Local News

Parental Choice Tax Credit program will cost Oklahoma nearly four times as much as projected

By Beth Wallis

Published November 9, 2023 at 4:00 AM CST

Oklahoma Gov. Kevin Stitt delivers a press conference surrounded by House and Senate leaders in May 2023. The administration unveiled an education funding package worth $625 million in recurring funds and $160 million in one-time funds.

The state’s new Parental Choice Tax Credit program is turning out to have a much heftier price tag than expected.

When the Parental Choice Tax Credit program was passed this spring, the tax commission estimated it would cost $1 million this fiscal year to set it up.

As it turns out, it’s going to cost nearly four times that. The commission chose third-party vendor Merit for $3.95 million.

Based on income levels, the program credits families with $5,000-$7,500 per student to cover private school expenses and up to $1,000 for homeschool expenses. The legislature capped the amount available for the credits at $150 million for FY 2024, $200 million for FY 2025 and $250 million for FY 2026.

So, what are Oklahomans getting for their money? According to the agency, Merit will:

Train OTC personnel on its software
Provide an application process for the credit using its platform
Assist in verifying schools’ accreditation statuses
Assist OTC in “seamlessly” integrating its software with the agency’s tax software system
Set up a contact center for taxpayers and schools to ask questions
Develop and distribute marketing and education materials to taxpayers and schools

Because the Legislature only allotted $1 million to the OTC originally, the agency says the remaining $2.95 million is coming from its own funds. An OTC spokesperson said in an email it’s yet to be determined if the agency will be reimbursed.

The OTC says it picked Merit because the company manages similar programs in Ohio and Kansas.

The agency said school registration began Tuesday, and the taxpayer application window opens at 8 a.m. Dec. 1. Families with household incomes of $150,000 or less should receive priority consideration if they submit their applications before Feb. 1, 2024.

After processing applications submitted in time from families with household incomes of $150,000 or less, the OTC will process remaining applications in the order it received them until it reaches the annual cap.

The OTC approved emergency rules to govern the program in October, with some requested changes. However, public commenters and lawmakers complained the tax year doesn’t match the school year. The OTC said that request is out of its purview and would require a legislative solution.