Donors help make Catholic schools affordable

By Anne Marie Amacher
The Catholic Messenger

Parents who want their children to attend Catholic schools may turn to several resources to help fund their education, such as school and parish scholarships and School Tuition Organizations (STO).

Since 2006, STOs in Iowa have helped many families afford a Catholic education for their children. Funding for the STO program allowed by state law has grown, but it is not enough to fund every student who needs assistance, said Steve Roling, executive director of the STO of Southeast Iowa.

The funding cap has been raised from $2.5 million in the first year to $13 million today. Supporters hope the Iowa Legislature will raise the cap in the new session, which began Jan. 14, said Tom Chapman, executive director of the Iowa Catholic Conference (ICC). Legislation was approved last year that increases eligibility. Families earning up to 400 percent over the poverty level now qualify, he said.

Trish Wilger, Iowa Alliance for Choice in Education’s executive director, said the organization believes parental choice in education provides a pathway to academic success. “For over 12 years the STO program has made it possible for more lower-income and working-class families to afford a nonpublic education. At the same time, the program saves taxpayers money, as reported by the Iowa Department of Revenue during the 2018 legislative session.… We will continue to work to expand this program so that all Iowa parents have a choice when it comes to educating their children.”

Twelve STOs in Iowa provide funding for private schools, including Catholic schools. Two STOs operate in the Diocese of Davenport: STO of Southeast Iowa and the Mississippi Valley STO. Each STO has its own funding cap, based on the total allowed to be raised and the number of students per school within the STO. Donors may specify a school or donate to the STO in general.

STO of Southeast Iowa covers Notre Dame Catholic Schools in Burlington; Prince of Peace Catholic Schools in Clinton; St. Joseph Catholic School in DeWitt; Regina Catholic Education Center in Iowa City; Keokuk Catholic Schools in Keokuk; Holy Trinity Catholic Schools in Lee County (Fort Madison, St. Paul and West Point); Saints Mary and Mathias Catholic School in Muscatine; Seton Catholic School in Ottumwa; and St. James Catholic School in Washington.

For 2019, STO of Southeast Iowa reports 2,219 students in the schools it covers. The STO can accept contributions for a maximum total of $1,331,414 through Dec. 31, unless the cap is met earlier.

Mississippi Valley STO covers Lourdes Catholic School and Rivermont Collegiate in Bettendorf and All Saints Catholic School, Assumption High School, John F. Kennedy Catholic School and St. Paul the Apostle Catholic School in Davenport.

For 2019, Mississippi Valley STO reports 1,957 students. The STO can accept contributions for a maximum total of $1,141,210 through Dec. 31, unless the cap is met earlier. The STO can award tax credits of $741,787.

STO donors

Qualifying donors are individuals, LLCs, Subchapter S corporations and C corporations. Individuals can make unlimited gifts by check, credit card, stock, IRAs and more. Donations cannot be accepted after the STO limit has been met. Individual donors receive a 65 percent tax credit on their Iowa tax form and receive a tax deduction on their federal form, which reduces their taxable income.

Federal deductibility of state tax-credited donations faces a potential change, however, said Liz King Powers, coordinator of the Mississippi Valley STO. “Currently, a donor can take a federal deduction for the full amount of the gift; the change would only allow a donor to deduct the difference.” For example, with a $1,000 gift, the donor would receive a $650 Iowa tax credit and a federal deduction for the remaining $350. STOs are awaiting a final ruling on this issue, she said.

STO recipients

Families apply for STO grants after Jan. 1. A tax return is required along with an STO application. Application deadline for STO of Southeast Iowa is April 15. Funds granted will be awarded for the 2019-2020 school year.

Each STO committee reviews the applications. Families meet certain criteria to qualify, such as income limitations, living in Iowa and having students who are at least 5 years old by September. After reviewing applications, the committee determines how much money is needed and makes award decisions. “There isn’t enough to cover every student for their total amount,” Roling said.

At Notre Dame Catholic Schools in Burlington, about 73 percent of what is needed is distributed. At Regina Catholic Schools in Iowa City, the STO of Southeast Iowa covers about 59 percent. Schools receive letters identifying grant recipients and the grant they’ll receive. The schools contact the families.

Families needing assistance beyond what the STO provides are encouraged to check with their school’s financial aid or business office.

For the Mississippi Valley STO, an additional resource is the Family Tuition Plan. Powers said that $1,235,962 in tuition grants were awarded through the Family Tuition Plan (FTP) for the 2017-2018 school year. “We are able to meet some additional need through a partnership between the MVSTO and the Embracing Our Future Campaign.”

Mississippi Valley STO begins accepting FTP applications after an applicant’s taxes have been submitted for the preceding year, with a June 30 deadline. Applications received after June 30 are not eligible for full funding unless the family is new to the school or has extenuating circumstances such as job loss, extreme medical costs, etc., Powers said.

FTP applications are processed through a formula that determines each family’s unique “tuition threshold,” or the amount they should reasonably be able to pay in tuition based on income, family size and total tuition requirements.

The FTP then covers the cost over each family’s threshold — for example, if a family’s tuition threshold is determined to be $3,000 but their total tuition requirements are $5,500, the FTP would cover the additional $2,500. After applications have been processed, a letter is sent to the school and family with the grant results. Payments are handled by each individual school.

For information on STO of Southeast Iowa visit http://stoseiowa.org or contact Roling at (563) 391-1845 or steve.roling@roling.tax. For Mississippi Valley STO, visit www. mvsto.org or contact Liz King Powers at (563) 326-5313, ext. 228 or email Elizabeth.powers @assumptionhigh.org.