Corporations and individuals are given tax credits to donate toward tuition to private, often religious, or even home schools
No tracking of who donates, how much, or where the money goes
Recipient schools don’t need to be accredited, aren’t required to report outcomes, and can pick and choose students
Money that would otherwise go to the state General Fund (and therefore about half of it to K-12 public education) instead goes to private schools
After initial bill with limitations on amounts that can be deducted and on income of student families of recipients, further legislation expands access and chips away at restrictions
Private schools already offer scholarships; low income students already have choices
Even within the Blue Valley School District, students are able to transfer between schools; unless overcrowded, most schools are open to transfer on request
This program allows corporations to give money secretly, get tax credit, no way for public to know where that money went, no public accountability for Scholarship Granting Organization
Taken to the extreme, many “School Choice” advocates believe that government should not be in the business of running schools, and call public schools “government schools”
You may have heard the term “School Choice” being used by some legislators. Simply put, “School Choice” is a term referring to a variety of programs that purport to increase “educational options” for families. Nationwide, supporters of School Choice claim it will allow parents to choose alternatives to public school for their children. While the idea of School Choice sounds positive, these programs most often represent some type of tax credit or voucher where taxpayers (corporations and/or individuals) donate money that is used for tuition payments or “scholarships” to private schools. These private schools are often religious schools, and in some cases may be home schools. These schools do not necessarily need to be accredited, and in some programs, “scholarships” can be given to students already enrolled. Donors (corporations and/or individuals) then receive tax credits for funding these “scholarships” - meaning the state receives less tax revenue than it would have otherwise received if this private/homeschool “scholarship” program were not in place.
While “School Choice” may sound good to some, Stand Up Blue Valley wants voters to ask some hard questions about this concept:
Who is behind advocating for legislation that favors “School Choice”?
What do voters know about these tax diversion programs, and about who benefits from them?
What kind of financial and outcomes oversight exists for schools or homeschools that receive these “scholarships” - which are essentially funded by public dollars diverted through tax credits?
How does this legislation affect the state budget that these taxes would otherwise go toward?
Who stands to gain financially from this arrangement? Who builds, owns, and operates these private schools?
Several organizations advocating for limited government and privatization of public services, including schools, support the notion of “School Choice”. The National School Choice Week (NSCW) organization is clearly well organized and well funded. From an article in the Washington Post, here is a description of events the organization promoted and supported during School Choice Week 2016:
This past week was School Choice Week with no less than 16,140 events held across all 50 states, according to the School Choice Week website. They took place in 13,224 schools, with 1,012 chambers of commerce and 808 homeschooling groups staging events too. Twenty seven governors and more than 200 mayors/county leaders issuing proclamations to recognize School Choice Week, and, to top it off, there were rallies and special events at 20 state house buildings.
NSCW is not organized in a way that its donors are required to be disclosed; it provides no financial or donor information on its website. Its “Partners” listed on the website include ALEC (American Legislative Exchange Council), Americans for Prosperity (AFP), CATO Institute, and Kansas Policy Institute (KPI), organizations which we characterize in general as anti-tax, favoring small to nonexistent government, proponents of private enterprise as the ultimate solution.
By renaming less-popular voucher programs “scholarships” and by using positive-sounding phrases like “School Choice” and “educational options”, anti-tax, “small government” groups have attempted to frame the discussion in a certain way. Alarmingly, their types of “choice” lead to the ultimate defunding of public education, and in turn, privatizing and profitizing education.
Here’s a history of how School Choice has come about in Kansas.
In 2014, Kansas House Bill 2506 established the Tax Credit Scholarship Program. This school finance bill contained a rider which provided for corporations to contribute money toward scholarships, and then receive a 70% tax credit. Students eligible for scholarships to private schools would be from families at or below 130% of the poverty line, currently attending or to start kindergarten in a “failing school” (as defined by Kansas State Board of Education). Individual tax-credit scholarships could amount to up to $8,000 to offset the cost of tuition, fees, and expenses and, if applicable, transportation to a qualified school. Scholarship Granting Organizations (SGOs) were required to have 501c3 status and be registered as SGOs; qualifying schools were required to register with the state.
No oversight of the SGOs or the qualifying schools was built into this system. Businesses were not capped at how much they could donate and in turn receive a 70% tax credit. The program itself was capped at 10 million dollars. That represents 7 million dollars of tax money that, if the program were fully funded, would never make it into the state general fund. SGOs were required to use at least 90 percent of contributions for scholarships within 36 months of receiving the contributions. Therefore, a SGO could hold onto millions of dollars for up to 36 months and then determine how that money is allocated to a school or schools it favors. With regard to the corporations’ claimed tax credit, according to the Kansas Department of Revenue website, “If the amount of credit exceeds the contributor’s tax liability in any one taxable year, the remaining portion of the credit may be carried forward until the total amount of the credit is used.”
As of January 2016, 73 students had applied for and been awarded such a schoalrship (http://www.kansas.com/news/local/education/article55086965.html). $108,384 had been awarded. But the state Department of Revenue had recorded $776,000 in contributions to the program. That left over $595,000 sitting in bank accounts of SGOs. Those contributions totaling over $700K were made by a total of seven corporations, identities not disclosed, which then claimed $543,200 in tax credits in return. That’s over half a million dollars that the state of Kansas did not have to fund operating expenses including education.
If the program were to reach its capacity of $10 million, that would mean $7 million in taxes not being paid, and the state general budget being decreased by that amount.
In the 2016 legislative session, the House Education committee discussed expansion of the Tax Credit Scholarship Program.program. Proposed changes included allowing individuals to take tax credits for donations (not just corporations), increasing the tax credit from 70 to 90 percent, increasing eligible students by increasing the family income of eligibility to include half of Kansas families, and removing the requirement that a student had been attending a failing school. The proposal increased the maximum tax money that could be diverted in this manner, and it provided for a annual increase, if the maximum was attained. The proposed changes were approved by a 11-6 vote of the House Education Committee. Blue Valley area Rep. Jerry Lunn (District 28) voted in favor. Blue Valley are Rep. Amanda Grosserode (District 16) was not present for the vote, but had previously voiced her support. The bill was scheduled for a debate on the House floor but was pulled before that happened. As of this writing, the 2016 changes had not been voted on by the entire Kansas House.
As described on the Friedman Foundation website:
Kansas’ tax-credit scholarship program is a good starting point for the state’s pursuit of private school choice, but it has a long way to go to provide families with increased choices. The $8,000 maximum scholarship amount is high enough to provide even the poorest families with access to almost all private schools in Kansas, yet it provides enough flexibility for each SGO to determine the needs of their individual students. However, student eligibility needs to be improved. By removing the “failing schools” requirement, this program would be simpler for parents to ascertain eligibility and for private schools to effectively reach students. Second, any increase in the income requirement would exponentially expand the program to even more families. A simple extension of families up to 185 percent of the federal poverty limit or even higher would make scholarships available to an even greater number of low-income Kansans. The goal is to provide opportunities to every child in the state, not pick and choose individuals.
Do Blue Valley voters agree that undisclosed businesses should be allowed to divert their taxes to pay for private schools instead of public schools, thereby diverting funds from public schools, which serve all students - including students with costly special needs? How about those students whose religious beliefs may not align with those of the donors, the SGO, and the private schools? Will they be admitted to these private schools? What admission criteria will these private schools use? This program could essentially allow individuals and corporations to decide which private enterprises will get tax money, albeit through an intermediary SGO.
To read about the tax credit scholarship program in Kansas, use this link:
As of this writing, there are five Kansas “Certified Scholarship Granting Organizations” (SGOs). One, based in Roanoke, VA, is Renewanation. Here’s their Mission Statement, taken directly from their website: “Renewanation serves to promote the cause of Christian worldview education by supporting and expanding Christian schools, homeschools, and ministries reaching students in non-Christian schools.” Another one of the five SGOs is “The Independent School”, a private school in Wichita; their Head of School is the contact person on the SGO spreadsheet on the KSDE website. So the school and the SGO appear to be the same entity. Also in Wichita, the Christian Faith Centre, Inc., is a certified SGO. It’s a church whose pastor, Wade Moore, founded a school, Urban Preparatory Academy, and as reported in the Wichita Eagle in January 2016, 18 students at the Urban Preparatory Academy have received scholarships from this tax credit program. Would voters consider this relationship questionable? A corporation donates to a SGO, and is able to reduce their tax burden as a result. The SGO is basically one and the same with a (religious) school, and the SGO gives scholarships to students to attend the school. There is no accountability for expenses paid on behalf of the students, no oversight as far as outcomes (test scores, college readiness of the students), no requirements as to teacher credentialing, etc.
The “Scholarship Granting Organization” takes a cut of the donated money in payment for its services. Who benefits from that?
Here’s what the Kansas Department of Revenue website has to say about becoming a Participating Qualified School: “A “qualified school” is any nonpublic school that provides education to elementary and secondary students, has notified the state board of its intention to participate in the program and complies with the requirements of the program.” The one-page “request for participation” form requires a name and address; it’s really a “notification” and the most onerous requirement is that is be notarized. There’s no accountability or requirement for documentation as far as curriculum, standards, test scores, college or career readiness, or teacher credential/certification. There’s not even accountability for the school to remain in business from one year to the next. Private and Charter schools may open one year and close in the next one, two, or three years, leaving students who may have not kept pace with state standards to re-enter public schools, and there will be no accountability for the increased costs of bringing those students up to speed.
As of this writing, there were 51 schools on the KSDE list of “Participating Qualified Schools”. All but two of the 51 are overtly religious or church-affiliated. Not all have received scholarship dollars yet, but they are approved to do so if the SGO approves a scholarship. By our count, 20 of these schools are in Johnson County, including Ascension Catholic School, Nativity Parish School, St James Academy, St Michael the Archangel Catholic School, and Saint Thomas Aquinas High School.
One school on the list, Topeka Collegiate, has this to say on their website:
Philanthropy at Topeka Collegiate School includes the Annual Fund in the fall and the Annual Auction in the spring. The school concentrates its fundraising efforts on these annual endeavors in an effort to limit the number of times we ask our community to support the school. We strongly encourage you to make a commitment to these efforts with what is – for your family – a meaningful gift.
Our school is committed to a generous financial aid program designed to attract a wide range of students. We believe that the entire community is enriched by social and economic diversity. Nearly forty percent of our students receive some level of financial aid. Financial Aid for deserving students is supported in part by endowment funds and the Dick Patterson Fund.
In addition to annual fundraising events, philanthropy periodically includes a multi-year capital campaign in order to meet needs that often include building projects or major renovations.
We also welcome planned gifts to our school and would be happy to talk with you about a bequest or whatever planned giving opportunities best fit your goals.” and Gifts of long-term appreciated stock entitle you to an income tax deduction equal to the fair market value of the stock and allow you to avoid the capital gains tax that would have applied had you sold the stock, subject to tax deduction limitations. Contributions may be made directly through brokerage accounts.
We appreciate the commitment to a generous financial aid program made possible by donations directly to the school and their endowment. Is diversion of tax money intended for public schools and other public services needed, too?
While “school choice” is relatively new legislation in Kansas, here’s information from a 2014 Florida TV news investigation. According to this report, “Charter Schools USA” (CUSA) has been operating Charter schools in Florida for over 20 years, and operates 70 schools in 7 states.
Although charter schools sometimes struggle financially at first, CUSA eventually collects a 5% management fee from each to provide administration and guidance...But 10 Investigates found a much bigger pot of money CUSA has been able to tap into: rent. When the company helps open a new school, its development arm, Red Apple Development, acquires land and constructs a school. Then, CUSA charges the school high rent.
For example, Winthrop Charter in Riverview may struggle to balance its budget this year thanks to a $2 million rent payment to CUSA/Red Apple Development. The payment will equate to approximately 23% of its budget...
But the article tells us a study showed “a troubling lack of separation between a charter school's advisory board and for-profit management companies. It also indicates charter school teachers aren't often paid as well and profits all-too-often play a role in educational decisions...The study also revealed school choice creates a higher risk of disruption to a child's education, as "statewide closure rate of charters is 20%" and "Charters are 50% of all F-rated schools in 2011."
Charter Schools USA makes millions by managing schools, but tens of millions building and renting their buildings...Because the facilities are used as schools, there are no property taxes. Because the schools are technically public, the bonds to pay them are tax-exempt.
Charter Schools USA, its executives, and its subsidiaries have also spent millions of dollars to influence how laws are written in Florida...State records reveal CUSA has donated $468,850 to candidates and committees at the state level since 2010. Most went to the Republican Party of Florida and other candidates/committees who support school choice.
Blue Valley families already have school choice. Of the 20 private schools in our area mentioned above on the list of Participating Qualified Schools, most have scholarship programs or financial assistance available for families who need it. Within the Blue Valley district, parents are able to request transfer for essentially any reason from their assigned school to a different school, and in almost all cases, those transfers are approved. (In cases of a school being over capacity, a transfer in may be denied).
Stand Up Blue Valley believes that individuals and corporations should not be given secret tax breaks to donate money to private schools. Many of these schools are religious schools, and the use of the intermediary “Scholarship Granting Organization” effectively works around the Kansas Constitution, which states in Article 6, section 6(c): “No religious sect or sects shall control any part of the public educational funds.” Some have even referred to this strategy as “money laundering.” The tax credits for these donations come directly out of the Kansas General Operating Fund; the result is fewer tax dollars going to our public schools, and instead going to private, unaccredited, often religious schools. This legislation diverts tax money through secret channels to private hands without accountability as to who gave the money and where it ended up. It underfunds and undermines our public schools while at the same time giving tax breaks to wealthy corporations. Is this what Blue Valley voters want? Are your legislators representing you?