Supporters seek to double private-school scholarship program

Energized by a big win in this month’s election, Georgia school-choice advocates are now hoping to double a program that uses public money to pay private-school tuition for thousands of children.

Under a four-year-old state law, individuals and corporations in Georgia may divert part of their state taxes to “student scholarship organizations,” which then distribute most of the money to as scholarships to private schools they represent. The advocates’ goal for next year: Bump the program to $100 million.

The near-landslide passage of the charter schools amendment Nov. 6 made it clear that voters want more educational choices for children, supporters say – and that includes more public money for private-school scholarships.

“There is a real taste for anything that promotes school choice in Georgia,” said Rep. Earl Ehrhart, R-Powder Springs, who helped write the scholarships law and is the unpaid CEO of the Faith First Georgia student scholarship organization. “Obviously voters said that loud and clear. I think the timing is right.”

The timing may be right, but the program is wrong, its critics argue. They say that the scholarship program is largely unregulated, that it drains badly needed money from the state treasury, and that the public gets little information about how its money is spent. They also point out that, although the law is intended to enable more children to attend private schools, some groups have used it as a way to pay tuition for kids who are already there.

Because of such concerns, key legislators plan to hold hearings to make sure the organizations are funneling the money to schools and the parents involved are following state law.

“Before we expand the program, we probably need to make sure we’ve got it running right,” said Senate Education Chairman Fran Millar, R-Dunwoody.

Thousands shut out

Since 2008, individuals and corporations have claimed about $170 million in tax credits through the program.

The program had a $51.5 million cap this year, but the program was so popular that the money ran out in mid-August. Schools and SSOs knew the credits would go fast, so they urged parents and corporations to donate early in the year.

Ben Scafidi, an associate economics professor and director of the Education Policy Research Center at Georgia College and State University, said he expects the money to run out by May or June next year, unless the Legislature enacts a substantial increase in the cap.

“Thousands of donors who wanted to give to the tax credit school scholarship program weren’t able to, and they are mad,” said Scafidi, who has served as policy adviser to the Georgia GOAL Scholarship program.

Ehrhart said he will push to increase the cap to $100 million during the 2013 legislative session, which begins in January. He also wants to create a $200 million companion program created that would allow public-school parents to get tax credits for donating to public school enrichment efforts, such as teacher training, music and foreign language programs.

Scafidi thinks lawmakers will increasingly look to ideas like the private-school scholarship program and start-up charter schools to give parents more options, especially in areas where public schools are seen as struggling. Republicans have overwhelming control of the General Assembly, and many leading GOP lawmakers have pushed for increased choice. , from taxpayer-funded private school tuition through vouchers to for-profit charter schools.

“I really think we are going to have a robust debate on expanding school choice over the next few years,” Scafidi said.

But two things may slow Ehrhart’s plans, at least temporarily.

Opposition building

One is a lack of money. The state faces a massive shortfall in its public health care program, and Gov. Nathan Deal had to ask state agencies earlier this year to find $553 million in new spending cuts.

House Appropriations Chairman Terry England, R-Auburn, said it’s too early to tell whether the state will be able to expand the tax credit program next year.

¬Public-school groups are likely to lobby against any such increase, particularly after several years of cuts to K12-school budgets.

“It’s fine to do the scholarships, but they (lawmakers) need to take responsibility for all the children in Georgia,” said Louise Radloff, longtime school board member in Gwinnett County. “Isn’t it wonderful that they can continue to find money for certain categories of folks?”

Angela Palm, lobbyist for the Georgia School Boards Association, said GOP leaders wanted to increase the tax credits even before the charter amendment vote, so it’s not surprising that they’re floating the idea now.

“In the current economic reality of Georgia revenue and state obligations, however, it would be a travesty if that occurred,” she said.

Secondly, critics have raised numerous questions raised about the program’s lack of transparency and about whether some organizations and parents are skirting the intent of the law.

Lawmakers passed legislation in 2011 making it a crime for the state to release key information about the program and how the money is spent. The Department of Education has almost no role in it. The Department of Revenue has refused to release how much each of the SSOs received for scholarships. No state agency discloses who gets the scholarship, how much the scholarship is worth, and which private school the recipient is attending.

Some SSOs release volumes of information on their programs through their websites, press releases or in tax filings, while others provide almost no information about how the money is spent. By law, they don’t have to.

The program has sparked a cottage industry of about 40 student scholarship organizations. The organizations can keep up to 10 percent of the tax-credit money for administrative costs, including, in a few cases, six-figure salaries for the people who run the organizations.

“For anyone to plow ahead and ignore all the public questions that have been raised would essentially mean the public be damned,” said Steve Suitts, vice president of the Atlanta-based Southern Education Foundation and probably the program’s most persistent critic.

‘It’s a voucher’

Then there are questions about whether some organizations and parents are following the intent of the law. The AJC reported in 2009 that some organizations were urging private-school parents to enroll their children in public schools without them ever planning to attend, making them eligible for the scholarships.

“That was not my understanding of how it was supposed to work, nor do I believe that was the understanding of a majority of the Legislature,” Millar, the Senate education chairman, said. “The intent was that these kids who were attending public school – to give them another option because it wasn’t working out for them.”

But Ehrhart said the parents aren’t using a loophole to get around the law. He intended for it to work the way parents are using it. “I wrote it, it’s what I wanted. I’m not trying to trick anyone. It’s a voucher,” he said.

Three years ago, Ehrhart called private school parents getting around the law by enrolling their children in public schools to qualify for the scholarship “an anomaly.”

Many of the tax-credit scholarship recipients come from public schools, and many of the SSOs say they direct scholarship money to families in financial need that wouldn’t otherwise be able to send their children to private schools.

Millar said because of the limited information provided on the program, the state may need to insist that third-party audits be done to protect against potential abuses, such as parents receiving tax credits for donations that pay their own child’s tuition. He said there is currently little follow up to make sure the program is run right and that parents and SSOs aren’t taking advantage of loopholes in the system.

Ehrhart said his SSO performs yearly audits, and that they were available to the public to see how the money is spent. When told the Department of Revenue doesn’t release audit information submitted to the state, he said, “I pay for those audits. I want them to be public.”

However, Ehrhart doesn’t want more regulations placed on what many Republican leaders call a successful school-choice program. “To me, we are disclosing a great deal. I think what disclosure becomes is a code word for wanting to regulate more of what we do.”

Suitts said the program is far from transparent. “What we’re talking about is individual’s use of taxpayer money … and we know nothing about how the money is spent.”

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