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Legislature considers foster care tax credits

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The foster care system has been struggling on getting adequate funds and has sought out a different option that would infuse dollars directly into those who are delivering the services for foster care kids every day.

Canopy CEO, Dr. John Damon says there are around 5,000 kids in the child welfare system and many of those kids are taken care of by nonprofit organizations such as Canopy. However, while the organizations are in contract with the state, the dollar amount that they are contracted for is significantly short of what the actual costs are to deliver the service.

Damon says 100% of the nonprofits are out every day raising money to cover the cost to deliver the service for the state’s kids.

“This is an opportunity to bring another group of people, the corporations, our businesses, who want to be socially minded and get their employees involved in something that means something, to the table and get tax credits to support the crisis that we’ve had of our foster care system in the state,” said Damon.

Currently, the bill would mean a $15 million business tax credit. While there is a limit on how much of the tax credits individuals can receive, $500 per person or $1,000 per married couple. The bill is also looking to increase the cap on individual tax credits from $1 million to $3 million.

“I’ve heard that only about 2% of [people] are going to step up to be a foster parent, an adoptive foster parent,” said Damon. “That’s a small number, but you’ve got to think about the ecology around that family that’s required to be successful… You’ve got a broader group who say ‘hey I can’t keep the kid at my house over the weekend, but I’ll give to that family who will do it. I don’t want to be directly involved, but I feel a responsibility to step up in some way and contribute. This gives everybody a place to contribute.”

The law is based upon one from Arizona passed about two decades ago which the state has continued to expand as they have seen positive returns on investments.

“I believe that this concept is going to do nothing but expand here in Mississippi and what we are doing is this is a pilot program that we are putting in place to see how it goes,” said Dr. Jameson Taylor with Mississippi Center for Public Policy.

Taylor added that in last year’s bill they hit some issues with the State Department of Revenue during the implementation process and are looking to fix those this year.

“The tendency of the department was to extend the credit on a first come, first serve basis,” said Taylor. “When you’re talking to a donor, you don’t know whether they file their taxes on January 1st, March 1st or maybe even in August. The worst thing that you can do is tank your donor relationship by saying you are going to get a donor credit and then the donor doesn’t get the credit and then their taxes are all messed up.”

He added that this legislation is geared toward new donors and new investors to generate excitement for giving to the state foster care system.

“People will be doing their taxes and you have your program up and you are going to see that credit and think ‘oh what is this?’ People are going to get interested in that and then call someone like John and learn about the services that they are providing.”

The changes or updates to the legislation are based on a tax credit already in place called the new markets credit which is for impoverished communities in Mississippi, where businesses can invest in those communities, instead, this would be for families. There would now be a pre-authorization process for companies to know whether they will be getting the credit or not.

“It’s still going to be first come first serve, so you need to get your taxes together, ask for this credit and apply for it if that’s part of your tax preparation, but make no mistake that this is a tax incentive,” said Senator Joey Fillingane. “People are motivated by monetary and tax policy. Certainly, that’s not the biggest benefit in our opinions of what this does for the state and for these individual kids that are receiving the services and the families that ultimately benefit, but it is certainly a motivator.”

However, Taylor said it’s not about the money in the end.

“It’s about getting more people thinking about foster care,” said Taylor. “I don’t think any single person in the state of Mississippi can fix foster care. It is really a problem for us to think about as a state and so this a way to get more people thinking about the problem and working on the problem.”

Canopy’s IN-Circle Program is an example of how the funds would be used and provide family preservation services and family reunification services. The intensive services are designed to remove the harm from the child rather than removing the child from their families or to assist with the reunification of children with their families. Damon said their program is tailored to families where youth have been removed from their home and placed in MDCPS custody.

The bill passed the House and sent it to the Senate where they passed an amendment to the bill and sent it back to the original chamber. The House has invited conference on the bill and members from both chambers will now gather to discuss and decide on a final draft of the legislation.

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