Private school tax credit: A $170 million tax diversion that Georgia lawmakers cloak in secrecy. Why?
State Rep. Edward Lindsey, R-Atlanta, met with the AJC Friday for a general discussion on education issues in the state.
By design, it is impossible to know how the $170 million in private school tax credits have been spent or on whom. (AJC file photo)
Among his concerns: Whether the private school scholarship tax credit is working as it was presented to the General Assembly — as a means to help low-income kids whose parents had no other way to afford private schools.
“I want us to make sure the money is going to the kids I have envisioned so they can have better choices,” he said. Lindsey said he disagrees with state Rep. Earl Ehrhart, R-Powder Springs, who recently said the scholarship “was never sold” as a program to benefit only low-income students.
“Rep. Ehrhart and I don’t always agree,” said Lindsey.
The AJC has done several good stories on the tax credit and the challenges — deliberately injected into the law – in figuring out how the money was being spent and on whom.
And the money is considerable. Since 2008, more than $170 million has been set aside for tax credits that could be claimed by donors to student scholarship organizations. Now Ehrhart wants to expand the program.
Education advocate and Atlanta attorney Carolyn Wood sent me a dissection of the tax credit and why expansion is not in the best interest of taxpayers. I thought it was worth sharing:
By Carolyn Wood
Georgia’s tax credit scholarships for private schools were established with the passage of House Bill 1133 in 2008 which allows individuals and corporations to make donations to Student Scholarship Organizations (“SSO”) and receive a dollar-for-dollar Georgia income tax credit for these donations.
The stated rationale for this program was to fund scholarships which would help low income parents transfer their children from low-performing public schools to private schools in the hope of obtaining a better education. Now, the law allows $51.5 million in such tax credits to be claimed per year. Since 2008, more than $170 million in Georgia tax dollars has been set aside pursuant to this program.
A bill under consideration in the Legislature, House Bill 140, would increase the annual cap to $80 million. This program raises many questions.
1: How many recipients of scholarships actually attended a public school the year prior to receiving an SSO scholarship?
We don’t know. The current law does not require the students to actually ever attend a public school prior to receiving a scholarship. It only requires them to be “enrolled.” This has allowed students who currently attend private schools and those who never intend to attend public school to ”enroll” (register) without ever actually attending a public school, solely to receive a private school scholarship.
HB 140 would even enlarge this pool of students by dropping the requirement of “enrolling.” Under the proposed legislation, all students “eligible to enroll” in a public school can be recipients of the scholarships. Thus, all private school students are eligible. This hardly solves the problem of providing a better education for students in low-achieving public schools, or of moving the cost of public school students off Georgia’s rolls.
2: What percentage of scholarship recipients would qualify for free or reduced price lunches in public schools?
We have no idea. The initial idea behind this program was to help low-income students escape low-achieving schools. But unlike other states’ programs, the Georgia tax credit scholarship program does not include any provisions for means-testing the scholarship recipients. Because this law does not require any accountability, there is no way to determine how many, if any, Title I students are benefiting from the program. Without accountability, no one will ever know if the program is succeeding, or if the funds are actually benefiting other, less needy students. In fact, Georgia has made it a criminal offense to publicly disclose specific information submitted by SSOs to the Department of Revenue.
3: What percentage of their total scholarship revenue are the various SSOs actually providing as scholarships each year?
Again, no one knows. The law requires SSOs to distribute at least 67.5 percent of each year’s credits for scholarships. Because the law provides no accountability, in order to determine compliance with this requirement the only data available is gleaned (laboriously) from the individual SSOs’ IRS 990s. This data indicates that the SSOs raising much of the diverted funds have failed to meet the statutory requirement of distribution.
4: How can taxpayers be assured that these tax credits aren’t supporting “failing” private schools?
They can’t. The tax credit program in Georgia does not include a requirement that qualified private schools administer or make arrangements to allow scholarship recipients between grades 3 and 10 to take an approved standardized test. Because private schools don’t routinely take such standardized tests, the state has no way of assuring that the tax credits aren’t going to “failing” private schools.
5: By providing scholarships to schools that are overwhelmingly attended by white students, is the state encouraging racial segregation?
Yes. The Georgia private schools that are eligible for tax-credit scholarships are significantly more segregated by race and ethnicity than the state’s public schools. Approximately half of the state’s private school students attended schools that are “virtually” segregated – where one race or another constituted between 90 to 100 percent of the school’s student population in the 2007-08 school year. While there is hardly any data on how SSO scholarships are being awarded, it appears that the tax credit scholarships have done little more than provide support for white students to attend schools that are already racially isolated.
HB 140 would commit an additional $30 million annually from the state treasury to fund private school scholarships. No one, including legislators and taxpayers, will know which schools receive scholarship monies, which students receive scholarships, what curriculum is being taught, how well the scholarship students perform academically, how wealthy the parents of scholarship recipients are, or how much of the $30 million is actually used for scholarships and how much is used for administration by the student scholarship organizations.
In short, there will be no accounting for how the $30 million annually will be used—or the results of its investment.
If $30 million in additional funding can actually be found for K-12 education in the extremely tight FY 2014 budget, there are probably hundreds of ways it could be better spent than for the unaudited, unregulated scholarship fund. Here are just 10 suggestions for using any “extra” education funds.
•Funding to allow every pre-k applicant to attend a pre-k program ($35 million to clear the wait list of 8,000 applicants).
•Funding for additional safety equipment (metal detectors, cameras, carbon monoxide detectors, etc.) for all public schools.
•Funding to allow every public school to provide every student with a full 180-day school calendar
•Funding to provide additional technology in schools where it is lacking.
•Funding to provide teachers with needed professional development regarding the uses of technology and the state’s new curriculum, as well as other high-quality professional learning programs.
•Increasing the number of school counselors (recommendation of the state’s Education Finance Study Commission).
•Restoring all of the state funds that have been cut since 2009 to the 29 districts with the lowest per-pupil spending in fiscal year 2012.
•Beginning to reduce class size back to pre-recession levels.
•Providing a nurse for every school.
•Providing a graduation coach for every high school.During a time of diminishing state revenues, a growing population, and increasing expenses, it is not good public policy to divert taxpayer money to fund a program that has virtually no accountability, shows no evidence of improving the quality of education for any students (especially ones of limited economic means), decreases funding for already underfunded public schools, supports religious institutions in violation of the state constitution, and fosters discrimination against a variety of ethnic and demographic groups.
–From Maureen Downey, for the AJC Get Schooled blog
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104 comments Add your comment
Atlanta mom
February 18th, 2013
9:00 am
No dc, the point here is that 170 mil has gone into the private sector with ZERO accountiblity.
catlady
February 18th, 2013
9:02 am
Let’s face it: This was designed so that extended families can pay for little Muffy’s private school education by giving their tax dollars to the schools, WITH NO ACCOUNTING. So Grandma can divert $2500, Aunt Susie can divert $2500, Mom can add $2500 and Dad can do the same.
MEANWHILE, THE REST OF US HAVE TO MAKE UP THE TAXES NOT SENT TO THE STATE TO PAY FOR THE ROADS, SCHOOLS, ETC.
And, with NO ACCOUNTABILITY, NO PUBLISHING OF THE NAMES, NO SUBMISSION OF THE DATA to any state agency, where public watchdogs can connect the dots. GEORGIA HAS BECOME ROTTEN TO THE CORE, FOLKS!
Dekalbite@Ronin
February 18th, 2013
9:03 am
“A lot of the medical tests done by doctors are to CYA, due to the litigious nature of our society. If you want to bring down healthcare costs, enact tort reform and adopt a loser pays system. ”
I only wish that was the problem. Doctors and hospitals in particular are able to increase their billing with all those tests. You do realize someone gets paid to administer sell the machines and equipment for the tests, administer the test, evaluate the test, and relay the results to the patient. The cost for tests themselves are much higher than they are in countries with universal health care provided by other countries. I’m in favor of tort reform, but that is only one cost layer of many that needs to be addressed.
Clutch Cargo
February 18th, 2013
9:05 am
When will the AJC (and the author) present a list of questions THAT MUST BE ANSWERED about the waste and fraud in the public schools? Why not expose the featherbedding,nepotism and outright theft from students by the battalions of administrators and management deadwood that even the teachers on this blog constantly complain about? (And its not just in DeKalb or Clayton counties,either).
Here’s where I stand: If this program gets kids out of bad schools and helps them succeed,I don’t care what is “behind the curtain” (parents don’t generally pull their progeny out of good schools,so almost by definition,this is an escape plan for trapped students).To paraphrase a LOT of teachers “If it helps just one child lead a better life-It’s worth it”
Republicans- Bide your time. Kill any inquiry with endless commissions,studies and investigations.Every day that you stall the baying thieves in the education cartel,you create more students and parents that see how education should work and they will spread the word (proselytize,if you will) for an education system that serves all kids and not just the ones in “lucky” districts. Every child that is educated by private,charter or parochial schools will be come an agent of change that will not accept the mediocrity of our shameful school system as it exists today.
We are behind you.We’ll walk the walk.
FlaTony
February 18th, 2013
9:18 am
This pseudo-voucher program has been deliberately shrouded in secrecy to keep Georgians from knowing the truth about all aspects of the program: who contributes, who receives, which schools benefit, etc. I do not doubt that there have been many lucky students from poor areas who have benefitted greatly. Anecdotally, a friend of mine from way down in south Georgia reported that the local private school has been able to really beef up its football team by recruiting students and providing scholarships.
catlady
February 18th, 2013
9:26 am
Mary Elizabeth and Prof: I notified Ms. Downey of this very proposal on Friday, hoping she would put it out there. In my system it has not been publicized. I notice the change would not affect state legislators’ insurance! However, the version I saw said it would be in force for anyone RETIRING on or after July 1. If it passes, I will be out June 1.
And I will use my spare time then to work toward ousting any legislator involved.
catlady
February 18th, 2013
9:27 am
And, on the topic, I would think the provisions of the tax-directing law would be unconsitutional, as it circumvents citzens being able to get information through FIA. Were there ever any challenges?
lexi3
February 18th, 2013
9:32 am
There is an awful lot of misinformation about these scholarships. First, they do not reduce tax liability. The tax payments are directed, admittedly to “private” schools. Those schools compete with public schools for low income students who otherwise could not afford private school educations. Here’s a wink and a nod. While teachers and “education advocates” profess to want the best education for our children, they abhor competition and care primarily about protecting and creating jobs. Competition weeds out inefficient players-the last thing educator unions and professional associations want, since they collect dues and membership fees from members who are good teachers and bad apples. Further, to the extent that a student is moved from a public school to a private school, the cost of educating that student goes with the student, so public schools aren’t being deprived. Marginal teachers lose public jobs, though good ones should be able to find work in private schools with enhanced enrollments.
Second, our children attend a top tier religion affiliated school. Their biology books don’t preach creationism or an earth only six thousand years young, though they do proselytize about manmade earth warming that ain’t.
And, all top tier independent schools award scholarships based solely on financial hardship, not athletic, academic or artistic prowess.
Last, calling the arrangement “socialist” is silly. Again, tax dollars are redirected to enterprises that are not beholden to unions, professional associations or the politicians that unions and associations buy. I admit that public schooling is a socialist enterprise, and, like socialist enterprises everywhere, it is a glorious monument to gross inefficiency and failure, by and large. The problem is that these monopolies do a bad job of teaching people about the evils of such monopolies. Go figure. Once again, the remedy is competition (or eliminating public school education for primary and secondary students).
A Conservative Voice
February 18th, 2013
9:41 am
Private school tax credit: A $170 million tax diversion that Georgia lawmakers cloak in secrecy. Why?
It keeps all the riff raff out
A Conservative Voice
February 18th, 2013
9:44 am
@Private Citizen
February 18th, 2013
4:37 am
Georgia government is full of thieves and bandits. Truly, it is.
Private Citizen – My suggestion would be for you to MOVE – and DELTA is there to help you.
J Throckmorton Malcontent
February 18th, 2013
9:53 am
A significant portion of Georgians will never be satisfied until the resegregation of Georgia is achieved. The GOP is trying to give their people what they want, even if it is shady. Mix in standard Republican distate for necessary social infrastructure and a chaotic, chronically lacking public education system (due to the aforementioned racism & the death grip of bad ideas, and who knows, something in the peanuts), and you have a perfect storm of educational badness.
Mary Elizabeth
February 18th, 2013
9:55 am
@ Prof, 10:05 pm, 2/27/13
Prof, the State Health Benefit started to go insolvent after 2008. That was the year, in Sonny Perdue’s tenure as Governor, that the State Health Benefit plan was authorized to send millions if not billions of its assets to the general fund of the state of Georgia, and that was the year that the State Health Benefit Plan was turned into a Medicare Advantage plan for retired state employees in which United Health Care or Cigna would insure the retirees benefits – not the SHBP – because the money needed to insure the retirees health benefits had been, I repeat, sent to the general fund of the State of Georgia. I do not think it coincidental that state retirees had no voice in their health insurance being changed into Medicare Advantage, a Republican touted program that uses public funds from the federal government to supplement their Medicare Plan, from the previous regular Medicare plan for state employees, supplemented fully by the SHBP. Curbing the privately based Medicare Advantage subsidized funds has been a goal of President Obama to lower the overall national deficit, to the ire of Republican leaders who know what is happening. Obama was trying to take away from the private insurance profits made from Medicare Advantage.
Taken from the chart provided in your link that reveals how rapidly the SHBP has been going bankrupt are the numbers below: (Don’t you think it unusually coincidental that the SHBP started going bankrupt the same year that Georgia’s SHPB was authorized to send millions, if not billions, of its assets to the Georgia’s general fund and turned into Medicare Advantage (whereby state retired employees on the SHBP would no longer be insured for healthcare by Georgia SHBP but by United Health Care or Cigna as part of their Medicare Advantage agreement with the state of Georgia?) I saw this demise of the SHBP coming back in 2008 and I wrote to AJC journalists and the GAE about it what was happening. I do not think this coincidental. By SHBP’s becoming bankrupt, the state of Georgia and the SHBP can now turn over responsibility to individual state employees for their post retirement health care instead of depending on the state – the same goal Republicans want to see happen for Medicare itself (through privately held vouchers) and Social Security becoming privatized. Again, why the secrecy? Thank God for Obamacare and for Medicare itself being available now for older state employees of Georgia. I would say that the federal government, under Democrats, has demonstrated more concern about Georgia’s lifetime employees than does Georgia, itself, under Republican dominance. State employees if you are not seeing this, you are voting against your own best interests when you vote for Republican representatives to serve your interests well.
============================================================
From Prof’s link at 10:05 pm last evening:
Difference 2008 to Present
Assets (SHBP)
2008 $ 965,410,826
2009 $ 484,536,017
2010 $ 90,501,010
2011 $ 89,074,197
2012 $ (876,336,629)
======================================================
Prof, I well know that there is not a direct link between the SHBP and the TRS of Georgia. However, both agencies have in the past provided benefits to teachers that had been guaranteed for decades under Democratic Governors and Democratic legislatures in Georgia. Republican ideology wishes to shrink the size of government, including so-called “government” public schools. Both the SHBP and the TRS have received state of Georgia funding which have benefitted state employees. The national Republican goal, in my opinion, is to “dry up” these funds.
I had previously rmentioned that Republican Rep. Jan Jones, (and member of ALEC) the sponsor the the Charter School Amendment, had also sponsored a bill in last year’s legislative session which would have disallowed teachers in state public charter schools from becoming members of Georgia’s Teacher Retirement System, thus further “drying up” the viability of the TRS in the long run. A leading member of a Teacher Retirement group (in the greater Atlanta area) told me last year that the Teacher Retirement System was on the way out, by legislative plans. Look for it. In these ways (of starving the beast of government), by insuring that former teacher and state employee benefits dry up, there is a connection between the deliberate (in my opinion) demise of the SHBP and the TRS. Again, why the secrecy? What is the national Republican agenda relative to state employees’ benefits? I know full well, what their agenda is for I have studied it in depth for years.
sneak peak into education
February 18th, 2013
9:59 am
To those commenting about Universal Health Care, I suggest you watch the Fareed Zakari report on CNN. It is an eye-opening experience. Also, as one who lived for more than half my life in a country that did provide, very successfully, health care to EVERY citizen no matter how much they earned or where they lived, I can tell you that my family and I received excellent care for any emergency, chronic, or pregnancy care. One of the major differences between health care here and in countries that provide universal health care is the they keep their administration costs down and they don’t have to pay for advertising/marketing. In the US, 35% of healthcare costs goes to pay for such services. That means when we pay our premium, 35% of that cost has nothing to do with the care or direct health care services we are receiving. Also, for those who are calling for tort reform to reduce litigation costs, they only account for approx 3% of the total health care costs. So, reforming this part of health care would hardly impact costs to the consumer but would severely limit the amount of money that someone would receive if they are maimed at the hands of a doctor or healthcare worker. Also, another thing that is a big misconception here about universal health care; in the country I lived in (part of the UK), you could pay to go private if you wanted to and the costs to do so are about the same as you pay for your out-of-pocket costs here within the healthcare plans. The system here is weighted down in bureaucratic policies and red-tape.
Hey Teacher
February 18th, 2013
10:14 am
@Mary Elizabeth — thanks! Keep researching and posting this information — I don’t think the average teacher is even aware. We’ve been working for less for years so at some point you just tune it out, but this bill is huge.
DLink
February 18th, 2013
10:17 am
Allow me to summarize the vast majority of what I’ve read in this post.
Many people like the program and it is working well for the education system, at large. There is very likely some abuse in administering the scholarship which people don’t like.
Everyone has no problem with “sunshine” accountability of where the public’s money is going. The most likely reason there is no accountability for the money is that the lawmakers who made the law fear they may be enabling abuse by some benefactor to the laws’ creation. So… accountability is the issue. Sunshine and such. Add a watcher to the administers of the scholarship and most of the problems go away with a possibly more efficient scholarship. The problem being that one political party is essentially running the show in GA and may likely not want to get caught with the proverbial “hand in the cookie jar.”
BTW I quit as a teacher in my early twenties after getting a close look under the hood of the GA education system. The lack of ability to be creative in teaching methods available to GA teachers actually stunned me as a young man. As to full disclosure, I currently work at a private school.
@Prof That link thing? Now that had me grinning.
lexi3
February 18th, 2013
10:23 am
Mary Elizabeth
February 18th, 2013
9:55 am
@ Prof, 10:05 pm, 2/27/13
Don’t know why this discussion was hijacked, but those comments about Obamacare are grossly misguided. Obamacare will not lower the costs of healthcare, as is now acknowledged by the Congressional Budget Office. Governments invariably hide costs, which rise with bureaucratic inefficiencies, and invariably lead to rationing, when prices charged are out of line with market forces.
Obama doen’t expect to lower costs anyway. He wants to erase the difference between people who produced and paid taxes all their lives, and people who can’t be bothered working to support themselves or their children. (Think EBT cards disguised as debit cards used by real workers). Hence, he’s seeking to dismantle medicare advantage, which injects competition in providing healthcare services to seniors, and shunt money from medicare to a one size fits all medicaid type universal healthcare, single payer system. Simply, it isn’t “fair” that people who were “lucky” enough to work, save and contribute all their lives should have something nonworkers can’t acquire with the fruits of their “nonlabors.” Why work anyway when you can vote for a living, ehh?
DLink
February 18th, 2013
10:31 am
@sneak peak
http://globalpublicsquare.blogs.cnn.com/2012/03/26/zakaria-how-to-save-american-health-care/
Not precisely on topic, but, it does annoy me when people say Obamacare when referring to the Affordable Health Care Act. For me to insure myself and S.O. it would be $900/mo through my employer here in GA. That is the actual cost and is not affordable in my world. It may not be Universal Healthcare yet, but, I like the sound of that. I’d settle for Affordable until that day comes.
lexi3
February 18th, 2013
10:32 am
J Throckmorton Malcontent
February 18th, 2013
9:53 am
“A significant portion of Georgians will never be satisfied until the resegregation of Georgia is achieved.” [averring that the ulterior motive behind this legislation is support for white flight private education].
What hooey. At our children’s independent school the vast majority (approaching 100%) of children who benefit from these scholarships are people of color, lucky enough to escape the dungeons of thoughtless pc public school educators and administrators.
lexi3
February 18th, 2013
10:36 am
DLink
February 18th, 2013
10:31 am
So, what particular special attribute do you have that entitles you to vote away resources that others acquired lawfully to pay for the healthcare of you and your family?
“Affordable” is the biggest misnomer in history. It might give you and yours healtcare at a disguised and shifted cost, but that doesn’t make it efficient or affordable to society over the long run.
I love teaching. I hate what it is becoming...
February 18th, 2013
10:39 am
Hmmm. So as a public school teacher who is paid by taxes, I hear all the time, “I pay your salary!” There is constant pressure towards “accountability” to prove my school is “worth the cost.” Teachers must be evaluated and observed – a process involving hours of work and reams of paperwork, our students tested, our general scores published in the paper and online, and my school required to turn in all sorts of data and records about how fund are spent. If I buy materials for my classroom using school funds, I must fill various forms, a process so tedious that many times teachers just buy the materials on their own rather than having to jump through all the hoops. We must make sure funding streams never cross, to the extent that my regular ed students can’t even use materials bought by Title 1 funds, and the aide hired with Title funds cannot work with non-title students, even on the same concept.
But when it comes to *this* program, suddenly all the need for “accountability” is shunted aside by supporters. The fact that it is tax money is not longer important, because it benefits certain people who want those benefits and seem to be a bit worried about anyone looking too closely.
I have no problem with this program if it is being used in the manner intended. I suspect in many cases it is not, and guess what folks, I am a taxpayer too, and I DEMAND accountability. Let some of those private schools receiving taxpayers’ funds deal with the pressure and accountability measures my public school deals with daily. Sauce for the goose….
J Throckmorton Malcontent
February 18th, 2013
10:43 am
@ lexi
Fine. Let’s open up the accounting of this program and see what the real numbers are. I may owe you an apology. Until then, if it looks like a duck and quacks like a duck, a duck it is.
Beverly Fraud
February 18th, 2013
10:59 am
If this bill were any more lacking in integrity, they’d have to rename the bill DeKalb County Public Schools
“Rep. Ehrhart and I don’t always agree,” said Lindsey.
What do you want to bet their votes agreed when it came to the provisions that block out the sunlight?
Astropig
February 18th, 2013
11:00 am
This whole program costs less than some of these idiotic experimental monstrosities that are constantly being introduced (and later abandoned). All of these calls for transparency and accountability are coming from people who can’t figure out how to get their hands on that money.
This is a fine program.The only problem that I have/had with it is that it is not ambitious enough.
Prof
February 18th, 2013
11:06 am
@ Mary Elizabeth. Yes, I too thank you for keeping abreast of what the current legislation might be concerning teacher retirement benefits, and notifying us at once of imminent changes. Thanks especially for giving us the historical background for the 2010 insolvency of the State Health Benefit Plan. When I checked my “TRS Members Guide” around 2010, I saw that SHBP was not a healthcare benefits option for me although “Medical Advantage” was. I see now why.
@Catlady. Yes, I too have read the version of this House Bill in which the cutoff point for the retiree healthcare benefits being matched is July 1, 2013. Perhaps the bill noted by Mary Elizabeth was amended later to cover this situation too, so that the savings to the state would be more immediate than with the future retirement of new hires. And yes, I too would advise those planning to retire soon to make it by this June 30!
@ DLink, Feb. 18, 10:17 am. I did not get my doctorate in Computer Science.
lexi3
February 18th, 2013
11:17 am
Throck:
I’m all for “accountability.” Competition would make public school teachers and administrators accountable for their work. People vote with their feet. And, parents are not compelled to enroll their children in private schools. That’s a choice (something in another context is always good, we’re told).
DLink
February 18th, 2013
11:47 am
@lexi3
Me? By no means am I special in any particular way. I would have loved for someone to take 15% of my income from the day I started working for my future healthcare, as children simply do not know better. I would have loved for an additional 15% be taken for a future education.
It would be nice if I were wealthy and smart to be able to invest that same money in a more profitable venture (read risky). 30% of my pay for my health and education? Given no choice, I’d have adjusted my lifestyle to that long, very long ago. I simply feel America is not adequately investing toward a sound and profitable long-term future.
Simply an opinion. “Entitled”. Did someone entitle me then? I wasn’t aware of that. Such a meaningless word IMO.
Pardon My Blog
February 18th, 2013
11:50 am
@ Home-Tutoring Mom – Geez, did you forget your chill pill today?or had you been drinking again? Even though alot of us send our kids to school, either public or private, for most of us the teaching does not end there. You, in fact, are showing your insuperiority.
There are many people and Private Schools that are misusing this program. How do you think all these grand and glorious new athletic facilities are getting built?
DLink
February 18th, 2013
12:10 pm
@Prof
I’m outright laughing now. Glad to see you got sorted as to what’s up, and know that I venture out to the WWW with a smile that is entirely your fault.
-The IT guy.
Teacher2
February 18th, 2013
1:04 pm
@ I love teaching. I hate what it is becoming… 10:39 am
Good post! Where are the accountability police (i.e. GA legislators) on this taxpayer program?
This program converts private schools into public schools (i.e. operating on and using taxes) so accountability paperwork, ratings, penalties, testing and legislation must also apply to private schools!
Wondering
February 18th, 2013
1:05 pm
I keep wondering why all the secrecy around the use of tax money. I say let’s open it up and go back to the privacy afforded to income taxes back in 1862. None. The taxes of prominent citizens were published in the local papers to allow everyone to see who was paying their fair share. In this case, we’re not asking to see the full returns, just the information necessary to validate the program. Are the benefits worth the expense?
As for the state and teacher retirement change. It is my understanding that the bill effects all such workers retiring after June 30, 2013. That means you could have worked for decades under the old agreement, but our legislature will change it under your feet. Typical political move. Does anyone doubt why these people are so despised?
Mary Elizabeth
February 18th, 2013
1:11 pm
About the value of Obamacare and traditional Medicare. I am simply saying that since future state employees (including teachers) will be “thrown to the wolves” in Georgia regarding their post-employment medical insurance care (unlike retired teachers of past generations), it is fortunate that if future teachers retire in their early sixties, that those retired teachers can at least count on Obamacare’s serving their medical insurance needs until they are able to qualify for traditional Medicare at age 65 now, or at age 67 or later, if future Congressional legislation forces an increase in the age elders being able to receive Medicare benefits.
I hope more and more citizens of Georgia will connect the dots between turning Georgia’s school systems into private market schools and the forfeiting of benefits (healthcare and pensions) for state employees including teachers. If this assault on traditional public education and public school teachers in Georgia is not enough to demonstrate to Georgia’s citizens that Republicans in Georgia’s General Assembly are not looking out for the middle class, I do not know what it will take to prove this fact to citizens in Georgia. The Republican Legislature in Georgia is not looking after your interests, Georgia public school teachers, and it is not trying to improve traditional public education in Georgia for the lower, middle, and upper class public school students and their families. Georgia’s Republican Legislature is trying to turn traditional public so-called “government” schools into privately owned or operated schools based on a free market, private profit-making enterprise, using public tax dollars to do so. Wake up, Georgians. Research the number of Georgia’s Republican legislators who belong to ALEC, including Rep. Edward Lindsey.
Prof
February 18th, 2013
1:14 pm
@Wondering. The legislature probably would have made this bill effective July 1, 2012, but there is a legislative rule that bills affecting retirement are introduced in one year’s session, but cannot go into effect until the bill has been approved in the following year’s session.
Mountain Man
February 18th, 2013
1:45 pm
“we are in the process (awaiting approval) of giving $2,500 to a private school in Vine City”
I doubt that is true. What you are really doing is earmarking tax dollars you were forced to pay anyway away from prisons and regular education and roads into that private school. The amount of money that YOU paid is the same. The private school gets more. Everyone else gets less.
dc
February 18th, 2013
1:59 pm
you can doubt all you want. we are in the process of giving 2,500 to a private school in vine city. it wouldn’t have happened without this tax credit….in fact, that money would’ve gone into the same education bureaucracy that is failing the kids in Vine City today.
And the local school doesn’t have to educate those kids…which gives us taxpayers a huge savings.
I know…scares the dickens out of all the educrats out there, whose primary (not sole, just primary) focus seems to be making sure the adults who run the school systems are taken care of.
Mary Elizabeth
February 18th, 2013
2:13 pm
@ Hey Teacher and Prof,
You are both most welcome!
@ Catlady,
Please do keep working to “oust any legislator involved” and encourage others to do the same.
In my opinion, we must work to turn Georgia into a Democratic state, again, if not-for-profit public education for all students is to be sustained in Georgia – and if public school employees are to be respected, once again, and are able, once again, to secure the old-age benefits that they deserve from their choices to become life-long public servants to serve all the children of Georgia, and their families.
Mary Elizabeth
February 18th, 2013
2:58 pm
I think there may be some misunderstanding about the content of HB 263. From the information that I shared, via GAE, in my 8:54 pm post of yesterday, 2/17/13, are the following words:
“If this legislation became law, it would take effect July 1, 2013. Only State Employees HIRED after that date would be affected. New state employees would no longer be eligible for post-employment state health insurance coverage paid-for by the State, those employees would have to pay the full cost of coverage upon retirement.” (Caps are mine.)
Thus, this bill’s contents would effect only NEW employees hired on or after July 1, 2013. That bill does not state that those retiring after July 1, 2013 (if they were previously hired employees before July 1, 2013) would be effected by the bill’s content, as I read that bill’s words.
Suzie Hanson
February 18th, 2013
3:00 pm
If the money was given back to the public schools the idea is that the children would also go back to the public schools so there wouldn’t be EXTRA money, it would be money to educate them there.
Sounds like Georgia needs to rewrite the bill so it does what it is supposed to do instead of bagging the whole idea altogether.
lexi3
February 18th, 2013
3:32 pm
DLink
February 18th, 2013
11:47 am
I am not sure I understand your last comment. Are you saying that if the government had confiscated 30% of your earnings starting when you were too immature to make your own provident decisions (about saving for a rainy day) you would not now be expecting everyone else to help pay your healthcare expenses? Ever read Aesop’s grasshopper and ant fable? Too “old school”? I still don’t see the moral imperative to extract money from ants to pay for healthcare for grasshoppers. I have no qualms about helping people who cannot, through no fault of their own, help themselves. Grasshoppers? No.
Now this may come as a shock to you, but the number one reason healthcare costs so much is that costs are being driven by government command (required insurance coverages, like birth control, fat farms, marriage counseling, breast reductions, hymen reconstruction, gender reassignment…)and distorted incentives, deductability of insurance premiums…. Government creates a problem and swoops in to save us from the problem it created. Sweet.
In the aggregate, can everyone expect someone else to pay for [everyone's] own healthcare? What incentive not to be a grasshopper?
Prof
February 18th, 2013
4:05 pm
@ Mary Elizabeth. There seems to be much misunderstanding of whether HB 263 is intended to cover new hires after July 1, 2013, or those who retire after July 1, 2013. I found this on the “GA Teachers Chatboard,” dated Feb. 16:
” I talked to the reps office who authored this bill and the intent is for new hires in the schools after July 2013. They will have to provide their own insurance. At this point the bill is very unclear and sounds like it would end health insurance for school employees after they retire. They would have to buy it on their own.”
Here is the relevant section of the latest text of HB 263: “any person who becomes eligible to participate in such fund [school personnel post-employment health benefit fund] on or after July 1, 2013, shall pay a premium which reflects the entire cost of the coverage.” I think that the ambiguous section is “becomes eligible,” which some read as “becomes eligible by retiring.”
However, this latest text includes a new amended Section 1, (a), (1): ” the term ‘becomes eligible’ …includes, without limitation, becoming employed in or elected to or appointed to a position which renders the person so eligible.”
To me–not a lawyer–”includes” does not rule out those retiring on July 1, 2013, but rather adds those newly hired after that date. I believe it includes BOTH. (Just like the legislature!)
This bill is going to the Retirement Committee this Wednesday, and there are likely to be quite a few citizens at the meeting.
catlady
February 18th, 2013
4:46 pm
Prof: Where and at what time is this meeting? Thanks.
Prof
February 18th, 2013
5:51 pm
@ catlady. Wed, Feb. 20, at 3 pm in 310 CLOB (Coverdell Legislative Office Bldg.)
I also found this in the “Public Comment” section of the bill itself: “I just spoke with the office of Rep. Battles, Chairman of the Retirement Committee. The bill is still scheduled to be discussed in the retirement committee on Wednesday of this week although no vote will be taken at that time. The person with whom I spoke explained that the author of the bill would be there as would someone who would explain all of the bill’s ramifications as there was a lot of “misinformation” about the bill. We need to stay alert on this one!”
Mary Elizabeth
February 18th, 2013
6:31 pm
Thanks for your added input, Prof. Citizens must keep very alert to what happens regarding this bill, imo.
Ronin
February 18th, 2013
8:27 pm
@Dekalbite 9:03, yes, that’s correct. Tort reform would be one segment of needed changes. As you mentioned, too many tests and associated staff that has to be compensated, but may not be necessary. Fraud, over billing are just a few of the items that need to be examined. There are numerous was to approach correcting the issues ( I simply don’t have time today to go into further details) However, with all the political fighting between the Democrats and Republicans, I don’t have a lot of faith that things will change for the better. The tax credit issue deserves debate, but the real challenges in the near future will be retirement benefit cost containment of healthcare and limiting state funding of defined benefit plans (DBP’s) or its referred to TRS. Look for the 403b plan (defined contribution plan) with matching funds to, in time, replace the TRS program, which provides a guaranteed stream of income for life. State employees will have to work longer to save more to fund their own retirement and make it until age 67 to retire or face much higher premiums to pay the premiums for Obama care until they are eligible for Medicare. The bottom line is, most people will be working longer (not just teachers) to be able to retire.
This a link to areas outside that USA that may be appealing and more affordable to some readers to retire.
Ronin
February 18th, 2013
8:29 pm
link:
http://www.kiplinger.com/links/retireabroad
Mary Elizabeth
February 18th, 2013
9:48 pm
All readers should be made aware of the fact that approximately 87% of the retirement monies that today’s retired teachers receive through their pensions has been paid for by the teachers, themselves. Their pension money had been deducted from the teachers’ own paychecks, monthly, for approximately 30+ years, and their own money had been invested for the teachers by investment experts within the TRS. Therefore, retired teachers’ own monies have paid for 87% of their own pension money. The other approximately 13% of their pension money has been accounted for by an equal division (approximately) between the state government and the teachers’ local school districts. Teachers, in large measure, therefore, have paid for their own retirement pensions through the wise investment of their own monies, pooled together, and this money, legally, has been separated from the state of Georgia’s funds.
There is no reason, other than ideological extremism, that this smart investment through the TRS of public school teachers’ own money – by future public school teachers in Georgia – should not continue into the future. The teachers, not the public, pay for their own retirement, through investment, pooled together through the TRS. The public has been misinformed about this fact. I hope that my post will clarify the truth of the source of teachers’ pension monies in Georgia. I was given this information several years ago by the TRS, itself.
Ronin
February 19th, 2013
11:54 am
The information posted above is mostly true, I haven’t checked the percentage recently as to state contributions to the plan for additional funding. However, the above poster makes my point for me.
TRS takes private party contributions (Tia-Creff, Vanguard, Fidelity) state pension fund managers who run the funds invest in private for profit companies. When the employee retires, in this case a teacher, they receive an annuity, straight life, life with surviving spouse or life with ten years certain payout. It’s a good deal for the retiree. The difference being is when the conversion to the 403b plan is made, there will be no lifetime steam of income, you’ll have to manage your funds so that you don’t outlive them.
The problem is, many of our socialist leaning educators want to keep public schools the way they are. They have great benefits, healthcare supported by the state after retirement. However, the same teacher puts in roughly 7% for 25-30 years and they receive a return from in this case TRS for and they may draw 4-6k dollars a month in retirement, not bad. This is possible due to private money management which invests in private equity.
However, the same person invests in Social Security, contributes about 12% of earnings if self employed and half that amount if an employee. The result, the average check is about $1.500.00 per month with a maximum of $2.500.00. No life certain 10 year guarantee, you die in your second month of retirement, everything you pay in the pool disappears, nothing to your estate.
As I mentioned before, it’s not a matter of if this is going to happen to all state and federal workers, it’s simply a matter of when.
Many of those who argue against the privatization of social security and personal accounts are the ones benefiting programs similar to the TRS system. It’s ironic, they want only one choice for government education but prefer to have their personal funds managed private equity professionals rather than government finance employees.
To all recent graduates from college, if you can find a job, start saving now for your retirement 10-15% or more (Vanguard or Fidelity are both excellent choices) and in 40 years you won’t have to be concerned if you can afford to retire, you’ll be able to join me on one of the destinations listed on the above link and pass along a substantial investment portfolio to your family.
Prof
February 19th, 2013
12:16 pm
@ Ronin. As for your advice in your last paragraph, remember that public school employees (teachers, administrators, and staff) don’t have a choice, from the moment they’re hired: Georgia law requires them to join TRS. And the member doesn’t get those fabulous defined-benefits pension benefits until vested: 10 years of service and is age 60…though even then the benefits are partial. The member won’t get full retirement benefits until 30 years of service. After he or she has been making membership payments every month all that time.
Now, if the member quits before the age of 60 or 30 years of service, the member CAN get back the amount he or she put into TRS. amount, it is true. But still, TRS only pays off if you can last 30 years or make it to 60.
Ronin
February 19th, 2013
1:46 pm
Prof, that’s why I’m an advocate of the 403b programs for government and non profit employees that allow matching percentage of funds that are vested over a 5 year term. There will be a conversion period based on when you were hired at which point the DBP program will cease. Some close to retirement will be able to finish out with TRS, new hires will automatically go to the 403 program with the percentage match. The same thing happened in the private sector years ago as a way to cut long term expenses. The above is simply peanuts compared with the long term retirement healthcare savings, that’s the actual goal of these initial steps.
As far as the last paragraph, that information would apply to everyone, not just teachers. They are making their TRS payment, they should also attempt to max out a traditional or Roth IRA. Put off buying that new car for a few years, better yet, buy it three years old off of lease and save about 30-40 percent. The federal government needs to have a conversation with the American people about what they can or can’t expect as far as retirement benefits, so young people can plan accordingly. However, given that both parties can’t agree on anything…. I wouldn’t look for them to give us that pep talk.
The answer, plan like there is no government assistance for retirement and invest with a low cost Index or ETF fund based on what your risk tolerance and age are. No one can tell you the value of $1 million dollars, 30 years from now, however, my best WAG is that it will be worth substantially more than $0 dollars.
Mary Elizabeth
February 19th, 2013
4:24 pm
When I was hired by my school system over 40 years ago, the contract read (paraphrased) “You place your time and energies upon taking care of the students and the TRS will take care of your retirement concerns.” Forty years ago, the school systems knew where they wanted teachers, who are public servants, to place their time and energy priorities, and those priorities were on the students, themselves, and not upon their own financial portfolios. I know it is difficult for some in the private sector to realize the value of this. Moreover, the “investment experts” to whom I had referred to in an earlier post are part of the TRS.
You state, “It’s a good deal for the retiree.” And, why should it not be a good deal for the retiree? That “good deal” was accepted by teachers because they planned ahead with their futures, with prudence. I suspect simple jealousy is an operative factor which propels some to berate the TRS pension system. This is unfortunate and small-minded, imo.
Ronin
February 19th, 2013
5:16 pm
Mary, there is nothing “small minded or unfortunate” about my statement. Times change as do financial markets and ways of doing business. In fact, the only constant is change.
What I’m trying to educate you about is the change that is coming. I’ve dealt with clients that have benefited from professional money management. People like myself handle transactions like the managerial staff at TRS.
I strongly believe that all Americans should have the benefit of an account similar to TRS, which translates to young Americans having the freedom to benefit from a S.S. account that they own, just like TRS. While if may sound somewhat Socialist for a Libertarian to make that statement, it would be possible to do this, IF the federal government was not such a poor steward of the resources collected by the S.S. Administration over the last five decades. That said, both parties are to blame, both the Democrats and the Republicans.
So, while this may come as a shock, I actually agree with you that everyone deserves a program that is based on the model of TRS. It’s the government that wants to keep the current system as benefits submitted are then sent to current retirees.
As far as jealousy by some that berate the TRS system, I can’t speak to that. I think it’s a good program and should be the model for retirement programs rather than Social Security.
The real issue is going to be healthcare costs for state employees in retirement. Retirees are paying more in premiums each year for less coverage. There are many options available but I doubt that either party has the intestinal fortitude to make real changes until the system is about to collapse.
It’s not just state and federal employees, it’s the private sector as well.