Montana school districts hit $1 million cap on tax credits for public school donations in mere minutes.

A program offering a dollar-for-dollar tax credit for donations to Montana public schools reached its $1 million limit within minutes of launching this month, with nine school districts claiming credits on behalf of 23 individual donors.

The tax credits were offered to individuals and businesses that donated to specific public school districts through the Innovative Education Program, a source of supplemental funding for a variety of district-based initiatives. The Montana Legislature passed a law last spring raising the per-donor limit on the credits from $150 to $200,000 and capping the total amount of the credits to $1 million for tax year 2022. The law, House Bill 279, applied the same increase and aggregate limit to donations made toward scholarships for private school students.

The Department of Revenue began accepting claims for both tax credits at 8 a.m. In an emailed response to questions, DOR Communications Director Jason Slead told Montana Free Press the $1 million limit for public school donations was reached at 8:05 a.m. Slead said the tax credits were claimed for a total of 23 donations to nine public school recipients: Big Sky School District, Bonner Elementary, Great Falls Elementary, Kalispell Elementary, Livingston Elementary, Shepard Elementary, Somers Elementary, Whitefish Elementary, and Montana City Elementary in Clancy.

As of Monday afternoon, $157,000 in credits had been claimed for seven separate donations to private school scholarship organizations. According to Slead, the organizations approved for those donations are ACE Scholarships Montana, Big Sky Scholarships, the Missoula Catholic Schools Foundation, St. Matthew’s Catholic School in Kalispell and Holy Spirit Catholic School in Great Falls.

With DOR’s tax credit portal operating on a first-come, first-served basis, some public school districts anticipated intense competition for the credits when the portal launched Jan. 3. Kalispell Public Schools added a page to its website dedicated to helping prospective donors seize the opportunity, noting that “time is critical” and “these tax credits will be gone in less than an hour.” Superintendent Micah Hill said Monday that the district had five staff entering claims on the portal simultaneously at 8 a.m. and was able to submit only four donations for a total of $80,000.

“It was over almost before it started,” Hill said, adding that his district had checks from 13 other donors that it will have to return as it was unable to submit the tax credit claims.

Karen Ogden, communications director for the Helena Public Schools, told MTFP her district reached out to potential donors individually ahead of the launch date and publicized information on its website. Staff attempted to submit a claim for one donation “right at the stroke of eight,” Ogden said, but the limit had already been reached.

“If they are still interested in donating without the tax advantage, we would certainly welcome that,” Ogden said. “However, they weren’t able to take advantage of that this morning.”

Craig VanNice, chief financial officer and district clerk for Billings Public Schools, said his district had been working closely throughout the fall with one donor who intended to contribute “north of $20,000.” The district had the check in hand, VanNice said, and attempted to submit the tax credit claim as soon as the portal went live, only to receive a notification that the available credits had been “completely exhausted.”

“It’s a disappointment for sure,” VanNice said. “Obviously the school district will be missing out on this one larger donation that we were aware of. But, you know, I think maybe some of the frustration stems from the fact that it really was who could get the clicks in the fastest.”

VanNice added that Billings Public Schools will be keeping the situation in mind when it prepares to submit tax credit claims next year, when the statewide limit increases to $2 million.

Denise Williams, executive director of the Montana Association of School Business Officials, was aware Monday that many of her organization’s members were poised and ready for this morning’s launch. And while only nine districts succeeded in submitting tax credit claims for donors, Williams said the speed at which the $1 million limit was reached indicates there’s “a lot of enthusiasm for supporting public schools.”

“I’m hoping that those who weren’t able to get in on the dollar-for-dollar tax credit may consider making donations to their school districts anyway,” she said, noting that such donations may still qualify as charitable contributions with tax benefits.