HB251 (Rep. K. Johnson) and SB189 (Sen. Brewbaker)
529 Savings Investment Plans
When the federal tax reform was passed in December 2017 language was included to allow 529 savings accounts to be used for K-12 private and religious education. Public K-12 education lost the fight to stop this language from being added at the federal level.
In Alabama, the State Treasurer, Young Boozer, is supporting legislation that changes Alabama’s Code to conform to the new federal 529 savings account. After studying the bill more closely, these bills are much more complex with big ramifications that allow the expansion of state tax exemptions on 529 accounts and can be used to pay for K-12 religious and private school education. According to the fiscal note on the bills, the tax credit received by 529 account holders would divert money away from the ETF by an undetermined amount. Studying the financial impact closer, other states with similar population to Alabama, report an impact between $10 million and $20 million to their budgets while paying expenses for private and religious K-12 schools.
CLAS will not remain silent; we oppose both bills. CLAS will oppose issues that divert money from the Education Trust Fund.
On Wednesday, both the House and Senate bills were in committee. HB251 was quickly given a favorable report from the Senate Ed Policy committee. Committee Chairman, Sen. Brewbaker, stated he will not allow the bill to move to the Senate floor until all education parties work out their differences on the bill. Later a public hearing was held on SB189. Speaking against the bill was Alabama Arise, CLAS, and AASB. Speaking for the bill was State Treasurer, Young Boozer. No vote was taken, but we expect the bill to be voted on next week.