Published Monday, January 28, 2013
BY RAY HENRY
ATLANTA (AP) – A scholarship program designed to help children escape failing public schools and afford private education may have been abused to aid children of scholarship donors, according to a complaint to be filed with tax officials obtained by The Associated Press.
The allegations raised by the Southern Education Foundation are the latest against a scholarship system that has been criticized for aiding children already enrolled in private schools and accused of encouraging wink-and-nod financial arrangements between donors and scholarship recipients.
The foundation said it would file a complaint Monday asking Georgia tax officials to investigate what it called irregularities in a four-year-old tax credit program intended to raise money so students from troubled public schools can afford private school tuition. The foundation's research showed that in some cases donors may be allowed to earmark donations for individual students despite prohibitions against it.
While the report does not prove wrongdoing, it suggests at a minimum that rules are being bent.
"We have never had a system of taxation in which people get to decide individually where my taxes should go, especially not to decide I will only pay taxes if it only helps my family," said Steve Suitts, the foundation's vice president.
Rep. Earl Ehrhart, a co-sponsor of the legislation that passed in 2008 and CEO of scholarship provider Faith First Georgia, said the SEF was unfairly attempting to discredit users of the tax credit program. He threatened to sue the organization over its complaint.
"They care about the failing education system, not about the children," he said.
At issue is a 2008 tax credit approved by the Georgia General Assembly and signed into law by then-Gov. Sonny Perdue, a Republican. Supporters said the law would raise money so low-income families with children in poorly performing public schools could afford private school tuition, which can cost thousands of dollars a year.
Under the system, people can receive state tax credits by giving nonprofit scholarship providers donations of up to $1,000 for individuals, up to $2,500 for married couples or up to 75 percent of a corporation's state income tax liability. Georgia caps the tax credits at about $50 million annually. Donors can earmark their contributions for specific private schools but not students.
Foundation researchers found evidence that those rules may not be strictly enforced.
For example, the Georgia Student Scholarship Organization has received more than $22 million for scholarships since 2008, according to the foundation's report.
In one of the scholarship organization's public presentations in late 2009, state Rep. David Casas, R-Lilburn, a co-sponsor of the program, told the audience: "You can take this chunk of money and be able to say, `No, 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," he said, according to a transcript of a video recording reviewed by SEF.
That video, which was on the organization's website until last year, has since been removed, and Casas did not return messages seeking comment. His recorded remarks were used in other public presentations and were preceded by a video screen labeled, "Donations Designated For Schools and Students."
Bob Jasion, the organization director, said Casas' advice was correct when the law passed but became outdated when the law was amended in 2011.
"Donors at that time could designate a student to receive the benefit of their donation as long as that student was not a dependent of theirs," Jasion said.
But from the beginning, the law banned taxpayers from getting tax credits for scholarships that benefited their dependents. The state Department of Revenue issued rules that went further, preventing donors from earmarking scholarships for any students. Lawmakers wrote the more expansive rule into state law in 2011. Jasion said his organization abides by the current law.
"We made it very clear that donors can only designate the school of their choice, and it's up to the school to decide which students will receive a scholarship," Jasion said.
The website of the Gainesville-based Pay It Forward Scholarships invites donors to give money in the form of a "Pay It Forward" scholarship. At the end of the form, donors are asked if they know a student who could use a scholarship from an anonymous donor.
"This on-line procedure is nothing less than a badly veiled scheme to help private school parents and friends designate who will receive a tax-funded scholarship in the same amount as the tax credit contributed by the donor," the foundation said in its report.
A Pay It Forward board member, Cary Sinnett, denied that the scholarship system was a quid-pro-quo arrangement.
"It's a way of asking people to talk about it," Sinnett said. "We're asking for a referral."
The report said Dalton's Christian Heritage School has been affiliated with Ehrhart's scholarship program, Faith First. The SEF said that the school has offered parents tuition rebates if they donate to the scholarship program and recruit others to do the same.
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