Scholarship Groups Need Oversight, not Overregulation

By Eric Wearne

Eric Wearne, Senior Fellow, Georgia Public Policy Foundation

A recent New York Times article called into question practices resulting from tuition tax credit programs around the country, including in Georgia.  That article spends a lot of column space discussing creationism and football when the discussion should really come down to two issues: Are needy students benefitting from the program, and is the program being administered appropriately?

The clearly accessible (though self-reported) data available online show the answer to both questions, at least for some of Georgia’s leading Student Scholarship Organizations (SSOs) – including the state’s largest – is yes.

The Arête Scholars Fund, for example, focuses explicitly on students with financial needs. In 2010-11 (the most recently reported data), Arête provided scholarships averaging $4,577. Students’ families had an average income of $30,000 and 90 percent of the students were eligible for free or reduced price lunch.

The GRACE Scholars SSO, which provides scholarships to help students attend Catholic schools, was founded by the Catholic bishops of Georgia. The 437 scholarships awarded in 2011 averaged $2,151.  Over a quarter of scholarship-receiving families were not Catholic, and the mean annual family income was $48,419 (almost exactly the point at which children from a family of five would be eligible for reduced price lunch in a public school). Over 93 percent of the SSO’s annual revenue went to scholarships – above the 90 percent required by law.

Finally, at the GOAL Scholarship Program, Georgia’s largest, representing 118 Georgia private schools, the data are even more striking. In 2011, 93.5 percent of annual revenues went to scholarships. GOAL provided over 2,500 scholarships during the 2011-12 school year, in an average amount of just over $3,800. Recipient families’ average adjusted gross income was $25,342 – just above the federal poverty rate for a family of four.

GOAL has taken a leadership role in transparency and is calling for other SSOs to do the same. For example, GOAL uses a “voluntary scholarship calculator” as a way to means test its awards. GOAL complies with and promotes Model Ethical Principles and Standards in the administration of its program, and publishes its financial and award data on its Web site.

These are clearly sensible policies other SSOs could follow voluntarily now, or that the General Assembly could require without overly burdensome regulations.

Some practices at some schools accepting SSO scholarships may be violating the spirit, if not the letter of the law. This should be addressed by the SSOs’ boards, participating schools and, possibly, the Legislature. But it is still clear that absent this program, thousands of Georgia students would still be attending public schools their parents felt – for whatever reason – were not serving their children’s needs. And local public school systems would be shouldering the costs of those students.

The evidence is that:

  • According to publicly reported data, the average recipient of a scholarship from Georgia’s largest SSO, among several others, is a low-income student.
  • These same students’ parents choose to seek out help from SSOs to cover tuition costs at schools other than their assigned public schools, even when the awards fail to cover full tuition.
  • Even SSOs attached to particular religious faiths devote large percentages of the awards they make to students who do not share that faith.
  • Some SSOs have adopted practices on ethics in giving without being required to, have spoken out about unethical practices at other SSOs, and have even gone so far as to propose new legislation.
  • Ultimately, however, oversight over such a large and growing program should be improved.

When public school programs have problems (with standardized testing or construction projects, for example), no one seriously advocates shutting down the entire system. Rather, rules are tightened and improvements are made – sometimes at the local level and sometimes by the state. Enough individual SSO data should be published to show the public how SSOs manage their funding, and how their scholarships are awarded to ensure compliance with the law. That is a necessary change for accountability.

Thousands of Georgia taxpayers – more and more every year – have shown their support for school choice through their contributions. As with any public policy, Georgia should require transparency, maintain oversight to ensure compliance, then let the market work.

Eric Wearne is a Georgia Public Policy Foundation Senior Fellow and Assistant Professor at the Georgia Gwinnett College School of Education.  Previously he was Deputy Director of the Governor’s Office of Student Achievement.