More access & oversight proposed for FL tax credit scholarships

Jon East

Jon East

Three weeks after Florida House Speaker Will Weatherford promised a “massive increase” in school choice scholarships for underprivileged schoolchildren, his chamber has released a 40-page bill. By common political measurement, he has lived up to his word.

The bill takes broad aim at the Tax Credit Scholarship, which has tripled its enrollment in the past six years but is still struggling to keep pace with demand. This year, the scholarship is serving 59,674 K-12 students in 1,414 private schools, yet applications were shut off nearly two months early with 34,000 more students who had already started.

The main reason the enrollment is limited is because the scholarship is financed by corporate contributions that receive a dollar-for-dollar state tax credit, and those credits are capped by budget writers. That puts them on a different footing than scholarships for disabled students or charter schools or most any other choice option, none of which have statewide enrollment limits. So the bill takes a stab at accelerating an already ambitious rate of growth.

Under current law, the cap is set to increase from $286.2 million this year to $357.8 million next year, under a formula that allows it to grow by 25 percent following any year in which 90 percent of the cap is reached. The House bill would up that ante by roughly $32 million, taking the cap in 2014-15 to $390 million and allowing the program to serve an estimated 75,000 students. In turn, the cap in the following three years would also be increased beyond current law by roughly $30 million, which means it could grow to $475 million, $590 million and $730 million. By that fourth year, enrollment could have doubled, to nearly 120,000 students.

Regular readers of this blog will know it is produced by Step Up For Students, which helps administer the tax credit scholarship (three other nonprofits have also signed up to do that next year). So we can claim a thorough working knowledge of the scholarship and how the bill might affect it, even as we acknowledge our obvious potential for bias here.

The increase in the cap is but one of at least a half-dozen bill features that are worthy of note.  In no particular order, the bill would also:

•             Increase the scholarship amount. The current scholarship, $4,880, is the lowest-cost education option in the state and covers only about two-thirds of the average tuition and fees for participating schools. Every year, thousands of students are approved for scholarships but then turn them down because their families cannot afford to cover the gap. The scholarship is pegged to the unweighted average of the Florida Education Finance Program (FEFP), which is the technical description for how much operational money the state budgets for each public school student. The scholarship is on a path to reach 80 percent of the FEFP in 2015-16. The bill would take that one step further, to 84 percent, in 2016-17.

•             Partial scholarships for higher-income students. The scholarship is targeted at students whose household income qualifies them for free or reduced-price lunch, which is 185 percent of poverty or $44,122 for a household of four. These students can remain on the program, as long as their household income does not exceed 230 percent of poverty, with the scholarship amount being reduced in the process. But there is no way for a new student with income greater than 185 percent to get any scholarship help. The bill would change that by allowing partial scholarships for both new and existing students. The scholarship amount would be reduced in proportion to the size of the income. At the top, a student whose household income is 260 percent of poverty, or $62,010 for a household of four, would be eligible for a 50 percent scholarship. The bill mandates that students in the lowest-income category, 185 percent and below, receive first priority. It also would require that any new partial-scholarship student have attended a public school the prior year, except for those entering kindergarten and first grade.

•             A sixth tax source. The bill would add the sales tax to the other five tax sources for which companies can receive dollar-for-dollar state tax credits for contributions to scholarship organizations. The potential sales tax pot would be the biggest of the six, but adding it to the mix has no impact on the state budget because the tax credits are capped across the board. In other words, the size of tax-credit pie is the same, but this change would allow it to be sliced into six pieces, not five. The sales tax credits would pose no legal obstacles under the 2006 Bush v. Holmes decision outlawing Opportunity Scholarships, according to constitutional attorney Barry Richard, because they are not earmarked or appropriated specifically for public education.

•             Removing prior-year attendance requirements for low-income scholarship students. Students whose household income qualifies them for free or reduced-price lunch meet the income eligibility criteria for the program, but right now, those who are entering the program in middle or high school must have attended a public school the prior year. This bill would remove that requirement.

•             Tightening up on scholarship organizations. The bill overhauls the process by which a nonprofit can become and remain a “scholarship funding organization.” The nonprofits would have to be approved each year by the state Board of Education, and would be required to reveal more information about their finances and operational plans. They would be subject to review by the Auditor General, Chief Financial Officer, Department of Education and Department of Revenue. They also would be required to secure bonds to protect against scholarship proceeds.

The bill is filed as a proposed Finance and Tax Subcommittee bill, which speaks to the support it has in high places. Weatherford and Senate President Don Gaetz have included the bill on their priority lists for the session, and Sen. Bill Galvano is expected to file a companion bill in the other chamber.

Gaetz also has asked for the effort to include a change in the testing requirements for scholarship students, which the House bill does not address. Since 2006, students have been required to take a nationally norm-referenced test approved by the state, but the Senate president wants them to take the state’s own test or a direct equivalent.

The six years’ worth of testing data for scholarship students has revealed two consistent trends: 1) The students who choose the scholarship are the lowest performers from the public schools they leave behind; and 2) They are achieving the same gains in reading and math as students of all income levels nationally.

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