Guest column: Fix, don’t expand, Georgia’s troubled private school tax credit program.

Hillel Y. Levin is an associate professor of law at the University of Georgia Law School. He teaches courses on administrative law, civil procedure, constitutional law and legislation.

In this essay, Levin discusses the tax credit for private school scholarships, which has been the subject of several AJC investigations. Here is one. Here is a blog on abuses in the program.

By Hillel Y. Levin

Five years ago, Georgia’s legislature enacted a program that gives taxpayers a tax credit for donating to student scholarship organizations (SSOs) affiliated with private schools.

The stated purpose of the program—to provide scholarships for underprivileged children to attend expensive private schools—is a worthy one. But this goal has been undermined by a lack of transparency and by aggressive efforts by some private schools to funnel SSO funds to middle- and even upper-class students. Indeed, there is scant evidence that any disadvantaged children have escaped poor public schools thanks to this program.

Worse, a recent investigative report by The Atlanta Journal Constitution indicates that the SSO system is rife with tax fraud. Still, some in the state legislature now propose to further expand the program from $50 to $100 million. This is exactly the wrong thing to do. Instead, the legislature should institute three modest reforms to make sure the program achieves its noble purpose.

First, the Legislature must demand honesty and transparency from SSOs and affiliated private schools. Reportedly, many parents and family members use the program to direct their scholarship money to cover their own children’s education, but current law, which requires SSOs and schools to report almost no information, makes it difficult to verify the extent and nature of this form of tax fraud. Likewise, the public has no access to other critical information about how SSOs work. For example, who donates to SSOs? Who receives scholarships? How are SSO administrators paid and incentivized?

Unfortunately, nearly everything we know about SSOs is based on woefully incomplete (and unverifiable) voluntary disclosures, second-hand accounts, and even recorded conversations with administrators that have been turned over to the media. Before we divert millions more from the public schools and other high-priority public programs, let’s shine some light on how this program actually works.

Second, students at private schools that receive public funds should be able to take the same kinds of standardized tests that are required for students in the public schools. Under current law, even as we have become more and more obsessed with measuring achievement in public schools through testing, literally nothing is demanded of the private schools that receive funding from SSOs. As a result, we have no way of evaluating whether the program actually improves educational outcomes in Georgia.

To be sure, standardized tests have all kinds of problems and limitations, and we can reasonably debate whether they are effective evaluative tools. But if we require them of public schools, then surely we should also require them of private schools that enjoy privileged status thanks to the SSO program.

At the very least, we can use such tests to determine how public school education compares to that offered by participating private schools. Testing would thus help us decide whether this method of providing for school choice is a good use of taxpayer funds.

Finally, the Legislature should establish a means of ensuring that only needy kids are eligible for the scholarship. The tax credit program was sold as a way to help the underprivileged, but it doesn’t seem to be achieving that goal. Georgia, unlike other states with similar programs, does not limit the availability of scholarships based on need.

Thus, in Georgia, the wealthy are just as entitled to this scholarship funding as the poor. The most sensible approach to this problem would be to institute a graduated eligibility system. Under such a system, those with lower incomes would qualify for larger scholarships than those with higher incomes. For example, households earning up to 185 percent of the federal poverty level (approximately $43,000 in 2012 for a family of four) could be eligible for full tuition scholarships from SSOs.

In contrast, households earning 600 percent of the federal poverty level (approximately $138,000 for a family of the same size) would only be eligible to receive a small fraction of their tuition from SSOs; and higher earners would be ineligible altogether. Of course, reasonable people can disagree about where the cap should be set, and a healthy debate is warranted. But it is perverse to continue to allow the wealthiest taxpayers to use state funds that would otherwise go to public education and other programs that benefit all Georgians to fund their own children’s private school tuition.

These modest reforms would provide mechanisms of transparency, accountability, and evaluation, and would make sure the program serves its stated purpose rather than as a subsidy for the wealthy and a tax evasion tool.

This is a non-partisan issue; these are precisely the kinds of good-governance measures that all people of Georgia rightfully expect. Expanding the already-troubled tax credit program is fiscally imprudent and dishonest. Instead, let’s help the SSO program achieve its original purposes by making these simple changes.

–From Maureen Downey, for the AJC Get Schooled blog

14 comments Add your comment


March 7th, 2013
6:12 am

How many other laws has the General Assembly enacted that have this little transparency?

10:10 am

March 7th, 2013
7:44 am

In Maureen’s daily crusade against education reform, the day’s proxy, Mr. Levin, hints at some age-old anti-reform arguments: that the ruling (liberal) elites know better; that the “rich” or middle class (in this case) anyway don’t deserve their relative wealth or the right to determine how best to spend it; and that their children benefit undeservedly.

He darkly hints of wrongdoing while at the same time admitting such allegations have absolutely no foundation in fact.

By the bye, I wonder if he will share with us just where his own children have been schooled?


March 7th, 2013
8:49 am

I would add another stipulation for receiving scholarships. Parents and/or private schools should be required to prove that students came from a public school that is actually failing.

I have a cousin whose children attend Christian Heritage School in Dalton, one of the private schools cited in the New York Times for irregularities/dishonesty in the distribution of scholarships. The boys previously went to a public school that was doing fine, meeting AYP every year. They were both in the gifted program, and the older boy stayed at the school until he completed elementary school because he enjoyed the gifted program so much. They are only at CHS because their parents didn’t want them in middle school with “those kids”.


March 7th, 2013
8:51 am

Oh, and I’m pretty sure the boys are receiving scholarships based on money their parents and grandparents have donated.

living in an outdated ed system

March 7th, 2013
8:52 am

Ummm, has anyone read the language of SB 243, especially Mr. Levin? I think it’s a good bill and closes some of the loopholes that have plagued the SSO program. The problem with the SSO program has historically been in its implementation and the lack of transparency. This bill should fix that, from what I can gather. Where has Mr. Levin critiqued the current bill? Seems a bit out of context. SB 243 has bi-partisan support, which is something rare in Georgia these days.

Parent Too

March 7th, 2013
11:13 am

Lyndon Academy does the same thing that Christian Heritage does. None of the students there are “disadvantaged”.


March 7th, 2013
12:08 pm

“Second, students at private schools that receive public funds should be able to take the same kinds of standardized tests that are required for students in the public schools.”

What a bunch of hooey. Of course, what “should be able to” actually means is

“standardized tests have all kinds of problems and limitations … But if we require them of public schools, then surely we should also require them of private schools.”

Translation: yeah we have a cruddy system – just don’t even think that you have the power to choose something better for your children. Not ’sour grapes’ exactly, more like ‘if my kids have to eat sour grapes, so to yours’


March 8th, 2013
8:43 am

i have railed against this law since its inception, as it hardly seems fair for the rest of us to pick up the slack in paying for roads, prisons, etc, while folks can direct their taxes toward educatin of their children. And doubt it not; these scholarships ARE targeted to donor’s children and grandchildren. One of the private schools around here does it quite openly.

Now, I am rethinking my position. The Montessori school my daughter wants my grandson to go to costs $800 per month, far beyond what she and her husband can afford. However, if the family members designate most of our entire state income tax money to it, we could pay his way plus a little. To heck with our civic duty to pay for roads, prisons, state parks, and other things! Let the “common schmucks” pay for that!


March 8th, 2013
9:22 am

It does appear that this law is, to its discredit, framed disingenuously as a scholarship program for poor students when it is in fact morphing into a sort of voucher system.

However, if we change the question asked to “should there be vouchers”, the law looks better. You mention “fair”ness. In the case of a child who is being educated in a private school, it is unfair for the public school district in which the child resides to pocket $8,000 or so for providing exactly NO services to said child. The tax funds allocated for the education of a student should FOLLOW that student to wherever he or she is educated.

The current legislation, as jerry-rigged and convoluted as it is, is a step in the right direction. If Montessori school is the right place for your daughter, why not? Who else besides your daughter and her husband is in a better position to make that decision? And if your granddaughter does go to Montessori school, why should your daughter and son in law pay everything while their local public school collects money for nothing?


March 8th, 2013
9:28 am

Sheared: I am home sick, so maybe I am not thinking clearly, but how is the local school getting $8000 for a student who is never there? The public schools get funds based on FTE, so where is this $8000 coming from?


March 8th, 2013
9:30 am

I mean, for the purposes of public school funding, it is as though that student were never born. And public schools get NO money for unborn kids.


March 8th, 2013
8:12 pm

OK Cat, let me rephrase: Your local board of ed collects fistfulls of property tax money in order to, among other things, educate your granddaughter. Then if she enrolls at Montessori school, they don’t use one thin dime of that money for her benefit – it all goes somewhere else.

peppermint candy

March 9th, 2013
5:40 pm

recently i was told that dekalb county school system has released contracts for the 2013-14 school year. this is another example of how manipulative the board is. for the past two weeks they have not been able to make any decision as well as the 3 board members who remain. by the way, it is my understanding that teachers evaluations have not taken place. contract are released after teacher evaluations have taken place. eugene walker wants to remain in control. if it was not done by walker then the current chairperson looks needs to be questioned because his board is not in a position to make decision.


March 11th, 2013
7:12 am

” “Public education is the Soviet agriculture of American life,” Charles Murray once wrote. When it comes to the myriad goods and services produced by the private sector, not only are supplies plentiful, but quality, convenience, and innovation are routine. But when it comes to government-run schools, which are dominated by politics and guaranteed a captive customer base, the blessings of competition are all but unknown.

The problem with public schools, in Boston and elsewhere, is government compulsion. Soviet citizens learned the hard way what to expect when government runs the farms and operates the grocery stores: long lines, poor quality, empty shelves. Why should we expect anything different from public education? Government runs the schools, hires the teachers, sets the curriculum — and assigns the students. Of course the result is dysfunction and controversy.

What Boston’s public schools need isn’t a better top-down plan. It isn’t a new, more complex algorithm. They need to be liberated. The education of children — like the clothing and feeding of children — should be entrusted to parents, not to politicians. Government education should be as unthinkable as government religion. Separation of church and state is a cardinal American value. Why haven’t we figured out by now that separation of school and state should be too?”

Jeff Jacoby, Boston Globe