The state will spend about $50 million in tax money on scholarships for private school students next year, but it’s unclear whether the public will have any way to determine how the money is spent.
The Legislature this year made some changes to the 2008 law that created the scholarship program, and the new law makes it a crime for state officials to release key information about the program. Some other states with similar laws, such as Florida, have strict public accountability rules.
Supporters argue that the scholarships program is doing what it was intended to do: providing children of modest means a chance to attend private schools. “It has been the most remarkable experience of my life,” says the single mother of a 6-year-old girl who attended a Johns Creek private school on scholarship this year.
Critics say, however, that the lack of transparency invites abuses. “These are public dollars, and I think we have every right to know how the money is spent,” said state Rep. Kathy Ashe, D-Atlanta, an opponent of the program who has tried unsuccessfully to kill it.
The law set up “student scholarship organizations,” known as SSOs, that accept donations from people and corporations and funnel them to private schools. In a monthlong review, the AJC found that:
● The law signed by Gov. Nathan Deal earlier this month may be flawed. It says at one point that the state will post information about each scholarship organization on its website; later the same law says all information relating to SSOs is confidential.
● Three officers of one SSO were paid $109,000 each in 2009, or 9.5 percent of their revenue, according to a federal tax filing. Only a handful of other SSOs filed federal tax reports for 2009, but none reported making six-figure payouts to three officers.
● Proponents’ claims that the program saves the state millions of dollars are impossible to prove or disprove for all of the scholarship organizations.
● Each SSO must provide the state with an independent audit each year. Officials say that not all the organizations have done so, but they refused to say how many or which ones. ● The purpose of the program is to give public school kids a chance to attend private schools by granting them scholarships. But some SSOs encourage families to game the system: Although their children are already in private schools, they enroll them in public schools for the sole purpose of making them eligible for the scholarships. The children never actually attend the public school. The AJC found 81 such cases in one county alone.
How it works
Under the law, a person or a company may donate to an SSO, each of which has participating private schools. The donor may designate a particular school as the beneficiary. The SSO then sends money to the school, and the school uses it to award scholarships.
Individual donors may write off up to $1,000 of the donation as a dollar-for-dollar tax credit; couples may write off up to $2,500. And corporations may write off up to 75 percent of their total tax liability.
One large scholarship organization, Georgia GOAL, posts a transparency report on its website, but most offer the public few if any details about how they spend the millions of dollars in tax credit donations they receive.
Only a few of the more than 30 scholarship organizations listed on the state’s approved list last month responded to an AJC request for basic information.
A few said they hadn’t given out any scholarships yet. Phone calls brought varying amounts of information from a few more, such as GRACE Scholars Inc., run by the Roman Catholic Archdiocese of Atlanta, the Georgia Student Scholarship Organization in Cumming and Georgia Christian Schools Scholarship Fund.
‘Crazy extremists’
Steve Suitts, vice president of the Southern Education Foundation, said the SSOs don’t want to release detailed information because they probably can’t withstand an “evidence-based assessment.”
“It doesn’t take much to see this as a campaign of no information and disinformation,” said Suitts, whose organization will release a report next month branding the scholarship program a failure. “What if we had [public] school districts operating this way?”
State Rep. Earl Ehrhart, R-Powder Springs, the sponsor of this year’s tax credit law and the unpaid CEO of the Georgia Christian Schools fund, called some of the program’s critics “crazy extremists” and said they should prove their case with facts or “shut up.” But even Ehrhart said SSOs should release more information than they do.
All the organizations should publish reports on how they spend the money, said Ben Scafidi, an associate professor of economics at Georgia College & State University and a policy adviser for Georgia GOAL Scholarship Program, one of the largest scholarship groups.
“People who donate their money to an SSO want to know if it is going to a kid who truly needs a scholarship and they also want to know it’s not going to excessive overhead,” Scafidi said. “They want to be accountable to donors, to scholarship recipients, private schools, and they want to be accountable to taxpayers.”
Contradiction in the law
The new law says the SSOs must send the Revenue Department a report listing the total contributions by individuals and corporations, the number and dollar value of scholarships awarded, a list of donors, and the audit. It says the department should post the information on its website.
However, the next section of the new law says “all information or reports provided by student scholarship organizations to the Department of Revenue shall be confidential taxpayer information” and that it’s against the law to release it.
The Revenue Department would provide the AJC only with the number of donors and the total value of tax credits — about 10,500 donors and $26.5 million in credits in 2009, the last year for which it had complete figures.
Department officials said not all organizations had filed audits, but they wouldn’t name any that didn’t, citing taxpayer confidentiality laws.
So all the public knows about the organizations is what a few such as GOAL voluntarily publish and the limited financial data in IRS forms, which nonprofits have to file each year.
According to those federal tax records, the Georgia Student Scholarship Organization spent 9.5 percent of its contributions paying its three officers — Robert Jasion, Mark Langston and Stefani Sanchez — $109,500 each in 2009. The law allows scholarship organizations to spend 10 percent on administration.
By comparison, a similar Florida program, which doled out more than $100 million in private school scholarships to 29,000 children from low- and lower-middle-income families last year, mandates much more reporting and analysis of student performance.
Angela Palm, lobbyist for the Georgia School Boards Association, noted that public education emphasizes outcomes — how a student does in school.
“In the case of this expenditure, we don’t seem to care what the outcome is,” Palm said.
No income rules
Some SSOs limit who can receive scholarships based on their parents’ income, although the law doesn’t require this.
Diane Starkovich, superintendent of schools for the Roman Catholic Archdiocese of Atlanta, said GRACE gave out about 250 scholarships last year worth $800,000 to $900,000. They are spread out over 38 Catholic schools and range from a few hundred dollars up to $8,000. All are based on need, with average family income about $45,000.
“We feel very proud that the mission was to make a Catholic education open to as many students as possible,” she said.
Ehrhart said the families of recipients in his scholarship program earn even less. But he doesn’t think the scholarship law should set income limits.
“We let the schools make the decision on who needs financial aid,” Ehrhart said. “Who is going to give one of these scholarships to children whose parents make $500,000?”
‘It has changed her life’
Single mom Beatrice Lester of Milton said a GRACE scholarship opened up unbelievable opportunities for her two daughters and her. Lester, a victim of domestic violence who has lived in a shelter, transitional housing and now a Habitat for Humanity-built home of her own, held out “as a dream” the possibility of sending her two daughters to Catholic school.
The scholarship covered the bulk of kindergarten tuition for Maryann, 6, at Holy Redeemer Catholic School in Johns Creek.
“It has been the most remarkable experience of my life,” Lester said. “I not only gained a good Catholic education for her, I gained a family. The school has been my backbone.”
Robin Lamp, a single mother of two from Stockbridge, is sending daughter Haley to Eagle’s Landing Christian Academy this year on a Georgia GOAL scholarship. Lamp, who works multiple part-time jobs to support her family, said the scholarship created an opportunity for Haley that Lamp had never thought possible.
“She’s had to work her tail off, but she loves it,” Lamp said. “It has given her a whole new level of opportunity, a new outlook and an optimism. Now I see her being able to go to college. I can’t say enough how it has changed her life.”
Saves the state money?
One of the most prominent claims by advocates of the program is that the scholarships save the state money. Ehrhart said in a speech on the House floor this year that it saves $40 million or so each year.
For example, if the state spends $7,500 a year per pupil in a public school, and the average private school scholarship is, say, $4,500, state and local taxpayers are saving $3,000.
But Suitts of the Southern Education Foundation disputed those calculations. For one thing, he said, that formula does not account for administrative costs the SSOs incur, such as salaries and fundraising. And, he said, not all scholarship recipients are former public school students.
The law says students must “enroll” in a public school, not attend one. The AJC reported two years ago that some students were being registered for public school by their parents — but not attending — just so they would be eligible for the scholarships.
School systems are still seeing students coming from private schools to enroll. Forsyth County schools had 48 such students enroll in 2008-2009; 72 in 2009-2010; and 81 for the current school year, said Sue Derison, the school system’s director of information. In Barrow County, Ken Greene, director of student services, said, “We are still continuing to see students enrolling solely for purposes of qualifying for the scholarship.”
Public funds?
Jim Kelly, an education law attorney and founder of the Georgia GOAL Scholarship Program, argues that the U.S. Supreme Court has ruled that tax credit money is a private charitable contribution and not government money.
That is a hotly debated issue. Even some Republican leaders who support the program say the tax credits are “state appropriations.”
But whether it is state money or not, Kelly agrees with Suitts that more scholarship information should be made public.
“It’s important for those organizations to share as much information as possible in order to give comfort to the taxpayers of Georgia that this money is being prudently used,” he said.
Ehrhart said critics like Suitts have no credibility because they have no data — other than limited IRS reports — to back up their claims. He thinks releasing more information would prove his case that the scholarships save the state millions.
“If we are going to have to defend the program against crazy extremists, we are going to have to get more data,” he said.
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