Governor Pence and the House leadership want to spend $10 million more in the next two-year budget for Scholarship Granting Organizations to expand private school vouchers.
In the same budget, they want to cut complexity funding for districts which serve low income students. The Indianapolis Public Schools, for example, would lose $13 million next year and another $19 million in the second year of the budget due to the complexity formula cuts.
This trade off should not stand. Using enhanced scholarships to attract low income families to private schools while cutting funds for the public schools that now serve them is outrageous.
It advances a policy of defunding the services for low income students in public schools all over Indiana, both urban and rural, so that class sizes go up and parents will feel compelled to consider private schools for their children, where class sizes are lower because private schools can control how many students they enroll. Simultaneously, the budget lifts funding for vouchers and for SGO school scholarships which give a student eligibility for a voucher in the following school year.
The policy pushes families out of public schools to escape drastic budget cuts and pulls families in to the private schools with beefed up voucher deals.
This is how Governor Pence and his private school allies plan to slowly drain public school enrollment and transfer nearly all students to private schools funded by public taxpayers.
The $10 million funding hike for SGO tax credit scholarships must be stopped in the Senate budget. The $10 million must be redirected to mitigate the budget losses to districts serving low income students.
Let the Senators on the Appropriations Committee, and indeed all Senators, know where you stand: Don’t expand vouchers by giving $10 million more to Scholarship Granting Organization tax credit scholarships. Then use the $10 million to restore funding for districts serving low income students.
The same message could be said about the other better known proposal to remove the $4800 cap on vouchers for grades 1-8, a proposal LSA says would cost taxpayers $3.8 million each year.
Scholarship Granting Organization (SGO) School Scholarships: How do they work?
Scholarship Granting Organizations are systematically turning nearly every private school student into a tuition obligation for taxpayers. Over half of all private school vouchers now go to private school students who have never enrolled in an Indiana public school. Yet public money is paying their tuition.
The SGO program has changed the purpose of vouchers. No longer are vouchers about giving low-income parents a choice to transfer to a private school. Now they are about having taxpayers pay tuition for students whose parents decided long ago to have their child get a religious school or a private school education.
There are five SGO’s in Indiana: 1) Elkhart County Community Foundation; 2) Institute for Quality Education, (Indianapolis); 3) School Scholarship Granting Organization of Northeast Indiana (Fort Wayne); 4) Sagamore Institute Scholarships for Education Choice (Indianapolis); and 5) Lutheran Scholarship Granting Organization of Indiana (Fort Wayne). Complete information about each SGO as listed on the website of the Indiana Department of Education is attached.
The Sweetest Deal in the Indiana Tax Code
The SGO program is the sweetest deal in the Indiana tax code. Those who want to support private schools and simultaneously reduce their payment for Indiana taxes simply have to give a donation to an Indiana Scholarship Granting Organizations (SGO). Exactly 50% of the donation becomes a credit to pay the Indiana tax payment. If $100 is owed for state income taxes, donating $200 to an SGO will pay the state tax obligation while helping SGO’s pay tuition scholarships for religious and private schools.
Here is the surprising part of the deal: There is no individual limit on how big a donation can be given. Whatever large or small donation is made, 50% of that amount can be written off the Indiana tax bill. The only limit is the total statewide cap, but that cap has never been reached, and Governor Pence wants to raise the cap again this year and build in an escalator clause so that the cap is never reached.
The sky will be the limit for the 50% tax credit.
Many high income individuals who support private schools have found this tax credit and have taken advantage of it. At the March 5th public hearing on the Senate budget, LSA data was cited that 62% of the donations to Scholarship Granting Organizations have come from taxpayers earning more than $500,000.
There is no similar tax credit to help K-12 public schools. There is a well known tax credit to help universities in Indiana but it has an individual limit of $200 producing a maximum tax credit of $100, numbers which are doubled for couples filing jointly. Similar limits for SGO tax credits should be considered by our legislators.
The picture is clear: High income taxpayers who want to promote vouchers and private schools can give large donations to the Scholarship Granting Organizations and have 50% of their donation pay for their tax obligation to the state of Indiana.
A Second Sweet Surprise: Scholarship Granting Organizations Can Keep 10%
The Scholarship Granting Organizations under the law passed in 2009 have been required to give 90% of their donations as scholarships to students who are attending private schools. These are called “School Scholarships” and should not be confused with “Choice Scholarships”, which is the name give to vouchers paid directly from the state treasury to the private school family and their private school.
Under the law, 10% of all donations can be kept by the SGO “for administrative costs”. (IC 20-51-3-3) This turns out to be a substantial amount of money now that the Governor wants to move the budgeted amount to $12.5 million, the amount of public money budgeted to pay for the tax credit. Since the tax credit is for 50% of the donation, donations must reach $25 million before the public money would be fully expended.
With a potential of $25 million in donations, the SGO’s must give out 90% in school scholarships, or a total of $22.5 million. At the same time, they can keep $2.5 million for their own salaries and expenses. Not a bad deal when you consider that taxpayers are providing the incentive for this whole enterprise by funding the 50% tax credit!
This is the second way that SGO’s are the sweetest deal in the Indiana tax code. Taking 10% off the top will fund well-paid jobs for those who are working for SGO’s to promote private school scholarships.
Cuts in Complexity Funding
Complexity funding, once known as “at-risk” funding, has provided extra funding for many years to districts based on their count of free and reduced lunch students, an indicator of low income. Nearly $300 million in the House budget was shifted from complexity funding, which goes to districts with low income students, to foundation funding, which goes to districts for all students equally. The net result reduced funding for districts serving large numbers of free lunch students. The districts serving poor families will get poorer in the House plan.
A $10 million expansion of SGO scholarships is totally wrong when districts serving low income students are being handed budget cuts. Do they think low income students need less money to succeed?
The Senators can fix this problem in their budget, but they will have to hear from a large number of public school advocates for this to happen. SGO’s are not well known, and this $10 million expansion could easily slip through unless constituents shine a light on it for members of the Senate.
It is time to contact your Senator, Senators on the Appropriation Committee or all Senators about SGO’s and voucher expansion.
Say yes to better funding for public schools and no to more money for private school vouchers.
Thanks for your advocacy for public education!
Vic Smith firstname.lastname@example.org
“Vic’s Statehouse Notes” and ICPE received one of three Excellence in Media Awards presented by Delta Kappa Gamma Society International, an organization of over 85,000 women educators in seventeen countries. The award was presented on July 30, 2014 during the Delta Kappa Gamma International Convention held in Indianapolis. Thank you Delta Kappa Gamma!
ICPE has worked since 2011 to promote public education in the Statehouse and oppose the privatization of schools. We need your membership to help support the ICPE lobbying efforts. Joel Hand will again be our ICPE lobbyist in the Statehouse. Many have renewed their memberships already, and we thank you! If you have not done so since July 1, the start of our new membership year, we urge you to renew now.
We must raise additional funds for the 2015 session, which begins on January 6th. We need additional members and additional donations. We need your help and the help of your colleagues who support public education! Please pass the word!
Go to www.icpe2011.com for membership and renewal information and for full information on ICPE efforts on behalf of public education. Thanks!
Some readers have asked about my background in Indiana public schools. Thanks for asking! Here is a brief bio:
I am a lifelong Hoosier and began teaching in 1969. I served as a social studies teacher, curriculum developer, state research and evaluation consultant, state social studies consultant, district social studies supervisor, assistant principal, principal, educational association staff member, and adjunct university professor. I worked for Garrett-Keyser-Butler Schools, the Indiana University Social Studies Development Center, the Indiana Department of Education, the Indianapolis Public Schools, IUPUI, and the Indiana Urban Schools Association, from which I retired as Associate Director in 2009. I hold three degrees: B.A. in Ed., Ball State University, 1969; M.S. in Ed., Indiana University, 1972; and Ed.D., Indiana University, 1977, along with a Teacher’s Life License and a Superintendent’s License, 1998. In 2013 I was honored to receive a Distinguished Alumni Award from the IU School of Education, and in 2014 I was honored to be named to the Teacher Education Hall of Fame by the Association for Teacher Education – Indiana.