A growing number of taxpayers funneling part of their state income taxes to the Georgia Tax Credit Scholarship Program has helped the fund — which financially assists public school students moving to private schools — hit its $50 million cap for the first time.
The ceiling was reached last week as applications for millions of dollars in pledges were being processed by the Georgia Department of Revenue. The program provides a dollar-for-dollar tax credit to individuals and corporations who donate funds earmarked for use by a specific school. The school then uses the money to set aside special financial aid for public school students who want to enroll in private schools.
“More people are aware that this is an option and are taking advantage of it,” said Jud Seymour, a spokesman for the Department of Revenue.
The cap was reached nearly two months before the Dec. 31 postmark deadline, cutting off schools still trying to raise money for scholarships and taxpayers slow to submit applications for tax credits. As a result, some schools could raise less money and have fewer scholarships to share with public school students.
The Georgia GOAL Scholarship Program, the largest of the student scholarship organizations that raise funds through the tax-credit program to go to private schools, took in $8 million in 2010 during the last two months of the year. The nonprofit has raised $12 million so far in 2011, and donations are still coming in.
“People like to do this as close to the end of the year as possible because when they file their tax return they get the money back as a refund,” said Lisa Kelly, president of Georgia GOAL, which is still waiting to hear whether $1.5 million in pledges last week made the cutoff. “They can’t part with that money too far in advance.”
Some schools anticipated the cap being reached early and planned ahead.
Pace Academy of Atlanta raised more than $825,000 in 2011 for tax credit scholarships, which puts it about $60,000 ahead of last year at this time.
“We had a higher volume. We anticipated the cap would come. We hit it and that’s fantastic,” Pace headmaster Fred Assaf said. “It helps that many more children.”
Derek Monjure, executive director of the Arete Scholars Fund in Dacula, was on the way to finalizing a significant corporate donation when the cap was hit. He said reaching the ceiling was bittersweet. “We had a $1 million corporate gift that could not be processed. We had another $6 million worth of scholarships we could have awarded on our wait list.”
Arete still raised $6 million this year — five times more than last year. The funds provided scholarships for 1,100 students, more than four times as many as in 2010.
The cap will increase slightly with the rate of inflation in 2012. Maximum contributions are $1,000 for an individual and $2,500 for a couple; corporations can claim up to 75 percent of their tax liability.
Critics of the tax credit scholarship program say it subsidizes private schools with public funds and does little to require them to show how the money was spent and whether the transfer improved student performance.
“We require public school districts to administer [standardized] tests each year and report on those tests by student group,” said David Suitts, vice president of the Southern Education Foundation. “We know nothing about what [nearly] $121 million of taxpayer funds diverted in this program has done for students.”
But Gina Daunt said without the scholarship she wouldn’t have been able to send her son to the Cottage School in Roswell. She said her 10th-grader’s attitude has changed since he’s enrolled.
“He is up before I am,” she said. “He never wants to miss school. They really know how to treat kids.”
Georgia Tax Credit Scholarship Program
The program provides a dollar-for-dollar tax credit to people or corporations who donate to scholarship funds earmarked for use by a specific school. Donors submit pre-approval forms to the state Department of Revenue for the tax redirection. The department will either approve or deny it within 30 days.
Once the pre-approval notice is received, the taxpayer must make the contribution to the student scholarship organization within 60 days of the notice and within the same calendar year. A partnering school then uses the money to offer scholarship awards to public school students who want to attend private schools.
Starting in 2012, the cap will be tied to the inflation rate. If the Consumer Price Index increases 3 percent, for instance, next year the state could allocate $51.5 million for the tax credits.
Tax credit program totals
$41 million
amount raised in 2010
$25.4 million
amount raised in 2009
$6.2 million
amount raised in 2008
Source: Department of Revenue, various scholarship organizations
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