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.
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