failed experiment-sef full report

8/6/2019 Failed Experiment-SEF Full Report

1/82

SEFS I N C E 1 8 6 7

THE SOUTHERN EDUCATION FOUNDATION

135 Auburn Avenue, NE, 2nd Floor Atlanta, GA 30303

www.southerneducation.org

GeorgiasTax Credit

Scholarships for

Private Schools

A FailedExperiment


2/82

2

THESOUTHERNEDUCATIONFOUNDATION

TheSouthernEducationFoundation(SEF)isanonprofitorganizationcomprisedofdiversewomen

andmenwhoworktogetherto improve thequalityof lifeforallof theSouthspeople through

better and more accessible education. SEF advances creative solutions to ensure fairness and

excellenceineducationforlowincomestudentsfrompreschoolthroughhighereducation.

SEFdevelopsand implementsprogramsof itsowndesign,servesasan intermediary fordonors

who want a highquality partner with whom to work on education issues in the South, and

participates as a public charity in the world of philanthropy. SEF relies on contributions from

foundations,corporations,andindividualstosupportitsefforts.

SEFSVISION

SEF seeks a South and a nation with a skilled workforce that sustains an expanding economy,

where civic life embodies diversity and democratic values and practice, and where an excellent

educationsystemprovidesallstudentswithfairchancestodeveloptheirtalentsandcontributeto

thecommongood.Wewillbeknown forourcommitmenttocombatingpovertyand inequalitythrougheducation.

SEFsTIMELESSMISSION

SEF develops, promotes, and implements policies, practices, and creative solutions that ensure

educational excellence, fairness, and high levels of achievement for all students. SEF began in

1867asthePeabodyEducationFund.

CREDITS

Steve Suitts, SEF Vice President, developed and wrote this report with Katherine Dunn, SEF

Program and Research Fellow, who was chief investigator for the study. Dorian Woolaston,

Program Assistant, helped to retrieve and format statistical data. Cynthia Blakeley was copy

editor.

2011SouthernEducationFoundation,Inc.,Atlanta,Georgia

Allrightsreserved.

PrintedintheUnitedStatesofAmerica.FirstEdition.

Portionsofthisworkmaybereproducedwithoutpermission,providedthatacknowledgementisgiventotheSouthern

EducationFoundation.Limitedpermissionisalsograntedfor largerportionstobereproducedbynonprofitandpublic

agencies and institutions only, solely for noncommercial purposes so long as acknowledgement to the Southern

Education Foundation as the source is prominently given. Reproduction or storage in any electronic form for any

commercialpurposeisprohibitedwithouttheexpresswrittenpermissionoftheSouthernEducationFoundation.

Theelectronicversionisavailablewithoutchargeatwww.southerneducation.org.
http://www.southerneducation.org/http://www.southerneducation.org/http://www.southerneducation.org/http://www.southerneducation.org/http://www.southerneducation.org/http://www.southerneducation.org/http://www.southerneducation.org/http://www.southerneducation.org/http://www.southerneducation.org/http://www.southerneducation.org/


3/82

3

TABLEOFCONTENTS

ForewordbyKentMcGuire,President,SouthernEducationFoundation 04

Introduction 06

Background 08

Public

Accountability

for

the

Use

of

Tax

Funds

11

FailurestoComplywiththeLaw 14

Sidebar:GeorgiasScholarshipTaxCreditLawIgnoresLessonsofOtherStates 22

AccountabilityforTaxFundedEducationPerformance 23

IncomeandTaxFundedPrivateSchoolScholarships 28

Sidebar:ApplesandOranges:AdjustedGrossIncome(AGI)andCensusIncome 31

RaceandTaxFundedPrivateSchoolScholarships 36

ReligionandTaxFundedPrivateSchoolScholarships 41

FiscalImpactofTaxFundedPrivateSchoolScholarships 48

Observations,Conclusions,andRecommendations 59

Appendices

Appendix

1:

Financial

Summary

of

Georgia

SSOs:

20082009

63

Appendix2:SSOAffiliatedSchoolsIssueswithEligibleSchoolRequirements 64

Appendix3:IssuesonthePurposeofEnrollinHB1133 65

Appendix4:SSOs&SSOAffiliatedSchoolswithIssuesConcerningEligibleStudents 67

Appendix5:SSOScholarshipCostsperStudent:20082009 69

Appendix6:Methods,Assumptions,andCalculationsofthisStudy 70

Appendix7:GeorgiaGOAL:ACaseStudyintheHazardsofVoluntaryDisclosure 72

Appendix8:BriefHistoryofGeorgiasPrivateSchoolsinOpposingDesegregation 76

SelectedBibliography 79


4/82

4

FOREWORD

TheSouthernEducationFoundation(SEF)beganareviewin2009ofanewGeorgia

lawprovidingtaxcreditscholarshipsforstudentstoattendprivateschools.Weoriginally

consideredusingthe lawtoestablishourownstudentscholarshiporganization (SSO)to

providelowincomeandminoritystudentsinpoorlyperformingpublicschoolsinGeorgia

withopportunitiesforabettereducation.Earlier,inOctober2008,SEFhadinvitedGerald

Robinson,atthattimePresidentoftheBlackAlliance forEducationalOptions (andnow

Virginia Secretary of Education) to make a presentation to our board of trustees about

publicandprivatealternativesfor improvingAfricanAmericaneducation inK12schools

acrosstheSouth.

These considerations led SEF to examine thepotentialofGeorgias new law, HB

1133,inaddressingthecriticalquestionofhowtoimprovetheeducationalperformance

oftheSouthsnew,diversemajoritylowincomestudentsandstudentsofcolorwhohad

become a numerical majority of the regions public school children in 2009.1 SEF has a

long history of support of effective public schools forall students in theSouth,butour

commitmentacrossthedecadesalwayshasbeentothechildrenthemselvesespecially

low income and minority childrenrather than to any tradition or method for how or

wherestudentscouldbewelleducated.

ThemoreSEFscrutinizedtheGeorgialawontaxcreditscholarships,themoreour

inquirybegantoraiseseriousquestionsandconcernsaboutthelegislationspotentialfor

worsening educational practices, for diverting and diminishing resources for the states

neediest, most vulnerable children, and for creating a dual system of publicly financed

education that might enlarge inequities as much as create good, fresh options for

individualstudents.

Aftercarefulconsideration,SEFsprogramcommitteerecommendedtoourboard

oftrusteesthattheSEFstaffforegoestablishinganSSOandinsteadundertakeastudyof

the lawand its implementationduring itsearlyyears.Thenandnow,weseethe lawon

tax credit scholarships as an important experiment in how the first state in the Deep

SouthwouldcarryoutthistypeofmajorpublicprivateventureinK12education.

1SeeADiverseNewMajority:StudentsofColorintheSouthsPublicSchools(Atlanta:SouthernEducationFoundation,

2010).
http://www.southerneducation.org/showTeaser.asp?did=618http://www.southerneducation.org/showTeaser.asp?did=618http://www.southerneducation.org/showTeaser.asp?did=618http://www.southerneducation.org/showTeaser.asp?did=618http://www.southerneducation.org/showTeaser.asp?did=618http://www.southerneducation.org/showTeaser.asp?did=618http://www.southerneducation.org/showTeaser.asp?did=618http://www.southerneducation.org/showTeaser.asp?did=618http://www.southerneducation.org/showTeaser.asp?did=618http://www.southerneducation.org/showTeaser.asp?did=618http://www.southerneducation.org/showTeaser.asp?did=618http://www.southerneducation.org/showTeaser.asp?did=618http://www.southerneducation.org/showTeaser.asp?did=618http://www.southerneducation.org/showTeaser.asp?did=618http://www.southerneducation.org/showTeaser.asp?did=618http://www.southerneducation.org/showTeaser.asp?did=618http://www.southerneducation.org/showTeaser.asp?did=618http://www.southerneducation.org/showTeaser.asp?did=618http://www.southerneducation.org/showTeaser.asp?did=618http://www.southerneducation.org/showTeaser.asp?did=618http://www.southerneducation.org/showTeaser.asp?did=618http://www.southerneducation.org/showTeaser.asp?did=618http://www.southerneducation.org/showTeaser.asp?did=618http://www.southerneducation.org/showTeaser.asp?did=618http://www.southerneducation.org/showTeaser.asp?did=618


5/82

5

ThisreportevidencestheindependentfindingsofourtwoyearstudyofGeorgias

experiment with taxfunded tuition grants for private schools. As the following pages

document, the law in its present form contains a numberof troubling features. It lacks

transparencyregardingcontributors,beneficiaries,andthecriteriabywhichscholarships

areawardedoreven thesizeand numberofscholarshipsawarded.Nor do the schools

involvedappeartobesubjecttoanyaccountabilityregardingtheacademicstandards in

force or academicoutcomes of their students. There are no income limits for eligibility

and, in the absence of a mandate to report demographic information on participating

students, it is difficult to see how the program is meeting its stated policy objective of

increasingtheaffordabilityofprivateschoolsforlowincomefamilies.

And if helping parents make informed choices between public and private

education isan impliedgoal,thenbothcollecting informationfromparticipatingschools

andprovidinginformationtoparentsabouttheseschoolswouldbeanimportantfeature

in a welldesigned tax credit law. This of course presumes that using tax subsidies to

supportprivateschoolsisgoodpublicpolicy.

Itisalsoclearthatthelackofanymeaningfulreporting,regulation,orsupervision

abouthowfundsareraisedandscholarshipsawardedhas ledtoafailureonthepartof

somestudentscholarshiporganizationsandsomeaffiliatedprivateschoolstofollowbasic

rulessetoutinthelaw.

Iencourageyoutoreadthisreportinitsentiretyasyouconsiderboththemerits

of the idea of education tax credits and the design of Georgias current tax credit

legislation.

KentMcGuire

President

SouthernEducationFoundation


6/82

6

INTRODUCTION

Georgia isoneofsevenstatesthatcurrentlyallowtaxcredits forscholarshipsto

private schools.2Georgias lawwasenacted inMay2008 inorder toassist low income

students transfer out of low performing public schools.Operationsunder the new act

began in late 2008. The lawpermits taxpayers inGeorgia to reduce their annual state

taxes

up

to

$2,500

on

joint

returns

when

they

contribute

to

a

student

scholarship

organization (SSO),whoprovides scholarships toprivateschool students.Acorporation

mayeliminateitsGeorgiataxesbyasmuchas75percentoftotalliabilitywhenitusestax

creditstocontributetoanSSO.

ForeverydollarprovidedtoanSSO,aGeorgiataxpayerreduceshisownstatetax

liability by a dollar and diverts that dollar from state tax revenue. The Georgia law

currentlylimitsthetotalamountofstatewidetaxcreditsinanyonecalendaryearto$50

million.Duringthe lastthreeyears(July2008through2010),atotalof$72.1millionhas

been diverted from Georgias state revenues as a result of these tax credits for

scholarshipstoprivateschoolsinthestate.

$6.6

$24.2

$41.3

$0

$10

$20

$30

$40

$50

2008 2009 2010

Millions

PublicCostsofGeorgiaTaxCreditScholarships

ForPrivateSchools:20082010

Source:GeorgiaDepartmentofRevenue

Moststudentscholarshiporganizations inGeorgiaallowtaxpayerstodesignatea

private

school

to

receive

their

tax

diverted

scholarship

funds.

Otherwise,

the

SSOs

use

tax

credit funds for grants to the private schools of their choice. In turn, private schools

distributetaxfundedscholarshipstothestudents. Inlate2008,theGeorgiaDepartment

2 The other six states are Arizona, Pennsylvania, Florida, Rhode Island, Iowa, and Indiana (in order of adoption).

Oklahoma will begin a tax credit program for educational improvement in late 2011. In the 20082011 legislative

sessions,atleast25stateshadlegislationintroducedfortaxcreditscholarships,including8additionalSouthernstates.

Foranationalreviewoftaxcreditscholarshipsandtheiremergenceinrecentyears,seeKevinG.Welner,NeoVouchers: TheEmergenceofTuitionTaxCreditsforPrivateSchooling(Lanham,MD:Rowman&Littlefield,2008).

ThreeYearTotal:$72.1Million


7/82

7

ofEducationlistedfewerthan10SSOsregisteredtosolicitfundsforstudentscholarships

toprivateschools.AsofDecember31,2010,thatnumberhadgrownto32SSOs.

By Georgia law, in order to operate as an SSO, a group must: 1) be a lawful,

charitable organization located in the state; 2) register with the state department of

education;3)allocateorobligatenolessthan90percentofitsrevenuestomorethanone

private school for funding student scholarships; and 4) have an annual CPA audit and

financialreportsenttotheGeorgiaDepartmentofRevenue.SSOsfilloutachecklistfrom

the Georgia Department of Education on which they affirm that they meet the

requirementsof thestate law and are afterwards listedon the education department's

approvedlistofSSOs.

Approximately370privateschoolshadaffiliatedwithoneormoreSSOsbytheend

of2010.3MorethanhalfoftheseSSOaffiliatedprivateschoolswerelocatedinonlyfive

Georgiacounties:Fulton,Cobb,DeKalb,Chatham,andGwinnett.Attheendof2010,two

thirdsoftheprivateschoolsaffiliatedwithanSSOtoreceivetaxcreditscholarshipswere

inonlynineofGeorgias159counties.

Acrossthestate,almost199,000studentsattendedprivateschools in2009one

outofevery10schoolchildreninGeorgia.

Source:SEFResearch

3AnSSOaffiliatedschoolisaprivateschoolassociatedwithaGeorgiaSSOinordertoreceivetaxcreditscholarships.

ThereisnocompletelistingofprivateschoolsaffiliatedwithregisteredSSOsinGeorgia.SomeSSOspublishalistofthe

affiliatedschools.Othersdonot.SEFusedavarietyofresearchmethodstoidentifyallSSOaffiliatedschoolsinthestate

(seeAppendix6).NodoubtthenumberofschoolshasgrownsinceDecember31,2010.


8/82

8

BACKGROUND

Georgias tax credit scholarships for private schools were established with the

passage of House Bill 1133 in the 2008 session of the Georgia General Assembly. State

Representatives David Casas and Earl Ehrhart and former State Senator Eric Johnson

introducedandchampionedthe legislationasawaytoprovideschoolchoicetoGeorgia

parents

and

students

for

whom

private

schools

were

inaccessible

due

to

cost.

Duringcommitteedeliberations,Rep.Casassaidthebillwouldhelpparentswho

cant afford private education, such as those struggling in Clayton, DeKalb, and other

countieswhowant to leaveunderperformingpublicschools.Casasalsoarguedthatthe

bill would improve public schools without costing taxpayers more money. He cited a

study by the Friedman Foundation for Educational Choice of Indianapolis. It concluded

thattheproposedlawwouldsaveGeorgiasstateandlocalgovernmentsacombinedtotal

of nearly $100 million annually based on the transfer of almost 15,000 students from

publictoprivateschools.Rep.Casasmaintainedthat"thousandsofstudentswouldtake

theseprivatelyfundedscholarshipsandtransfertoprivateschools, leavingahostoftax

moneyavailableforpublicschoolstoimprovetheirperformance.

OntheflooroftheHouse,Rep.Ehrhartcalledthebilloneofthemostinnovative.

. .greatestthings . . .forthechildrenofGeorgiasince itprovidestheopportunity for

childrentohavechoicesineducation.HeinformedcolleaguesthatFlorida,Pennsylvania,

Rhode Island, and Arizona had passed similar legislation. He too quoted the Friedman

Foundations conclusion that Georgia public education could save nearly a hundred

milliondollarseachyear ifthebillwerepassed.Praisedbysponsorsasaplanfor lower

income schoolchildren to get out of shoddy public schools, the legislation passed the

lowerhouseinarollcallvoteof92to73.

In the State Senate,Sen. Johnson spoke onbehalf of the bill onApril 1. He said

thattheonlybeneficiaryoftheproposedlegislationwouldbethosewhocantafford

tobe inprivateschoolandwant tobe.Heexplained thatthebillwouldnothelpthe

rich because they could already afford private schooling and would not seek the tax

credit scholarships. The bill passed the upper chamber by a vote of 32 to 20, and

GovernorSonnyPerduesignedHB1133intolawonMay14,2008.


9/82

9

Inthe followingyear,during the2009 legislativesession,Rep.Ehrhart4andRep.

Casas introducedabilltomakeseveralchanges intheSSO law. Itproposedprimarilyto

eliminate any limits on the amount of tax credits an individual taxpayer could take by

contributingtoanSSO,solongastheamountdidnotexceed75percentofthetaxpayers

totalstate tax liability. In addition, thebillwouldhaveadded freestanding,privatepre

kindergarten programs as eligible schools and would have made all information and

reports provided by student scholarship organizations to the Georgia Department of

Revenue confidential taxpayer informationsubject tocriminal misdemeanorpenalties

fordisclosure.

The bill passed both houses of the General Assembly but was vetoed by Gov.

PerdueonMay11,2009.Inhisvetomessage,Gov.Perduestated,Iagreethatchanges

areneededtotheoriginalstudentscholarshiporganization lawand IsupportedHB394,

whichwouldhaveenactedthechangesIbelievearenecessary.

HouseBill394,the legislationGov.Perduehadhisfloorleaderssponsor,wouldhave

implementedsweepingreformsinthecurrentSSOlaw.Itwasdesignedto

restrictscholarshipstostudentswhocoulddocumentthattheyhadbeenenrolledin a Georgia secondary or primary public school for at least one year and were

eligibleforafreeorreducedpricelunch;

requireSSOstoallocate97percentofannualrevenuetoscholarships; mandatebackgroundchecksonSSOownersandoperators; prohibitanowneroroperatorofanSSOfromalsobeinganowneroroperatorofa

qualifiedschooleligibletoreceivescholarshipmonies;

require SSOs to report annually to the Georgia Department of Education on thenumberofstudentsreceivingscholarshipsandtheschoolsinwhichsuchstudents

areenrolled;

restricttheamountofanSSOscholarshipinasingleacademicyeartotheaverageamountthestateprovides in itsfundingformula forafulltimestudent inpublic

schools;and

require each school in which a student receives an SSO scholarship to select anationally normreferenced test approved by the State Board of Education,

administer annually such test to each scholarship student, and report yearly on

resultsofthenormreferencedtesttotheDepartmentofEducationinaccordance

withitsrulesandregulations.

GovernorPerduesbilldiedinaHouseCommitteeduringthe2009legislativesession.

4Betweenthe2008and2009legislativesessions,Rep.EhrharthelpedtoestablishanSSO,theGeorgiaChristianSchools

ScholarshipFund,whereheremainsanofficerandamemberofathreepersonboardofdirectors.Rep.Ehrhartisalso

ontheboardofdirectorsofoneoftheChristianprivateschoolsaffiliatedwiththeGeorgiaChristianSchoolsScholarship

Fundtoreceivemoniesforstudentscholarships.


10/82

10

OnFebruary22,2011,Rep.EhrhartandRep.CasasintroducedHouseBill325,ina

renewaloftheirattemptstoalterGeorgiasexistingprivateschoolscholarship law.This

new bill proposed, among other things, to increase the current funding cap on the tax

creditprogramfrom$50millionto$62.5millionandtoautomaticallyincreasethefunding

capby25percentafteranyyear inwhichSSOtaxcreditsreachedanamountwithin10

percentoftheexistingcap.Inaddition,thebillproposedtoremoveincomelimitsonSSO

taxcredits for individualsandmarriedcouples,up to75percentof their totalstate tax

liability.

These specific provisions were stripped away by the House Ways and Means

Committee after a hearing in which members cited a sluggish economy and lingering

concernsaboutstaterevenues.IntheStateSenateFinanceCommittee,however,Senator

ChipRogersrevivedtheprovisioninHB325thatprovidedanautomaticincreaseinthe

ceilingontaxcredits.

On the last day of the 2011 session, the Georgia General Assembly passed a

revisedversionofHB325.Thelawprimarilyremovestheannualcapof$50milliononthe

amount of tax funds diverted from the state treasury for private school scholarships. It

automaticallyincreasestheceilingeveryyearforthenextnineyearstoreflectgainsinthe

consumerpriceindex(CPI).HB325alsomakesitacriminalmisdemeanortodiscloseany

informationreportedtotheGeorgiaDepartmentofRevenuerelatingtotaxpayers,SSOs,

and private schoolsexcept for tallies on the total number and amounts of tax credits

used and the total number and dollar value of all scholarships awarded. Disclosing or

publishinganythingelseincludingtheresultsofanSSOsCPAauditwillbe illegaland

punishablebycriminallaw.

Thenewlawalsoaddsprivateprekindergartenprogramstothoseschoolseligible

fortaxcreditscholarshipsandlimitstheamountofeachscholarshipfundedbytaxcredits

totheamountofthepublicschoolsperpupilexpenditurefromstateandlocalfundingin

Georgia.

GovernorNathanDealsignedthebillonMay12,2011,andthenewprovisions

becomelawonJuly1,2011.


11/82

11

PUBLICACCOUNTABILITYFORTHEUSEOFTAXFUNDS

Thereisalmostnopublicrecordcurrentlyavailableabouthowthelawauthorizing

taxfundedscholarshipsforprivateschoolsisoperatinginGeorgia.Thestatedepartment

ofeducationmaintainsonitswebsitealistofSSOsbutnothingmore.ItrequiresanSSO

tofilloutacheckoffsheettoregister.Attheendof2010,eightofthe32listedSSOsdid

not

have

a

website,

and

10

SSOs

had

only

a

post

office

box

for

their

location.

The Georgia Department of Revenue receives annually a certified public

accountantsauditofeachSSOsfinancesandareportfromeachSSOthatincludesalist

ofdonorsandtheamountsoftheirtaxcredits.AsofJuly1,thedepartmentisauthorized

topublishalistofdonors,talliesonthetotalnumberoftaxpayerswhousedtaxcredits,

the total amount of the tax credits, and the total number and dollar value of all

scholarships awarded. The disclosure of any other information, including the financial

auditoftheSSOsoperations,willbeacriminaloffense.

The SSO law also fails to authorize the department to collect any information

abouttheprivateschoolsorstudentsreceivingthetaxfundedscholarshipsandprohibits

the revenuedepartment from requiringSSOs to provide anyadditional informationnot

expresslyauthorizedbythe law.A listofSSOs isalsosubmittedannuallytotheGeorgia

GeneralAssembly.

Asaresult,thereisnopublicinformationaboutthefollowingcriticalcomponents:

SSOcontributorsusingstatetaxdollarstosupportprivateschoolscholarships; privateschoolsreceivingtaxfunds,whichSSOsawardthemthefunds,orthe

amountoftaxdivertedfundseachprivateschoolisreceivingfromanSSO;

theamountornumberofscholarshipsthatprivateschoolsorSSOsdistributetostudentswithSSOfunds;

whichstudentsreceiveprivateschoolscholarshipssupportedbytaxcreditsorthestudentscharacteristics;or

thecriteriaandprocessesthatdifferentprivateschoolsorSSOsusetoawardtaxfundedscholarships.

5

Georgia

alone

makes

it

a

criminal

offense

to

publicly

disclose

any

specific

informationsubmittedbySSOstothedepartmentofrevenue,anditistheonlystatethat

fails to require any real public accountability for the use of tax dollars to finance

scholarships.Ineachoftheothersixstateswithtaxcreditscholarships,theorganizations

5AfewSSOsestablishedinlate2009and2010awardscholarshipsdirectlytostudentsinsteadofpermittingprivate

schoolstoawardthescholarships.AreteScholarsFund,theStudentScholarshipFoundationofGeorgia,andAAA

ScholarshipFoundationappeartofollowthispractice.


12/82

12

and/or schools receiving contributions through taxpayer funding must provide detailed,

adequateinformationsothatastateagencycanreportpubliclyontheoperationsofthe

taxfinancedscholarshipprogram.

TheGeorgialawrequiresSSOstoobligatenolessthan90percentoftheirannual

revenueforscholarshipsandtooperatelawfully,butthereisonlyaverylimitedamount

of information that the law permits the department of revenue to require in order to

investigate issues of unlawful conduct and to assure an SSOs compliance. In most

respects,Georgias law isdesignedprimarilytowatchdogthehonestyoftaxpayersnot

theSSOs.TheforemostregulatoryfunctiontheGeorgiaDepartmentofRevenuecancarry

outwiththeauthorityandinformationithasbeengrantedbytheSSOlawisnothingmore

thantoassurethattaxpayerswhoclaimareductioninstateincometaxesunderthislaw

havemadepaymentsofthesameamounttoaregisteredSSO.

By way of contrast, the Arizona Department of Revenue issues an annual public

report identifying each scholarship organizations number, the amount of contributions

received, and the number and amount of scholarships it has provided private schools

from both its corporate and individual tax credit programs. These public reports also

identifyeachprivateschool inArizonathatreceivestaxcreditscholarshipfundsandthe

numberandamountofthescholarshipsthateachschoolawards.

PublicReportsonArizonaStudentScholarshipProgramExcerptsfromIndividualDonorsProgram

Source:ArizonaDepartmentofRevenue


13/82

13

Rhode Islands Division of Taxation makes a similar annual public report for the

activitiesofeachstudentorganizationthatallocatestaxcreditfundsforscholarships.The

state reports also identify the zip code of each student who receives a tax credit

scholarshipandtheamountofthescholarship.

InFlorida,thistypeoffinancialreportingisonlythebeginningofitsinsistencethat

studentscholarshiporganizationsandtheiraffiliatedprivateschoolsmustbeaccountable

for public funds. All student scholarship organizations must provide the Florida

DepartmentofEducationwiththefollowinginformationfourtimesayear:

demographic information for each student, including name, date of birth,socialsecuritynumber,gradelevel,gender,race,parentsname,andaddress;

informationonthestudentsschoolofattendance,includingtuition,fees,andtransportationamounts;and

theamountofeachstudentsscholarship.Florida also mandates that private schools complete an annual survey and to publicly

release scores of standardized tests administered by an independent research

organization,if30ormorestudentsreceiveataxcreditscholarship. Basedontheseand

otherdata,theFloridaDepartmentofEducationpreparesandpublishesquarterlypublic

reportson the tax credit scholarship program, its schools, and itsstudents. Floridaalso

requiresafullannualpublicreport.

In Georgia, none of this information about the states taxfinanced scholarship

program is required or available, and most SSOs and private schools eligible to receive

SSOscholarshipfundshavefailedtovoluntarilyprovidesuchpublicinformationaboutthe

use of tax funds. Except for the Georgia Greater Opportunities for Access to Learning

(GOAL) scholarship program, no student scholarship organization in Georgia has made

publiconawebsiteorinanyotherpublicforumspecificinformationaboutcontributions,

expenditures, SSO grants to students or schools, or the schools scholarships and the

students who receive them. The schools also have published no detailed, meaningful

information

about

their

SSO

supplied

funding

or

the

students

who

have

received

tax

creditscholarships.

Despite extensive efforts, the Southern Education Foundation was unable in the

fall of 2010 to convince a single SSO in Georgia to voluntarily complete all or even a

substantialportionofanSSOsurveyontaxcreditfunds,schools,oroperations.SEFalso

surveyed 67 private schools that were affiliated with an SSO. They were asked to


14/82

14

complete a oneandahalfpage survey. Only nine schools answered all or most of the

surveyinwriting,andtwooftheninerepliedonlythattheyhadnotyetreceivedmonies

for taxfunded scholarships. Several schools refused any discussion when asked in a

followuptelephonecall.Oneschoolheadmasterdiscussedtheprogramingeneralterms

andwiththestipulationthattheconversationbeofftherecord.6

FAILURESTOCOMPLYWITHTHELAW

Theneartotal lackofdisclosureandoversighthascreatedanarrayof issuesand

questionsrelatingtowhetherSSOshavecompliedwithbasicprovisionsofGeorgiastax

creditscholarship law.Theseproblemsappearto implicatetheconductofalmostevery

SSOthatoperatedduringthefirstthreeyearsofthelaw.TheapparentfailuresofSSOsto

complywiththelawrelateto:

Studentseligibleforscholarships Schoolseligibleforscholarships Spendingrequirements Civilrightscompliance Limitingscholarshipstooneschool

EligibleStudents

TheGeorgia lawonprivateschooltaxcreditsstipulates thatastudent iseligible

forascholarshiptoaprivateschoolonly ifheorsheisaGeorgiaresidentenrolledina

Georgiasecondaryorprimarypublicschooloreligibletoenrollinaqualifiedkindergarten

program

or

pre

kindergarten

program.7

Several SSOs and many private schools have decided that the law requires only

thatastudentenrollnotactuallyattendapublicschooltobeeligibleforascholarship.

ThispracticebecameevidentInAugust2009whentheAtlantaJournalConstitution(AJC)

reportedthatparentsandstudentsattendingprivateschoolswereshowingupatpublic

schoolstofilloutpaperworktoenrolltheirkidsinpublicschoolssolelytoqualifyforthe

taxfunded scholarshipswith no intention of actually attending classes in the public

school.8

The

news

story

did

not

determine

how

widespread

the

practice

had

become

but

identified three school districts reporting the local practice by parents. The newspaper

6TheSEFquestionnairewassenttoallSSOsinGeorgiabyemailandbyUSPostalService.Thesurveywasfollowedupby

telephone callsandadditionalemails overa period of eight weeks. One SSO executiverespondedgenerallytoa few

questions inthesurvey. A Seventh Day Adventistrepresentative gave thenumberandamount of itsscholarships by

phone.7SeeCodeofGeorgia,sections202A1(1).

8AtlantaJournalConstitution,August9,2009.


15/82

15

alsofoundofficialsattwoprivateschoolswhoadmittedthatsomeoftheirstudentswere

usingthestatelawsloopholetoreceivetaxfundedscholarships.

State Rep. Earl Ehrhart, one of the laws sponsors, told anAJC reporter that he

thought it was legal for parents to use this loophole but described use of it as an

anomaly. There is no conspiracy there. In December 2009, however, at a meeting

sponsored by the Georgia Student Scholarship Organization (GASSO), State Rep. David

Casas, another sponsor of HB 1133, told parents how Killian Hill Christian School in

GwinnettCountyhadreceived$85,000 inSSOscholarshipstohelpkeepstudents inthe

privateschoolnottohelpnewstudentstransferfrompublicschools.9

Inaddition,inavideotapeofthesamemeetingthathassincebeenusedatother

GASSOmeetings,Rep.Casas informsprivateschoolparentsthatasasponsorofthe law

hedeliberatelyspecifiedenroll insteadofattend inHB1133 inordertoensurethat

taxcreditsubsidieswouldsupportstudentsalreadyinprivateschools.Rep.Casasstates:

Some people felt a little bit weird about that; felt it was a little

dishonest that theywould take theirchild,enroll them inapublic

schoolandnothavethemactuallyattend,butallofasuddenthey

actuallyqualifyforascholarship.Imtellingyou,wedeliberatelyput

thewordinginthereforthat.10

Rep.Casastapedassertion isanadmissionofadeliberatedeceptiononthepart

of a public official andan overtcontradictionofhisown public statements madewhile

seekingsupport forthe legislation in2008.OnhisownwebsiteonMarch4,2008,Rep.

CasasissuedapressstatementsayingthattheGeorgiaHouseisconsideringlegislationto

permittaxcreditsworthupto$50millionannuallyto fundscholarships forstudents to

transfer from public schools to private schools. It would help parents who cant afford

private education, such as those struggling in Clayton, DeKalb, and other counties who

want to leave underperforming public schools (emphasis added; see Appendix 3 for

documentation).

Rep.

Casas

assertion

about

the

true

meaning

and

intention

of

the

term

enroll

also belies the public statements of civic leaders who were among the primary public

supporters of HB 1133. On March 19, 2008, for example, Georgia Family Council Vice

9SeethisversionofthevideotapeofRep.Casasremarksat:

http://www.youtube.com/watch?v=Yx2GxjGpWcw&feature=player_embedded#at=440,(accessedFebruary1,2011).10

ThisversionofRep.CasasremarksisnotpubliclyavailablebutisapparentlyusedbyGASSOonlyatmeetingsin

privateschools.SeeAppendix3foratranscriptofRep.CasasremarksaboutthetermenrollinHB1133fromthis

versionoftheGASSOvideotapeandhisearlierstatementsaboutthepurposeofthelegislation.


16/82

16

President Eric Cochling wrote in a newspaper column that these scholarships are

availableonlytostudentscurrentlyinpublicschoolssotheclaimthattheywillbenefit

onlystudentsalreadyinprivateschoolissimplywrong.11

Despite Rep. Ehrharts assurance in the fall of 2009 about an anomaly, the

practiceofprivateschoolstudentsregistering inpublicschoolssolelyforthepurposeof

becomingeligibleforataxcreditscholarshipspreadin2010acrossatleasteightcounties,

where more than 42 percent of Georgias SSOaffiliated schools are located. Private

schoolsservingchildreninBarrow,Cobb,Gwinnett,Cherokee,Forsyth,Fulton,Glynn,and

LowndesCountieshaveencouragedandinstructedparentsofcurrentstudentsonhowto

enrollinbutneverattendapublicschoolinordertoreceivetaxfundedscholarshipsfor

theirprivateschooltuitioncosts.

The Ivy League Montessori School in Cumming, Georgia, told its families,

AccordingtotheGeorgia law,studentsmustbeGeorgiaresidentsenrolledinaGeorgia

secondaryorprimarypublicschool,thoughattendanceisnotrequired.Therefore,existing

andnewstudentsatILMScanenrollinpublicschoolsforthecountyinwhichtheyliveand

qualifytoreceivescholarshipmonies(emphasisadded).TheSt.SimonsChristianSchool

inGlynnCountyprovidedacopyofthepublicschoolregistrationformonitsownwebsite.

The school informed families that they can make their children eligible for an SSO

scholarshipiftheycompletetheStudentEnrollmentEligibilityFormandsubmititatthe

countyschoolboardregistrationoffice,which is intheannexbuildingbehindtheschool

boardoffice.

Covenant Christian Academy in Loganville instructed its parents that a student

mustbeaGeorgiaresidentenrolledasanonattendingstudentinaGeorgiaprimaryor

secondarypublicschool tobeeligible foranSSOscholarship.CornerstonePreparatory

Academy in Acworth also told its parents, Many of the state public school systems

(includingCobbCounty)haveestablishedaproceduretoenrollthesestudents,butnot

enter

them

into

the

student

information

system,

thus

avoiding

unnecessary

work

for

the

publicschoolstaff,knowingthestudentwillnotactuallybeattending.Whenyoucallfor

anappointmentorgointotheschooltoregister/enroll,pleaseexplainthatyouareusing

HB 1133 and bring all of the documents listed below which are necessary for school

11AtlantaJournalConstitution,March19,2008.


17/82

17

enrollment(emphasisadded).12

SeveralSSOs,includingGASSO,haveencouragedandsupportedprivateschoolsin

their tactics to use tax credit funds to subsidize existing students tuition costs. One of

GASSOs directors, Robert Jasion, has recruited private schools and contributions to his

SSObysellingtheloophole inHB1133asalawfulmeanstousetaxdollarstosupport

privateschoolsexistingstudents.

Inhisprivateschoolpresentation,Jasiontypicallystartsbyshowingthefullversion

ofthevideotapeofStateRep.DavidCasasexplainingthetaxcreditsprogramasawayfor

citizenstospendtheirowntaxdollarsforprivateschooling.Ifnobodytakesthatcredit,

Rep.Casassaysonthevideo,we[theGeorgialegislature]willfindawaytospendit.In

addressingthe issueofenrollversusattend,Rep.Casasstatesthere isnoloophole,

thereisabsolutelynoloophole.Thatwasdeliberatelyputintheresothatprivateschool

childrencouldenrollinbutneverattendapublicschoolandtakeadvantageoftaxfunded

scholarships.

GASSOs Jasion also explains the difference between enrolling or registering a

studentatapublicschoolandattendingapublicschool.Heshowsprivateschoolparents

what a public school enrollment form looks like and lists on his PowerPoint slides the

contactinformationofastateemployeeoftheGeorgiaDepartmentofEducationwhohe

stateswillHelponEnrollinginthePublicSchools.

Atameetingwithprivateschoolparents,Jasionalsostated,

You saw David [Rep. Casas] in the video. He said he intentionally

wrote that word enrolled in there. What does enrolled mean?

Well,Davidsitsontheeducationcommitteeandhehelpswritesthe

laws for the Department of Education, and he knew that DOE

defines enroll as the registration of a student in a local school

systemofresidence.

. . . [They] thought enrolled meant attend. Enroll means simply

registeringyourchild in the localpublicschoolsystem,nothaving

them

attend,

just

having

them

register.

Once

theyve

registered,

theyareeligibleforascholarshipaward.

GASSOs presentation notes that the SSO works with more than 100 private

schools inGeorgia (although theclaim cannotbe fullyverifiedsinceGASSO is theonly

12See Appendix 4 for a listing of private schools identified by SEF as instructing parents on how to enroll but not

attendpublicschools inordertobecomeeligiblefortaxcreditscholarships.This isprobablyonlyapartial listing.Two

SSOs,ALEFandGRACE,statethattheyrequiredocumentationofpublicschoolattendance.


18/82

18

largeSSO inthestatethatdoesnotpublicly listthenamesof itsaffiliatedschools).The

one private school that Jasion identifies in his presentation is Cornerstone Preparatory

Academy,wherehisownchildrenattend.Itisoneoftheschoolsthatinstructitsparents

onhowtoenrollinpublicschoolstoreceiveataxfundedscholarship.

GASSOisnottheonlySSOencouragingprivateschoolstousethisrusetosupport

existing private school students. SEF has discovered that the Golden Dome Scholarship

Fund, Corporate Giving for Education, and the Parents Choice Student Scholarship

Organization are also registered SSOs working with private schools to use the enroll

languageinthestatelawtoprovidetaxcreditscholarshipstotheirexistingstudents.

EligibleSchools

Georgialawspecificallydefinesaprivatequalifiedschoolorprogrameligibleto

receive tax scholarships as a nonpublic primary school or secondary school that is

accreditedorisapplyingforaccreditationfromoneofsixprivateagenciesrecognizedby

Georgialaw.13

Inaddition,thelawstatesthattheschoolmustbelocatedinGeorgiaand

satisfiestherequirementsprescribedbylawforprivateschoolsinthisstate.Regulations

oftheGeorgiaDepartmentofRevenuealsorequireSSOstodeliverthepaymentofthetax

creditscholarshipsdirectlytoaqualifiedprivateschool.14

Some SSOs apparently have granted scholarships to students to attend schools

and programs that arenotqualified by lawas accredited,private primary or secondary

schools.Attheendof2010,itappearsthatthreeSSOaffiliatedschoolswerechildcare

orpreschoolprogramsunaccreditedbyanyofthestatesanctionedaccreditingagencies.

Thirtyone programs were accredited as nontraditional educational centersnot as

accredited primary or secondary private schools. Nine of these nontraditional

educational centers fail to meet the state laws definition of a private primary or

secondary school (see Appendix 2 for a list of the most questionable SSOaffiliated

schools). Most of these centers call themselves schools but appear to supplement and

13ThelawwasamendedbyHB325sothatasofJuly1,2011,qualifiedprivateprekindergartenprogramswillbeeligible

toreceiveprivateschoolscholarships.14

SeeCodeofGeorgia,sections202A1andRulesofGeorgiaDepartmentofRevenueTaxDivision,Chapter56078.

ThedefinitionofaprivateschoolintheCodeincludesarequirementfor180daysofinstruction,aminimumof4.5hours

ofinstructiononthosedays,andacurriculumthatcoversbasicareasofknowledgesuchasreading,mathematics,and

science.


19/82

19

support homeschooling without the necessary curriculum or amount of organized

learningthatGeorgialawdefinesasaprivateschool.15

There are also 19 SSOaffiliated institutions that are accredited only as

educationalagencieswithspecialpurposesnotasprimaryorsecondaryschools.Sixof

the 19 educational agencies with special purposes do not appear to meet the legal

definitionofaprivateschool.Someoftheseagenciesservechildrenwithdevelopmental

needsandprovidetherapyasaprimarymethodofassistance.Othersarealsoonlypart

dayprogramsanddonotprovideaminimumof4.5hoursofinstructionasrequiredofall

qualifiedschools.

SpendingRequirements

ThelawinGeorgiarequiresanSSOtoallocateorobligate90percentofitsannual

revenue for scholarships to private school students. It permits up to 25 percent of this

amount(onefourthof90percent)tobecarriedoverintothenextfiscalyear.Ineffect,a

GeorgiaSSOmustdistributenolessthan67.5percentofitsrevenueforscholarshipseach

yearandmaycarryovernomorethan22.5percentofannualrevenueforscholarshipsin

futureyears.Theserequirementsleave10percentofannualrevenuesforadministrative

costs. The law clearly mandates that SSOs cannot hoard tax funds and must distribute

everyyearthevastmajorityofitsmoneyonstudentscholarships.16

Inthefirsttwoyearsofoperations(2008and2009),severalSSOsfailedtocomply

withthesebasicprovisionsofstatelaw.AccordingtotheirreportstotheInternalRevenue

Service(IRS),fiveSSOsreportedin2008combinedrevenuesofmorethan$4.6million

almost 70 percent of all scholarship tax credits taken that year in Georgia.17

These five

SSOsmade lessthan$1.4million inscholarshipgrantsorpayablegrants(obligationsfor

current or future scholarships)distributing only 30 percent of all revenues raised for

15Two SSOaffiliated private schools accredited by the Southern Association of Colleges and Schools (SACS) also use

whatiscalledtheuniversitymodeloflearning,wheretheschoolssimplyholdclassesonthreedaysaweekandforthe

otherfourdays leavestudentsunderthesupervisionofparents,whoareresponsibleforguidingtheirchildren inthe

completion

of

assigned

work.

This

innovation

is,

in

effect,

a

merger

of

traditional

schooling

and

homeschooling,

especiallyforyounglearners.16

SeeCodeofGeorgia,sections202A1and202A2.Initsannualstatisticalreportfor2008,theGeorgiaDepartment

of Revenue defines SSOs as taxexempt nonprofits that distribute at least 90% of their revenues forscholarships or

tuitiongrantstoallowstudentstoattendqualifiednonpublicschools(emphasisadded).SeeGeorgiaDepartmentof

RevenueStatisticalReport,FY2008,p.120.17As charitabletaxexemptorganizations,SSOs filean annual financial andoperational reporttothe federal Internal

Revenue Service (IRS). Federal regulations require these reports to be available for public inspection at the

organizations offices. These IRS 990 forms provide information on categories of annual income and expenses and a

balance sheet for the organization. The data on these federalreports cangenerally indicate if anSSO is spending 90

percentitsannualrevenueforscholarships.Typicallythefederalreportsarefiledatleast912monthsafterareporting

period.


20/82

20

scholarships.TherecordsforthreeSSOs(GeorgiaGOAL,GeorgiaChristianSchoolsFund,

and Apogee Scholarship Fund) show they did not grant or obligate any funds for

scholarshipsin2008,althoughGOALraisedover$3.5millionandGeorgiaChristianraised

almost$269,000.

Forthecalendaryearof2009,federalrecordsareavailableforfourSSOs(GASSO,

Georgia Christian, Great SSO, and Georgia GOAL) that diverted at least $30,000 in tax

credits from the public treasury. These four SSOs generated a combined total of $15.1

million in diverted state revenue (nearly twothirds of that years total amount raised

fromstate taxcredits).But federaldocuments indicate that these fourSSOsgrantedor

obligated no more than $5.9 million for scholarshipsbarely 39 percent of all tax

revenuesthatthesefourSSOsdivertedforscholarships(seeAppendix1).

OnlyoneofthefourSSOs,GeorgiaSSO(GASSO),showsthatitdistributedatleast

twothirdsof its taxgenerated funds in2009as requiredbystate law.18

GOALs federal

recordsshowthatitobligatedordistributedinscholarshipsonly28percentofthe$10.6

millionitraisedin2009.Duringthesameyear,GOALsfederalreportshowsthatitspent

12.2 percent of its revenueabove the maximum of 10 percent allowed by lawon

administrativeandoperationalcosts.

49.1%

69.9%

56.5%

27.6%

0%

10%

20%

30%

40%

50%

60%

70%

80%

GeorgiaChristian GASSO GREATSSO GeorgiaGOAL

PercentofSSOTaxRevenue

SpentorObligatedforScholarships

2009

LawRequiresatleast67.5Percent

Source: IRSForm990

18 GASSOs methods of distributing tax credit scholarships raise important issues of compliance in another area. See

pages 1418. Also, in a report for July 2008 through June 2009, the ALEF Fund, an SSO established to support

scholarshipsatJewishschools,actuallyexceededthe90percentrequirementbyobligatingmorefundsforscholarships

thanALEFraisedthatyear.ItsIRSreportforthelatestyearisnotyetpubliclyavailable.


21/82

21

Insummary,duringthefirsttwoyearsoftheoperationandfundraisingofGeorgia

SSOs,currentlyavailablefederalrecordsshowhow$19.7millionofatotalof$30.8million

intaxcreditswereused.Thesereportscapturenearlytwooutofeverythreedollarsoftax

moneydivertedtoSSOsforprivateschoolscholarshipsinGeorgiain2008and2009.Less

than$7.3milliononly37percentofthe$19.7millionwasdistributedormadepayable

asgrantsforscholarshipsduringthesetwoyears.

More than 57 percent of the $19.7 million in taxdiverted funds was carried

forwardfrom2008and2009into2010.Federalrecordsalsoshowthatanaverageof10.6

percent of SSO revenues from tax credits during these two years was spent on

administrationandoperations.Therefore,basedontheavailablefederalrecordsfor2008

and2009,mostofthetaxfundsdivertedbySSOswerenotused inaccordancewiththe

basicprovisionsofthetaxcreditlaw.

CivilRightsCompliance

Georgia law also requires private schools to comply with the Civil Rights Act of

1964,which inTitleVIoutlawsdiscriminationbasedonrace,color,ornationalorigin in

programs or activities.19

Unfortunately, the Student Scholarship Organization for Greek

AmericansinGeorgiaexpresslylimitsscholarshipstostudentsbasedonnationalorigin

proof of Greek ancestry. To receive an application for this SSOs scholarship, a student

mustdemonstrateoriginofGreekdescent.Asoftheendof2010,theSSOhadraised

approximately$40,000tosupportscholarshipsforGreekAmericanstudents inavariety

ofprivateschools.Theseschoolsareacceptingtaxdivertedfundsforscholarshipsthatare

awardedonthebasisofnationalorigin,contrarytotheCivilRightsAct.

LimitingScholarshiptoOneSchool

The Georgia SSO law prohibits an SSO from making scholarships available to

eligiblestudents inonlyoneschool.20

Theprovision isapparentlydesignedtopreventa

privateschoolinGeorgiafromcreatinganSSOinordertoarrangefinancingforeducating

a

limited

and

narrow

range

of

childrenchildren

attending

only

that

school.

This

arrangement,however,isexactlywhattheChristianInternationalCounseling&Ministries

(CICM)hasdoneasanSSO.Theorganizationwasincorporatedin2001andinrecentyears

hasbeeninbusinesstooperateFriendshipChristianSchool.Inits2008 IRSreport,CICM

19SeeCodeofGeorgia,sections202A1(2)(B).

20SeeCodeofGeorgia,sections202A1(3)(B).


22/82

22

statesas itsprimaryexemptpurpose:WeAreaNonDenominationalChristianSchool.

CICMs report was filed with the IRS in January 2010 and lists its street address as the

schoollocationandthewebsiteofFriendshipChristianasitsown.

Attheendof2010,CICMasaregisteredSSOhadaseparatewebsite,butitdidnot

list any affiliated schools. The site did not provide any means for applying for a

scholarship.Theonlinesection forScholarshipForms includedonly forms fortakinga

taxcreditnotforapplyingforascholarship.ThelaststreetaddressfortheSSOwasthe

SlavicEvangelicalChristianChurchofAtlanta,whosememberswereinvolvedinfounding

thenearbyFriendshipChristianSchool.TheonlyschoolthatSEFfoundinitsresearchthat

identifiesCICMas itsaffiliated SSO is Friendship ChristianSchool.The schools business

managerisalsothecontactperson/agentforCICMasaGeorgiaSSO.

CICM and other SSOs have been able to disregard Georgia law because the law

deliberately provides no public records by which to monitor how private organizations

that raise and distribute taxdiverted funds are implementing the law. By effectively

barringstateagenciesfrommonitoringandholdingaccountableGeorgiasSSOs,Georgia

lawhascreatedanenvironmentinwhichtoofewareactinglawfullyinapubliclyfunded

systemthatiscurrentlyfreetoserveprivateinterestsasmuchasthepublicinterest.

GEORGIASTAXCREDITSCHOLARSHIPLAWIGNORESLESSONSOFOTHERSTATES

Georgiaisanexceptioninseveralimportantwaysamongthesevenstateswithtaxcredit

scholarshipsforprivateschools.

First,Georgiaslawistheexceptionbecauseitfailstoholdanyoneaccountableforhow

they divert or spend tax funds. It is the only law that does not trackin some waywho is

receiving scholarships under the program. All other states require reporting that tracks and

measuresdevelopments in the taxcreditprogram.Threestates (Arizona, Indiana,andFlorida)

go a step further to ensure accountability by requiring private schools to measure student

achievementwithstandardizedtestingorreportsofstudentprogress.Dueto2011amendments

totheSSOlaw,Georgiaalsoistheonlystatetomakeitacriminaloffensetodivulgeinformation

aboutanSSOsauditedoperationsandspending.

Second,Georgiaistheonlystatethatdoesnotconsiderfamilyincomeinawardingtax

funded scholarships to private schools. Florida, for example, restricts scholarships to students

whosefamiliesareatorbelow185percentofthepovertyline.

Third,fourstateslimiteligibilityforscholarshipstopublicschoolstudents,butGeorgiaistheonlystateamong them thathasnotrequiredactualpriorattendance inapublicschool to

receive a taxfunded scholarship (see pages 1418). The other three states have enforced the

requirementthatonlystudentswhotransferfromapublicschoolareeligibleforscholarships.

Georgiaalso isoneofonlythreestates(includingArizonaand Indiana)thatallowboth

individualsandcorporationstoreceiveataxcredit,andoneofonlythree(includingArizonaand

Florida)thatallowadollarfordollartaxreductionforcontributions.Also,threestatesIndiana,

Iowa,andRhodeIslandhaveprogramswithannualcapsbelow$10million,whileGeorgias$50

millioncapnowhasanautomaticannualcostoflivingincrease.


23/82

23

ACCOUNTABILITYFORTAXFUNDEDEDUCATIONPERFORMANCE

InGeorgia,there is littleorno informationbywhichparentsorpolicymakerscan

consider and compare the academic performance of a private school receiving tax

revenuesforastudentscholarshipwiththeperformanceofstudentsinpublicschoolsor

otherprivateschools.Inaddition,Georgialawcurrentlydoesnotprovideforanymethod

to

account

for

how

well

schools

are

educating

any

student

receiving

an

SSO

tax

funded

scholarship.

Georgias law makes no provision for an assessment or testing of students who

attendprivateschoolswithtaxfundedscholarships.Nor isthereanystateregulationor

law inGeorgiathatprovidesthepublicwiththeresultsofanytestorassessmentofthe

academicperformanceofanystudentattendingaprivateschoolwithtaxpayersupport.

SomeprivateschoolsinGeorgiaadministernationaltests,suchastheIowaTestofBasic

Skills(ITBS),whichalsohasbeenusedwidelybypublicschools,butalmostnoneroutinely

makestestresultsavailabletothepublic.21

In contrast, students in taxfunded public schools are required to undergo an

extensive series of tests, all of which are published annually according to student

characteristicbyschoolandschooldistrict.Inthefirstandsecondgrades,Georgiapublic

schoolchildrenaretestedonthreesubjectseveryyear.Fromthethirdgradethroughthe

seventhgrade,publicschoolstudentsaretestedannuallyon fivesubjects. Intheeighth

grade, they are tested on five subjects and writing. In Georgia public high schools,

studentstakestatemandatedteststhreetimeseachyearononeofeightsubjectsinfour

coreareasofthecurriculum.Thereisalsoastatemandatedwritingtestandagraduation

test for high school students in public schools. The results from all of these tests are

disaggregatedbystudentcharacteristicsandmadeavailabletoparentsandtothepublic.

Today, as in the past, it is virtually impossible for parents to make an informed

choiceaboutthecomparativeacademiceffectivenessofpublicandprivateschools.Now

inGeorgia,someprivateschoolsarebeingaidedwithtaxdivertedfundsforscholarships.

21See,forexample,EducationGuide:ADirectoryofPublicandPrivateSchools inthe10CountyMetroArea+Their

StandardizedTestScores,AtlantaBusinessChronicle,specialsection, January28February3,2011.Despitethetitle,

there are no test scores for private schoolsonly for public schoolsin the guide. Also see theAtlantaJournal

Constitutions online School Guide for parents on public and private schools. It lists student demographics and

performance data, test scores, and teachers years of experience for public schools. The private schools report no

informationonacademicachievementorothercomparableindicators.See:http://schools.ajchomefinder.com/.


24/82

24

Asaresult,thereisalsonoinformationavailabletothegeneralpublicortopolicymakers

bywhichtoassesshoweffectivetheprivateschoolsareineducatingstudentsattending

withtaxfundedsupport.

StudentswhoattendandgraduatefrompublicschoolsinGeorgiawillundergoas

many as 87 statemandated tests over 12 years in order to assess if their schools are

effectivelyusingtaxdollarsineducation.Astudentwhoattendsaprivateschoolwithtax

fundedscholarshipstakesnostatemandatedtests.Theresultsofmandatedtestinginthe

publicschoolsarepublishedannuallybyschoolandschooldistrictaccording tostudent

characteristics.Therearenoresultsandnothingavailabletopublishintheprivateschools

wherestudentsattendwithsupportofdivertedtaxfunds.

Theonlyrationalbasisforsuchanenormousmismatchinpublicaccountabilityfor

taxsupportededucationistheassumptionthatanyprivateschoolselectedbyaparentis

alwaysbetterthananypublicschoolselectedbyaparent.Thisassumptionisfalse.There

is no credible evidence to support the conclusion that private schools educate children

withsimilarbackgroundsanybetterthanpublicschools.22

And,there isnofactualbasis

for concluding that any private school eligible to receive taxfunded scholarships in

Georgiaisusuallybetterineducatingchildrenthananypublicschool.

The nations prevailing independent research presents clear and convincing

evidence that students with similar economic, social, and family backgrounds in similar

communitiesscoremuch thesameon tests in publicandprivateschools.A2007study

usinglongitudinaldatawascommissionedbytheCenteronEducationPolicyandsupports

theconclusionthatstudentswhoattendprivatehighschoolsreceiveneitherimmediate

academicadvantagesnorlongertermadvantagesinattendingcollege,findingsatisfaction

inthejobmarket,orparticipatinginciviclife.23

22 A recent scholarly study shows that private schools receiving tax credit scholarships for students in Florida have

helpedtoimprovepublicschoolperformancebycreatingcompetitionbetweenprivateandpublicschoolsforstudents.

See

D.

Figlio

and

C.

Hart,

Competitive

Effects

of

Means

Tested

School

Vouchers

(Cambridge,

MA:

National

Bureau

of

EconomicResearch,June2010).Thestudy,however,offersfewornoprospectsforsuchabeneficialdevelopment in

GeorgiaunderHB1133.ThecompetitiveeffectsinFloridasteminlargepartfromtheFloridalawrequiringsimilarlevels

ofaccountabilityandreportingforeducationalperformancebetweenprivateandpublicschoolsandlimitingscholarship

tolowincomechildren,whosepublicschoolsareeligibleforextrafederalTitleIfunding.Inaddition,whilethestudys

findingswereconsistentusingfourdifferentmethodsofmeasurement,theauthorsnotethattheseestimatedeffects

aremodestinmagnitude(p.24).23

H.Braun,F.Jenkins,andW.Grigg,ComparingPrivateSchoolsandPublicSchoolsUsingHierarchicalLinearModeling,

No.2006461(Washington,DC:NationalCenter forEducationStatistics,2006);C.LubienskiandS.Lubienski,Charter,

Private,PublicSchoolsandAcademicAchievement:NewEvidencefromNAEPMathematicsData,OccasionalPaperNo.

111(NewYork:NationalCenterfortheStudyofPrivatizationinEducation,2006);S.LubienskiandC.Lubienski,School

SectorandAcademicAchievement:AMultilevelAnalysisofNAEPMathematicsData,AmericanEducationalResearch


25/82

25

Other recent research suggests that public schools on average may be out

performing private schools when examining students with similar backgrounds and

characteristics.Themostrecent,comprehensivestudyofstudentachievementbyschool

typefoundthat,afteradjustingdatatoaccountforastudentsbackground,sometypesof

privateschools intheUnitedStatesperformedbelowpublicschoolsonNAEPtests.The

lowestperformingschoolsscoringsignificantlybelowpublicschoolsonfourthoreighth

gradeNAEPtestswereconservativeChristianschools,whicharethe largest, fastest

growingsegmentofprivateschoolsandSSOaffiliatedschoolsinGeorgiatoday.Arelated,

followupstudyfoundthatconservativeChristianschoolsalsohadthelowestpercentage

ofcertifiedteachersamongpublicandprivateschools.24

12

10

8

6

4

2

0

2

4

Catholic Lutheran Conservative

Christian

OtherPrivate Charter

MostPrivateSchoolsUnderperformPublicSchools

inAverageAchievementScores

AdjustedtoCompareSimilar8thGradeStudentsNationalNAEPScoresinMath:2003

Source:Lubienski&LubienskiStudy

Data isavailable inGeorgiaforhighschoolseniorsSATcollegeentrancetestsby

school type,butno studyhasadjusted results to compare scores forGeorgia students

withsimilarfamilybackgrounds,locations,andsocioeconomiccharacteristics.Withthree

timesmorelowincomestudents,publicschoolsinGeorgialagbehindbothindependent

Journal43,no.4(2006):651698;andH.Wenglinsky,ArePrivateHighSchoolsBetterAcademicallyThanPublicHighSchools? (Washington,DC:Center forEducationPolicy,2007).A reviewof thepolicycenters researchvalidates thefindingsofotherindependentscholars,findingsmallornodifferencesinstudentperformanceamongsimilarlysituated

children inpublicandprivate schools.See J. Lee,ReviewofTwoReportsAddressing theAchievementofStudents inPrivateandPublicSchools (Boulder,CO:Education and thePublic InterestCenter&EducationPolicyResearchUnit,2007).24

Lubienski and Lubienski, School Sector and AcademicAchievement, 651698. S. Lubienski, C. Lubienski, and C.Crane,AchievementDifferencesandSchoolType:TheRoleofSchoolClimate,TeacherCertification,andInstruction,AmericanJournalofEducation115,no.1(2008):97138.


26/82

26

andreligiouslyaffiliatedprivateschoolsinaverageSATscores.Butin2010therewere34

public high schools that scored above Georgias SAT average for religiously affiliated

private schools, and 16 public schools that exceeded the independent high schools

averagewithoutconsideringstudentcharacteristics.

NumberofGeorgiaPublicHighSchools

ExceedingGeorgia'sPrivateSchoolSATAverageScores:2010

TypeofPrivateSchool

WherePublicSchoolExceeded:

Total Math Reading Writing

Independent 16 23 15 12

Religious 34 47 29 29

Source:CollegeBoard

The locationoftheseGeorgiaschools isparticularlyrelevant.Amajorityofthese

higherperformingpublichighschoolsarelocatedinthefivecountiesofGeorgiathathave

the

largest

number

of

private

schools

and

most

SSO

affiliated

private

schools.

In

other

words, most of the private schools currentlyworking with SSOs to receive tax funds to

finance student scholarships are in the five counties that also have Georgias higher

performingpublichighschools.Saidanotherway,mostSSOaffiliatedschoolsarenot in

the120Georgiacountieswithnohigherperformingpublicschools.

Highschoolseniors inpublicschools inthesamefivecountiesalsohaveahigher

rate of eligibility for HOPE scholarships than the rest of the state. Forty percent of the

public

high

school

seniors

in

2009

in

these

five

counties

were

eligible

for

a

HOPE

scholarship.Theaverageintheremaining154countieswas37percent.25

ThedataonGeorgiahighschoolsdemonstrateshowthecurrentlaw,withoutreal

oversight,disclosure,andaccountability, isdeveloping inanunregulatedmarketplaceto

providetaxfundededucationalchoiceprimarilyinlocationsthatalreadyhavethestates

mostacademicallycompetitivepublichighschools.

All told, with no public disclosure or accountability for a private schools

educational

performance,

Georgia

has

left

policymakers

and

parents

in

the

dark

about

howwell aprivate school can and does educate studentswith taxfundedscholarships,

especiallyincomparisonwithpublicschools.Thetaxcreditlawisbaseduponadisproven

assumption that a private school will always educate a student better than a public

school.And,sofar,mostoftheSSOaffiliatedschoolseligiblefortaxfundedscholarships

25AslightlylargerdifferenceinHOPEeligibilityexistedin2006.


27/82

27

toprovideeducationalchoicesforstudents in lowperformingpublicschoolsare located

inthecountieswherestudentsarelesslikelytobeinorneartheworstfailingpublichigh

schoolsinGeorgia.


28/82

28

INCOMEANDTAXFUNDEDPRIVATESCHOOLSCHOLARSHIPS

Thereis littleornoevidencetodemonstratethatSSOs inGeorgiahaveusedtax

fundedgrantstodistributescholarshipsprimarilytolow incomestudentsduringthe last

three years. The Georgia law fails to set income limits for eligibilitya fact that makes

Georgiatodaytheonlystateinthenationwithtaxcreditscholarshipsthatdoesnotlimit

at

least

some

tax

credit

scholarships

to

students

with

real

financial

need.

NoneoftheSSOsraisingtaxdivertedfunds inGeorgiasince2008hasvoluntarily

restrictedtheirgrantstoschoolsthatwillprovideonlyneedbasedscholarships,andnone

oftheseSSOshasestablishedhouseholdincomeasevenoneofseveralnecessarycriteria

for eligibility for taxsupported scholarships. Georgia GOAL has recommended that

participating schools provide needbased scholarships with tax credits, but it allows

affiliatedschoolstoignoretheirrecommendation.26

Most private schools in Georgia collect or consider, to some extent, household

income in order to award scholarships with their own private funds, but there is no

evidence that most SSOaffiliated private schools have considered a students family

income when deciding how to award taxfinanced scholarships during the last three

years.27 And currently there is no public information about how many taxsupported

scholarships are awarded, in whole or in part, by these private schools on the basis of

financialneed.

Thesepoliciesandpracticesmakeadifferencebecauserelativelyfewlowincome

children in Georgia attend private schools. For example, households with children

(betweentheagesofsixand16)attendingprivateschoolsinGeorgiahadessentiallytwice

themedianincomeofthosehouseholdswherechildrenattendedpublicschoolsin2007.

This gap in income was the fourth largest in the nation following only three other

Southernstates:Tennessee,Texas,andLouisiana.

26 Three newer SSOs, Arete Scholars Fund, Student Scholarship Foundation, and AAA Scholarship Foundation, have

statedthattheywill limittheirscholarshipstostudentswithfinancialneed;however,a largernumberexplicitlystate

theywillnotimposeanysuchrequirements.27

Some private schools such as Gatewood Academy in Eatonton and Landmark Christian School in Fairburn require

incometaxformstoverifyhouseholdincome.SeveralschoolslikeMaconsCentralFellowshipChristianAcademy,which

has issued 163 taxfinanced scholarships during the last three years, also use commercial services like FACTS, which

collect family income data for the schools in managing all applications for admission and scholarships, including tax

creditscholarships.


29/82

29

Source:USCensusBureau

Asaresult,children inGeorgiaspublicschoolsare farmore likelytocomefrom

low income households than private school students and far less likely to come from

higherincomefamilies.Only6.7percentoneoutofevery15householdswithchildren

inprivateschoolshadincomesbelow$25,000in2007. Inpublicschools,thepercentage

wasthreetimeshigheroneoutofeveryfivehouseholds.

Atthehighestendoftheincomescale,thepatternisreversed.Morethanoneout

ofeveryfivefamilieswithachildinprivateschools inGeorgiain2007hadanincomeof

$150,000 or more. One in every 15 households with public school children was at that

incomebracket.28

Lessthan

$25,000

Lessthan

$25,000

Morethan

$150,000

Morethan

$150,000

0.0% 5.0% 10.0% 15.0% 20.0% 25.0%

Public

Private

GeorgiaMedianHouseholdIncomeWithinSchoolType:2007


28ThesecomparisonsdonotshowthatmostofGeorgiashigh incomehouseholdshavechildren inprivateschools

onlythatmostofthechildrenwhoareinprivateschoolsdocomefromhighincomehouseholds.Infact,morethan70

percent of Georgia households with incomes at or above $150,000 have their children in public schools. The latest

availableyearfordataonschooltypebyincomeis2007.


30/82

30

Without clear intentions and focused efforts, it is difficult to understand how

private schools in Georgia, populated predominately by children from high income

households,canorwillusetaxsupportedscholarshipstoassisttheneedystudentswho

aresupposedtobethechiefbeneficiariesofthetaxcreditlaw.

GOALScholarshipsandLowIncomeStudents

GeorgiaGOAListheonlySSOthathaspublishedinformationaboutthehousehold

incomeofstudentsawardedtheirSSOscholarshipsin2009and2010.GOALreceived43.8

percent of all SSO tax credit revenue ($10.6 million) in 2009 and 34 percent of all tax

credit revenue ($13.7 million) in 2010. As perhaps the largest SSO operating in Georgia

during the last three years, GOALs statistical reports offer the only available data in

understandingifandhowSSOsaredistributingscholarshipstolowincomestudents.

GOAL reports that the average family adjusted gross income (AGI) for its 626

scholarshiprecipientsin2009was$44,633.29

Thirtypercent188scholarshiprecipients

hadafamilyAGIof$24,000orless.Another16percent102recipientshadafamilyAGI

between$24,001and$36,000.Together,42percentofthescholarshipswenttostudents

infamilieswithanAGIof$36,000orless.Morebroadly,72percentofallGeorgiaGOAL

scholarshipswenttofamilieswithAGIat$60,000or less. Incontrast,only16percentof

thescholarshipswereawardedtostudentsinfamilieswithanAGIof$72,000ormore.

GOALsprogramreportforlastyeardemonstratesasimilarpatternindistributing

scholarships. The average adjusted gross income for families receiving a private school

scholarship was $47,797 in 2010. Families with less than $24,000 in AGI comprised 27

percent of all GOAL scholarship recipients. Families with more than $72,000 in AGI

received23percentofallGOALscholarships.

On first impression, these numbers appear to demonstrate that low income

studentscompriseasignificantproportionofGOALsscholarshiprecipients,butbecause

ofthespecialfeaturesofAGIasincome,thedatadoesnot.

Compiled

by

the

Internal

Revenue

Service

(IRS)

and

state

revenue

departments,

adjusted gross income is often very different from the income reported by the US

29TheGeorgiaGOALprogramreportfor2009statesthattherewere639scholarships,butonly626areincludedinthe

SSOs breakout by family. Apparently there was no income data for 13 of the recipients. Also, GOAL reported on its

website that it distributed 77 scholarships in 2008 to families with an average AGI of $48,605. Its 2008 IRS report,

however, shows no scholarships or grants were allocated or obligated that year. SEF has elected to rely upon the

accuracy of GOALs IRS report in 2008, since a false federal report makes an individual subject to punishment for

perjury.


31/82

31

Census Bureau or other state and federal agencies. AGI is almost always considerably

belowreportedincomefromtheCensusBureauandotheragencies.

TheGeorgiaGOALdatatakesonnewmeaningwhenthosenumbersareplacedin

thecontextoftheIRSslatestAGIdata(2007)forallGeorgiataxpayers.TheaverageAGI

ofGOALscholarshipfamilies$44,633in2009and$47,797in2010wasmorethanfour

times larger than $9,842, which was the average AGI for tax filers who comprised

essentially the bottom half of all Georgia taxpayers in 2007.30

In this reallife context,

GOALs taxfunded scholarships appear heavily weighted toward students in Georgia

familieswithhigherincomes.

Similarly,

70

percent

of

GOALs

tax

funded

scholarships

in

2009

and

73

percent

in

2010wenttofamilieswithanAGIabove$24,000. Incontrast,theaverageAGIforeight

outof10Georgiataxpayers in2007wasonly$24,101. Inotherwords,morethanseven

30Thelatestdatafromfederalandstatetaxreturnsthatpermitananalysisofaverageincomewithinincomegroupsare

providedbythefederal InternalRevenueService(IRS)for2007.Sincetherecessionbeganto lower incomesofmore

families in Georgia in 2008 and afterwards, the use of 2007 IRS data in this comparison probably understates

differences.

APPLESANDORANGES:ADJUSTEDGROSSINCOME(AGI)ANDCENSUSINCOME

Statisticsonadjustedgrossincome(AGI)fromtheIRSandtheGeorgiaDepartmentof

Revenue cannot be compared with data from the US Census Bureau, which defines the

poverty

threshold

and

eligibility

for

free

and

reduced

lunch

in

public

schools.

It

is

a

classic

case

ofcomparingapplesandoranges.

The IRSdefines thecomponents of AGI income differently from the incomeofboth

the US Census Bureau and the Bureau of Economic Analysis (BEA), which reports for the

federal government on per capita income. The data also involves a different unit of

reportinga taxpayer (single andjoint) for the IRS; a household, family, or person for the

Census;andanindividualpersonforBEAincome.Finally,AGIisdifferentbecauseobviouslyit

isadjustedaccordingtothetermsofthefederaltaxcode.Asaresult,AGI issubstantially

belowtheotherformsofincomereportedbyotherfederalagencies.

An analysis by the IRS shows that nationally in 2003 the average AGI income per

taxpayerwasnearly$10,000belowtheaverageincomeperhouseholdreportedbytheCensus

Bureau.AstudybyArizonaStateUniversityrecentlyreportedthatin2007theIRSsaggregate

incomewasonly79percentofthetotalincomereportedbytheBEAduringthesameyear.In

Georgia the average AGI for a taxpayer in 2007 was only 76.1 percent of the average

household incomereportedbytheCensusBureauforthatyear. Inotherwords,onaverage,

AGIwas23.9percentlessthantheamountreportedbytheCensusinGeorgia.

Therefore, themostaccurate,meaningfulmethod forusingAGI tomeasurerelative

incomeorneedinGeorgiaistocompareagroupoffamiliesaverageAGItotheAGIaverages

for all Georgia taxpayers or different groups of taxpayers in the state. This comparison is

exactlywhatthisstudydoes,wheredataisavailable,todetermineifandhowwellGeorgias

SSOsareservinglowincomestudentswithtaxfundedscholarships.


32/82

32

outofevery10GOALscholarshipsinboth2009and2010wenttostudentsinfamiliesand

households whose average AGI was essentially above the averageAGI of 80 percent of

Georgia taxpayers. This pattern of distribution for taxfunded scholarships does not

evidenceprimarysupportforlowincomestudents.

$3,037

$9,842

$24,101

$37,508

$0

$5,000

$10,000

$15,000

$20,000

$25,000

$30,000

$35,000

$40,000

$45,000

$50,000

Bottom25Percent Bottom49Percent 82Percent 97Percent

PercentofGeorgiaTaxpayers

AverageAdjustedGrossIncome

ForGroupsofGeorgiaTaxpayers:2007

Source:InternalRevenueService andGOALStatistical Report

TuitionCostsforLowerIncomeStudentswithSSOScholarships

TheGOALstatisticalreportalsoprovidesinformationaboutthepercentageofthe

private

schools

tuition

covered

by

its

scholarships.

In

2009,

students

with

family

AGI

between $36,001 and $48,000, for instance, received the highest average scholarship,

$5614,whichcovered60percentoftheirprivateschooltuition. In2010,students from

families with an AGI of $24,001 and $36,000 received the highest average amount of

scholarships,$4921, whichcovered56percent of the privateschool tuition. Ingeneral,

students with lower incomes received the largest average amounts for scholarships in

GOALaffiliated schools and had the largest percentage of their private school tuition

coveredbytaxfunds.

These patterns for GOAL scholarships are progressive, but they fail to go far

enough to assure that the lower income families do not carry the heaviest financial

burdenand possibly the heaviest debt loadfor attending private schools with tax

fundedscholarships.TheGOALdatashowsthatthefamilieswiththelowestAGIwillhave

tospendthelargestportionoftheirlimitedincometopaytheprivateschooltuitioncosts

GOALScholarshipRecipients'Average2009AGI:$44,633


33/82

33

notcoveredbyscholarships.Astudent ina familywithanAGIof$23,000, forexample,

paid15percentof the total familyAGI to cover the remaining tuition costs in2009.A

studentinafamilywith$83,000inAGIpaidonlyhalfthatpercentagesevenpercentto

payoffthetuitionbalance.

AsfamilyAGIdrops,theunmetcostoftuitionbecomes increasinglyburdensome

forstudents receivingGOALscholarships. Ifastudent, forexample,hada familyAGIof

only $12,000 instead of $23,000, the average cost of unmet private tuition would

consume28percentof the familysAGI in2009and31percent in2010. In contrast,a

student from a familywith anAGIof $66,000usedonly sevenpercentof the familys

incomein2009andninepercentin2010roughlyonefourthoronethirdthesharethat

thelowincomestudentsfamilypaystocoverremainingtuitioncosts.

0%

5%

10%

15%

20%

25%

30%

$12,000 $30,000 $42,000 $54,000 $66,000 $78,000 $90,000

AssumedFamilyAGI

PercentofFamilyAGItoPayUnmetTuitionCostsAfterGeorgiaGOALScholarships

2009

Source:InternalRevenueService&GOALStatisticalReport There is no available data by which to assess how accurately Georgia GOALs

patternsofgivingreflectthetermsandpatternsofothertaxfundedSSOscholarshipsfor

private school students. But circumstantial evidence suggests that most other SSO

affiliatedprivateschoolsalsosupportrelativelyfewlowincomestudents.

Since 2008GeorgiaGOAL has been the only SSOwith substantial funding that

encouragesprivateschoolstograntneedbasedscholarships.31Forthisreason,itisfairto

assumethattheschoolsaffiliatedwithGeorgiaGOALhavebeenmorelikelytoprovidea

31ThreeSSOsdotargetlowincomestudents,butonlyone,theStudentScholarshipFoundationofGeorgia,was

operatingin2009.Theirscholarshipfundsamountedtolessthan$30,000in2009.


34/82

34

largerpercentageofscholarshipstolowincomestudentsthanmostschoolsaffiliatedwith

the other large SSOs operating in the state since 2008. And, since some significant

percentageoftaxfundedscholarshipsaregoingtoexistingprivateschoolstudents,who

aremostlyfromhigherincomehouseholds,thoserecipientsoftaxcreditscholarshipsare

likelytobehighincomestudents.

The private schools associated with other SSOs in Georgia are often located in

Georgiashigherincomecommunitiesand,asaconsequence,arelesslikelyasapractical

mattertoreachandservelowincomestudents.AlmostoneinfiveSSOaffiliatedprivate

schools(butunaffiliatedwithGeorgiaGOAL)werelocatedinzipcodeswheretheaverage

AGI in 2007 was more than $100,000a rate four and a half times larger than the

percentageofsuchhigherincomezipcodesinGeorgia.

0%10%

20%

30%

40%

50%

60%

70%

80%

Under

$10,000

$10,000

$24,999

$25,000

$49,999

$50,000

$74,999

$75,000

$99,999

$100,000

$199,999

Over

$200,000

AverageAdjustedGrossIncomebyZipCode:

StateofGeorgiaandSSOPrivateSchools(GeorgiaGOALSchoolsOmitted)

StateZipCodes PrivateSchoolZipCodes

Source:InternalRevenueService&SEFResearch

Ontheotherendofthescale,morethan70percentofGeorgiaszipcodeshadan

average AGI of less than $50,000. But only 40 percent of SSOaffiliated private schools

(notassociatedwithGeorgiaGOAL)wereinthesezipcodesin2007.

Aprivateschools location inahigherincomeneighborhood,ofcourse,doesnot

exclude low income students from attending, but it often reflects the schools primary

student population and presents added costs of transportation, afterschool care, and

extracurricularactivitiesthatbecomebarrierstoattendanceforlowincomechildren.


35/82

35

All in all, Georgias private schools have been and are heavily populated with

students from high income households. When carefully analyzed, every available data

indicates that the Georgias tax credit scholarships have not changed that fact. It is far

more likely that the taxfunded scholarships have actually done very little to give a

significant number of low income students a private choice in education. And it is far

more likely that the implementation of HB 1133 has helped children in higher income

familiestoattendprivateschools.


36/82

36

RACEANDTAXFUNDEDPRIVATESCHOOLSCHOLARSHIPS

Georgiasprivateschoolseligiblefortaxfundedscholarshipsaresignificantlymore

segregatedbyraceandethnicitythanthestatespublicschools.Whilethereisscantdata

onhowSSOscholarshipsarebeingawarded, itappears fromavailablesources that the

Georgia tax credit scholarships have done little more than support white students to

attend

schools

that

already

have

extreme

racial

isolation.

In 2007 (the latest year for comparable racial data), white students constituted

47.5percentofthepublicschoolenrollmentand79.4percentoftheenrollmentinprivate

schoolsinGeorgia.AfricanAmericanchildrenmadeup39.2percentofthepublicschool

enrollment and 12.9 percent of the states private school students. Hispanic students

comprised10percentofthestudentsinGeorgiaspublicschoolsandthreepercentinthe

privateschools.StudentswithfamilyheritagesfromcountriesinAsia,thePacificislands,

andAmericanIndiantribesandstudentsselfidentifyingasmultiracialorotherhadthe

smallestdisparitiesinenrollmentbetweenpublicandprivateschoolsinGeorgia.

RacialCompositionofGeorgiaPublicSchools:2007

White Black Hispanic AsianPacific Am.Indian

RacialCompositionofGeorgiaPrivateSchools:2007

White Black Hispanic Asian Pacific Am.Indian MultiRacial/Other



37/82

37

These differences in school demographics reflect, in large part, the role that

private schools in Georgia played in resisting school desegregation during the last

century.32Infact,thefirsttimeGeorgiaenactedalawtoprovidetaxfundedscholarships

and grants for students to attend sectarian private schools was for the purpose of

advancingtheconstitutionalrightsofschoolchildrentoattendprivateschoolsoftheir

choice in order to preserve segregation. In 1962, the State of Georgia spent

approximately$210,000(morethan$1.4millionin2011dollars)financingscholarshipsfor

almost1200studentstoescapepublicschooldesegregationbytransferringtosegregated

privateschools.

Thispast isevidenttoday incurrentpatternsofracialseparationand isolation in

most of Georgias private schools. More than half the states private school students

attended schools that are virtually segregatedwhere one race or another constituted

from90to100percentoftheschoolsstudentpopulationinthe200708schoolyear.

0%

10%

20%

30%

40%

50%

60%

Public Private SSOAffiliatedPrivate

GeorgiaStudentsinVirtualSegregationPercentInSchoolswith90to100%EnrollmentofOnlyOneRace Ethnicity

BySchoolType:200708

Source:NationalCenterforEducationStatistics&SEFResearch

Based on the latest enrollment data from the National Center for Education

Statistics

for

public

and

private

schools,

a

student

in

a

Georgia

private

school

is

nearly

three times more likely than a public school student to attend a school virtually

segregated by race or ethnicity. Only 17.7 percent of Georgias public school children

32SeeAppendix8,ABriefHistoryofGeorgiasPrivateSchoolsinOpposingDesegregation.


38/82

38

were in virtual segregation, while more than half the states private school students

attendsuchschools.

Thesepatternsofsegregationapplyalmostequallytotheprivateschoolsaffiliated

withSSOsinordertoreceivetaxfundedscholarshipsinGeorgia.Fortyninepercentofthe

studentsattendingSSOaffiliatedprivateschoolsin200708wereinvirtualsegregation

onlyslightlybelowthepercentageforallofGeorgiasprivateschools.

The differences in segregated education between public and private schools

appliedtoallracialandethnicgroupsofschoolchildren,buttheywereespeciallylargefor

whites and Hispanics. Fiftyfour percent of Georgias white students in private schools

were isolated in schools that were virtually segregated, while only 13 percent were in

segregated public schools. Hispanic students were over nine times more likely to be in

virtualsegregationinprivateschoolsthaninpublicschoolsinGeorgia.Blackstudentshad

thehighestpercentagesforstudentsinsegregatedpublicschoolsmorethanoneinfour

blackstudents.(Ofcourse,mostofthissegregationhasbeentheresultofwhitestudents

fleeing desegregated public schools where black students attend in large numbers.)

Despite this fact,blackstudents inprivateschools inGeorgiahaveasignificantlyhigher

percentageofvirtualsegregationthanblacksinpublicschools.

Georgia'sStudentsinVirtualSegregationPercentinSchoolswith90100PercerntEnrollmentofOneRaceorEthnicity

200708

0%

10%

20%

30%

40%

50%

60%

Black Hispanic White

Public Private

Source:NationalCenterforEducationStatistics&SEFResearch

There is no publicly available data on the racial or ethnic characteristics of the

studentswhohavereceivedtaxfundedSSOscholarshipsinGeorgiaduringthelastthree


39/82

39

years.Buttwoprior findings inthisstudy tend tosupport theconclusionthat relatively

fewscholarshipshavesupportedtheattendanceofAfricanAmericanorHispanicstudents

inprivateschools.First,sinceasignificantnumberofscholarshipsareapparentlygoingto

studentswhoarealreadyattendingprivateschools(seepages1418),itislikelythatthe

scholarshipsaredistributedtostudents inroughproportiontotheirnumbersalready in

privateschools. InGeorgia,thatmeans thatabouteightoutof10of thesescholarships

would go to white students. This distribution seems especially likely given that most

fundraising for tax creditsbySSOshas been takingplace among families and friends of

currentprivateschoolstudents.

Second,theavailabledataonhou

failed experiment-sef full report

Documents