The Iowa Lutheran School Tuition Organization Scott Lindholm 3-29-2007 What is a School Tuition Organization (STO)? Student Tuition Organizations (STOs) were created by Iowa law in the summer of 2006 The state allowed for tax credits of 2006--$2.5million 2007--$5 million The law to date does not go past 2007 Iowa Lutheran School Tuition Organizat What is the Iowa Lutheran STO? In October 2006, representatives from both IDE and IDW met to establish an STO for Lutheran schools All Lutheran elementary schools in Iowa are included, with one exception Iowa Lutheran School Tuition Organizat Iowa Lutheran STO Board Chairman—Pastor Bob Riggert, Manning President—Barb Buescher, Waterloo Vice-President—Mark L’Heureux, Newhall Secretary—Carole White, Storm Lake Treasurer—Scott Lindholm, Davenport At-large #1—Dawn Champion, Waterloo At-large #2—Jeff Fick, Ogden Iowa Lutheran School Tuition Organizat How does the STO work? For 2007, $5 million will be allowable as Iowa income tax credits There are 10 different STOs recognized by the state, representing a total 34,700 students $5 million/34,700 equals a per-student credit $144 per student Iowa Lutheran School Tuition Organizat How does the STO work? Iowa Lutheran elementary schools have an enrollment of 1,562 students (October 2006 certified enrollment) 1,562 students * $144/student $224,928 in tax credits that can be issued The tax credit is a 65% tax credit, which means that $224,928/.65 $346,043 can be raised by the Lutheran schools in Iowa Iowa Lutheran School Tuition Organizat Who can benefit from the STO? Any child enrolled in grades K-8 Family income cannot exceed 300% of poverty guidelines 2005,traditional family of four $59,418 Income tax returns will be required as proof Iowa Lutheran School Tuition Organizat What is a tax credit? A tax credit is a direct reduction of taxes Consider a $1,000 contribution to the STO: The donor receives a tax credit worth 65%, or $650, which is subtracted from Iowa tax owed In addition, the donor can also claim the deduction on federal income tax filings The donor gives $1,000, and will get at least $650 (and probably more) back, for a net cost of $350 Iowa Lutheran School Tuition Organizat Who is an eligible donor to the STO? Must be a citizen of Iowa OR pay Iowa taxes All gifts must be in cash (no stocks, land, cash- equivalents) Gifts can be designated to individual schools All gifts will be used in the year they are given Iowa Lutheran School Tuition Organizat What has the STO done? Filed for 501(c)3 status (we have been recognized by the state as a legit STO) Established an interest-bearing Thrivent account for funds raised Established a website (still seeking a host) Iowa Lutheran School Tuition Organizat What do YOU need to do? Raise money (the easiest part) Once money is raised, send (or have it sent) to: Iowa Lutheran STO 1122 W. Central Park Davenport, IA 52804 Identify potential recipients, and have them apply (applications will be ready soon) Iowa Lutheran School Tuition Organizat The funny thing about tax credits People that are looking to benefit from a tax credit have a tendency to give that money as late in the year as possible I anticipate December 2007 as being a very busy month for receipts for the program We will not grant any assistance until the 2008-09 school year Iowa Lutheran School Tuition Organizat Questions? A summary document is available which can address points made in this presentation more fully The program sounds more complicated than it will be in real life We have close contacts with the Catholic dioceses throughout the state, who have utilized the program for a year and have seen the potential pitfalls Iowa Lutheran School Tuition Organizat
"Tax Credits and Stos"