Empowering Parents and Students More Important Than Who Funds Scholarships

By Jon East

Florida is one of 14 states that provide tax credit scholarships to children who can’t afford a private school, and a financial approach born of necessity has become one of its greatest strengths. Since the state has no personal income tax, its scholarship relies exclusively on tax-credited contributions from companies.

Those contributions, in turn, have fueled the largest scholarship program in the nation.

In its 13th year, the Florida program is now serving nearly 69,000 of the state’s most economically disadvantaged students in more than 1,500 private schools. The total contributions this year will approach roughly $350 million. In 2012, Education Week described the Florida scholarship law as a national “model.”

The scholarship serves truly needy students, and test scores show they are making solid academic gains. The average household of 3.8 persons has an income is $24,156, or 5 percent above poverty. More than two-thirds of the students are black or Hispanic, more than half from single-parent homes. More telling, these students were the lowest academic performers in the public schools they left behind, and for six consecutive years they have achieved the same standardized test score gains as students of all income levels nationally.

Financially speaking, the scholarships also pay for themselves. The maximum scholarship this year is worth $5,272, and the most recent independent fiscal evaluation, by the state’s Consensus Revenue Estimating Conference, projected the program saved taxpayers $57.9 million in 2012-13.

As Georgia GOAL founder Jim Kelly noted recently on this forum, Georgia also runs a scholarship program that is a source of educational pride. Last year, it awarded 13,270 scholarships averaging $3,517 per student. As a Student Scholarship Organization, GOAL itself has built a large base of financial support through its network of schools and their individual donors.

Kelly and his education policy director Ben Scafidi wrote with passion about the extent to which fundraising efforts have enlisted 18,592 individual taxpayers to be partners in the scholarship, which can be viewed as an added benefit. But those successes with individual contributors do not mean that the contributions of companies are therefore unwelcome, or, to put their own sharp point on it, a form of “crony capitalism.”

In Florida, in fact, the corporate approach has helped in two distinct ways.

First, it allows businesses, who bring both passion and financial resource, to be a meaningful partner in education. The law grants 100 percent tax credits for contributions made against five different corporate tax sources – corporate income, insurance premium, alcoholic beverage distribution, direct-pay sales, and oil and gas severance – representing a potential pool upwards of $4-billion. So far this year, Step Up For Students, the leading scholarship organization, has raised $326 million from 175 companies. It would need 326,000 individual contributions to reach the same level.

Second, unlike current law in Georgia, Florida corporations are encouraged to support full parental choice and are not allowed to direct money toward individual schools or students. The law provides the greatest educational flexibility to the parent and child by requiring that scholarship organizations grant scholarships to any of the more than 1,500 participating schools. In other words, parents are given one-stop shopping. Just as important, this approach opens the doors to schools that serve the poorest children – schools that are put at a severe disadvantage under scholarship fundraising networks that rely solely on individual contributors.

Whether the individual or the corporate approach is superior is less important than the fact that they complement, not compete against, each other. To its credit, GOAL is itself an example, having also received $2.9 million in donations from 87 corporations in 2013. As such, it’s not clear what “crony capitalism” means in the context of companies that freely give tax-credited contributions to private nonprofit organizations that then use them for K-12 scholarships for struggling students.

The objective of these scholarships, after all, is to give viable learning options to students who typically have limited means and limited alternatives. They also help public education customize learning and strengthen its commitment to equal educational opportunity. The fundraising is merely a means to that educational end, and so its primary objective should be to raise every possible dollar in a manner that enables any student to attend any private school that might help him or her achieve. These laws are created to empower parents and students – not scholarship organizations.



Jon East is vice president of policy and public affairs for Step Up For Students, a nonprofit scholarship funding organization that helps administer the Tax Credit Scholarship in Florida.

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