Private School Scholarships: Money Laundering for the Masses

The Southern Education Foundation found that the low-income students are not the ones being helped by Georgia’s SSO scholarships. The highest growth in Georgia’s private school enrollment is in the 1/3 of schools located in rural areas. SEF concludes that “most of the private schools currently working with SSOs to receive tax funds to finance student scholarships are in the five counties that also have Georgia’s higher performing public high schools.” The report further suggests that most of the students receiving scholarship money to attend private schools had followed Casas’ strategy and had not actually transferred from public schools. Between 2007, the year before enactment, to 2009, the first full year of implementation, “private school enrollment increased only by about 1/3 of one percent in the Georgia metro counties where more than two out of every three private schools affiliated with an SSO are located.” And because they were already in private schools, these students are costing the state money it was not spending on them before.

North Carolina is preparing to join Georgia, Arizona, Florida, Indiana, Iowa, Oklahoma, Pennsylvania, Virginia and Rhode Island. The Asheville Citizen-Times reports this week that North Carolina House Majority Leader Paul Stam, R-Wake introduced a bill that would give state corporations a tax credit worth up to “their entire yearly state tax debt” in exchange for contributions to funds run by nonprofit scholarship-funding organizations. Scholarships of up to $4,000 per year are allowed for pupils attending private schools. If passed, the law would allow the tax credit to be spread out over five years. Up to $40 million in credits are allowed starting in 2013, potentially increasing by 35 percent following each year in which donors claim 90 percent of the previous year’s credits. If successful, the program in theory could expand by 35 percent per year until consuming North Carolina’s entire state revenue stream for funding K-12 education. That makes State Board of Education Chairman Bill Harrison’s description of the bill as “the latest effort to dismantle public education” a modest understatement.

WRAL Raleigh observed that the U.S. Supreme Court “validated that middle-man approach” to funding vouchers in a ruling last year “against an Arizona lawsuit claiming violation of constitutional church-state separation requirements.” Scholarship funds avoid church-state separation issues by having donations collected and disbursed by the nonprofit groups. The money never passes through state hands.

At a rally organized to support the bill, Stam told several hundred people, “It is a beginning and it will be funded by corporations that believe in educational access for everyone.”

There’s the money quote. If you believe corporations contribute because they believe in “educational access,” watch how many turn up as investors in for-profit private schools, charters and virtual schools — partaking of both the middle-man profits and the corporate tax breaks. Now that’s the kind of government reform conservatives can get behind.

In confirmation, the Times recounts how over the past three years, working through the Bridge Educational Foundation, XTO Energy donated $650,000 in Pennsylvania — “as much as 90 percent” underwritten by taxpayers — to ingratiate itself with Pennsylvanians concerned about its hydraulic fracking operations and with politicians that regulate them. In Pennsylvania, Georgia and Arizona, it is industry lobbyists, politicians and staffers, not educators, running the largest scholarship funds. Because it is not about education reform, it is about the money.

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