STO tax credit helps Catholic school students

     With many local families in Northeast Iowa facing difficult decisions due to the COVID-19 pandemic and the derecho storm, a recent expansion in Iowa’s School Tuition Organization (STO) tax credit program makes it possible for Catholic schools of the Archdiocese of Dubuque to offer more financial aid to students in the 2021-22 school year. The assistance can’t happen, however, without additional gifts to the Our Faith STO.

     “Due to the tax credit limit, we are able to raise a maximum of $6.4 million by Dec. 31. This is an increase of $800,000 from last year. Our families will need every single penny of that,” said Jeff Schneider, director of the Our Faith STO. “because of the pandemic, people were out of work and the derecho storm had an impact on farmers, homeowners, and other businesses as well. We will use the STO proceeds to help more families with need-based tuition assistance. According to a 2017 Iowa Department of Revenue Study, it is estimated that 30 percent of all student who receive STO assistance would not be able to attend one of our schools if the program didn’t exist.”

     Families that apply for assistance from STOs must be at or below 400 percent of the federal poverty level to qualify. Educators anticipate a spike in financial need among many Catholic school families in the coming year due to the economic impact of the pandemic and derecho.

     In the archdiocese, about 40 percent of Catholic school students overall receive need-based tuition assistance from Our Faith STO. In some schools, the number of STO aid recipients is as high as 70 percent.

     “More than 40 percent of our families applied for and received an STO award for the 2020-21 school year,” said Laura Herbers, principal of Sacred Heart Catholic School in Monticello. “STO has allowed our Sacred Heart families the option to choose Catholic education for their children without needing to worry about the cost of tuition. Parents are able to make a decision without financial concern, and select a school they feel is right for their family.”

     The “Our Faith STO,” which serves the archdiocese, is one of 12 STOs in Iowa that were created in 2006 after the passage of bi-partisan legislation that authorized tax credits to expand access for low and middle-income families to faith-based and other non-public schools.

     “The STO program is a win-win-win and makes sense for all parties involved,” said Schneider. “First and foremost, families are able to reduce financial worries from the decision-making process on where they send their children to school. The State of Iowa also benefits. The 2017 study estimates that in the five years studied prior, the state saved an average of $13 million annually, after accounting for the tax credits issued, because of the STO program.”

     Each student enrolled in a non-public school saves Iowa taxpayers approximately $7,000.

     “The donors to the program also see a benefit,” continued Schneider.

     An individual Iowa taxpayer who contributes to the STO receives a state tax credit equal to 65 percent of his/her contribution. The contribution also qualified as a charitable donation on federal tax returns. The 2020 tax credits are available until Dec. 31.

     Those who wish to learn more about how to help local families may visit www.ourfaithsto.org/helptoday or contact Jeff Schneider at jeff.schneider@dbqarch.org or call 800-876-3546 ext. 219.