Federal Legislative Report 115-06
Delivered via email: November 27, 2017
On Nov. 16, the U.S. House of Representatives voted to approve its version of tax reform, H.R. 1, the Tax Cuts and Jobs Act, along party lines. It is anticipated that the U.S. Senate will vote on its version beginning this Wednesday, Nov. 29.
The following are provisions, applicable to education, included in the House version:
- Limits State and Local Tax Deductibility (SALT) deductions for taxpayers to property tax deductions up to $10,000.
- Expands Coverdell education savings accounts to allow contributions of up to $10,000 to private schools, thereby providing a tax-advantaged investment account for private school tuition.
- Terminates advanced refunding that allows districts/communities to refinance bonds at lower interest rates, as well as private activity bonds and tax credit bonds used by school districts (Qualified Zone Academy Bonds, Qualified Energy Conservation Bonds, and Clean Renewable Energy Bonds).
- Eliminates the $250 tax deduction for teachers who use their own funds to augment instructional materials and classroom supplies for students.
The following are provisions, applicable to education, included in the Senate version:
- Would repeal SALT deductions altogether.
- Would terminate advance refunding and does not address tax credit bonds or private activity bonds.
- Would double the $250 tax deduction, to $500, for teachers who use their own funds to augment instructional materials and classroom supplies for students.
FISCAL YEAR 2018 APPROPRIATIONS
In late October, Congress finalized the Fiscal Year 2018 (FY18) budget. Specifically, it:
- Funded the Department of Education at $66 billion, which is $2.4 billion below the FY17 enacted level. The majority of the cuts ($2 billion) were to Title II, Part A of the Every Student Succeeds Act (ESSA), which pertains to "Preparing, Training, and Recruiting High-Quality Teachers, Principals, or Other School Leaders."
- Increased funding for after school programs by $100 million.
- Increased IDEA, Part B grants by $200 million over FY17 levels.
- Funded Title I programs along with Perkins Career and Technical Education Act state grants and the ESSA State Assessment grants were level funded at FY17 levels.
- Included provisions to address investments in rural schools and financial assistance to school districts/communities affected by recent natural disasters.
Additional provisions in the budget resolution include:
- An amendment adopted in favor of discontinuing state and local tax deductions (SALT) currently claimed by more than 44 million taxpayers on federal tax returns.
- A federal tax credit and/or voucher program that would divert resources away from public school districts.
- A provision for tax-exempt bonds for construction and other capital improvement projects approved by traditional local school boards.
PERKINS CAREER & TECHNICAL EDUCATION ACT (CTE)
Reauthorization of the Carl D. Perkins Career and Technical Education Act (CTE) is still pending in the U.S. Senate. The House passed their bipartisan version, H.R. 2353, the Strengthening Career and Technical Education for the 21st Century Act, in June.
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