Dueling legislation addresses tax credits for private schools

Lawmakers in the House and Senate filed dueling bills Tuesday, targeting a controversial state program that allows individuals and corporations to claim tax credits for the millions of dollars they’ve given to fund private school scholarships.

Their actions follow a formal complaint from the Southern Education Foundation alleging that tens of millions of taxpayer dollars have likely been illegally diverted from the state treasury through the “virtually unregulated and unaccounted for” private school scholarship program. About $170 million has gone into the program since its creation in 2008.

Senate Democrats want to close a loophole in the law that some allege allows the participating taxpayer to designate specific students for the scholarships. Senate Bill 77 pushes to require disclosure about which schools get money and which students are helped.

A ranking Republican House member, meanwhile, filed a bill proposing to increase the tax credits, provided there is more transparency about how donations are handled.

“There’s a significant demand from children and their families who are looking for a choice in education,” said state Rep. Earl Ehrhart, R-Powder Springs, who co-sponsored the original legislation in 2008. Changes made to the law in 2011 make it a crime for state officials to release key information about the program.

The law sets up “student scholarship organizations,” known as SSOs, that accept donations from people and corporations and funnel them to families wanting to send children to private schools.

The way the law works now, 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.

Ehrhart’s House Bill 140 is calling for the amount of state money set aside annually for the SSO tax credits to be increased to $80 million, from the current $51.5 million. Ehrhart is the unpaid CEO of an SSO called the Faith First Georgia student scholarship organization.

He would expand the tax credit to public schools — with an additional $100 million set aside not for public school scholarships but for expenses including professional development for teachers, administrative bonuses and arts programs. He would also make public information about the donations, including how much each SSO collects — but it would still not tell taxpayers which schools get the money.

At least one large scholarship organization, Georgia GOAL, usually posts a transparency report on its website, but many offer the public few if any details about how they spend the millions of dollars in tax credit donations they receive.

“The program has become a thinly veiled attempt to shelter money to benefit the parents of children of means,” said a co-sponsor of SB 77, Sen. Vincent Fort, D-Atlanta.

There could be bipartisan support for the Democrats’ proposal.

“I think that program, the private scholarship program, needs to be studied and probably revamped in some areas before we go and expand it,” said Sen. Fran Millar, R-Dunwoody, former chairman of the Senate Education and Youth Committee.

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