The AJC is reporting that the Southern Education Foundation will file a complaint today with the state Department of Revenue alleging widespread abuses in the controversial private school scholarship tax credit program.
The tax credit has received national media attention because of allegations of misuse. Yet, state Rep. Earl Ehrhart, R-Powder Springs, the sponsor of the 2008 law creating the tax credit, is introducing a bill today to expand it.
Critics charge that the abuses — allowing donors to designate the recipients of their donation — have turned the private school scholarships into a back-door voucher. When the General Assembly approved the program, lawmakers said the money would enable poor students in public schools to move to private schools. Instead, the money appears to be going to students already in the private schools.
There have been reports that parents were making donations to schools that were then repackaged as “scholarships” for their own kids. In response to these allegations, the Georgia General Assembly has essentially shielded the program from public scrutiny, making changes in 2011 that make it a crime for state officials to release key information about the program.
Since 2008, when legislation established the tax credit program as a way to help students afford private schools, more than $170 million has been set aside for tax credits that could be claimed by donors to student scholarship organizations. State Rep. Earl Ehrhart, the Powder Springs Republican who was a key sponsor of the legislation that established the tax credit program, said he plans to introduce a bill Monday to expand it.
Advocates have called for the amount of state money set aside each year for the tax credits to be increased to $100 million from the $51.5 million per year that was set aside last year. Some legislators, however, have said they want to hold hearings to make sure the program is operating within state law.
Because tax records are not public, it’s difficult to determine how many tax credits may have been improperly claimed.
In its complaint to the Department of Revenue, the SEF said that “it appears that tens of millions of taxpayer dollars in Georgia have been unlawfully diverted from the state treasury through student scholarship organizations during the last four years.”
SEF Vice President Steve Suitts said that amount is an estimate based on the amount of money set aside for tax credits and the number of student scholarship organizations and private schools that the SEF found to be raising money by providing misleading information.
The SEF, which has shared its findings with multiple media outlets over the past couple of years, wants the department to launch a special investigation into the program.
“The state should discontinue the program or freeze the implementation of the program pending the findings of a statewide DOR investigation,” Suitts said. “The governor and the Legislature should consider carefully the DOR investigation’s findings as well as revelations about this program’s many other deficits in order to vastly mend or end this costly state program. So far, the program has been a failed experiment.”
Student scholarship organizations and private schools contacted by The Atlanta Journal-Constitution said they have done nothing wrong.
“We make sure no donor designates any individual,” said Cary Sinnett, a board member for Pay It Forward, a Gainesville-based student scholarship organization. “We go by the letter of the law.”
Ehrhart said the SEF complaints are “frivolous and inaccurate.” “They want to indict the whole program, which has provided hope to so many Georgia students, because of the anecdotal acts of a few,” said Ehrhart, who is the chief executive officer of a student scholarship organization, Faith First Georgia, which reported raising $1.2 million in 2011, according to federal tax forms.
The group’s complaint to the Department of Revenue lists specific student scholarship organizations and private schools as providing parents with misleading or outright false information. Quoting from information on Pay It Forward’s website, the SEF accuses the group of participating in a “give and get back” scheme.
“Do you know someone who could use a scholarship?” the group’s website asks potential donors. “Please provide the information below and we will send an email inviting them to apply for a scholarship from an anonymous donor.”
The SEF said that pitch invites a clear violation of the law. “Pay It Forward’s claim of a so-called ‘anonymous donor’ is a thin smokescreen in its attempt to evade Georgia law and regulations,” the SEF’s report states.
Parents, however, have received misleading information from program supporters, the SEF says, pointing to comments state Rep. David Casas, R-Lilburn, made during a seminar with private school parents in December 2009.
“You can take this chunk of money and be able to say, ‘I want this money to go to education, and not just education, I want it to go to the school of my choice, and maybe even more detailed — the student of my choice,’ ” Casas told the parents.
Contacted Friday night, Casas said it was legal at that time to designate a student for assistance as long as the student wasn’t the child of the donor. Casas said the state law was changed in 2011 to prohibit designating any student for assistance.
But Suitts said it has always been a violation of Georgia law to claim a tax credit after making a donation that’s designated to assist a specific student. The SEF’s complaint to the Department of Revenue said Covenant Christian Academy in Loganville gives parents the false impression that they can designate a specific student for assistance and claim a tax credit.
Michelle Deaton, the school’s financial director, said that’s not the case. She said the school has no way of knowing whether a donor improperly claims a tax credit after making a donation that is directed to a specific student.
–From Maureen Downey, for the AJC Get Schooled blog