school.

“The deduction isn’t big enough to be the deciding factor in whether we send our children to public or to private schools,” said Ms. Treichel, whose husband is a teacher at Concordia College in St. Paul. “Our concern for educational quality, for the values orientation provided in a school, and for matching the school to our children’s abilities is what determines where we send them to school.”

“Parents have a right to choose where they want to send their children,” she added. “The tuition tax deduction is one way for the government to recognize that right--and to provide for more equitable educational opportunities.”

A version of this article appeared in the June 15, 1983 edition of Education Week as Minnesota’s Private-School Parents Await Decision in Tax Case


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