A Look At AAA Scholarships And Private School Football

After months and months of preparation the grand finale of Alabama public high school football kicks off this weekend with the first round of playoff games.  By Saturday night (Nov. 11), 208 teams will have played 104 games.

And the 2017 football team will be over for 104 teams.  Cheerleaders will store away pom poms, band uniforms go to the cleaner a final time and tales about touchdowns and fumbles and caught passes will become memories in young minds.

(Interestingly enough, some private schools choose to play in a public school league, whereas some do not.)

Of the 208 schools competing this weekend under the auspices of the Alabama High School Athletic Association, 21 of them are private.  There is one in the largest classification, 7A; none in 6A; two in 5A; six in 4A; six in 3A; three in 2A; and three in1A.

Since the Alabama Accountability Act began providing vouchers for private school scholarships in 2013, many have wondered if there are instances where scholarships are being used to boost athletic programs.

The most recent quarterly reports (July -August-September 2017) for the five active Scholarship Granting Organizations have just been posted on the Alabama Department of Revenue web site.

These show that there are now 3,458 students across the state on scholarship.  Of these, 967 went to students “zoned” to attend a “failing school.”  (Remember this does not mean these students had previously attended a failing school, they were just zoned to attend one.  They may have well been enrolled in a private school for several years.)

Now back to football.  Of the 21 privates schools competing in the public school playoff, only 11 of them have received scholarships.  (Four of them do not participate in the AAA program, and six that do have no scholarships.)

This means 11 schools competing this weekend have students on scholarships, a total of 362.  Of these, 147 went to students “zoned” for failing schools.  It is noteworthy that 307 of these scholarships went to only five schools.  The sole private school competing in 7A got 125 scholarships.  One competing in 4A got 48 and one in 3A got 45.  One school in 2A got 40 and one in 1A got 49.

Unfortunately there is no way to determine how many scholarships went to athletes, or more specifically football players.

And once again we realize how little “accountability” there is in the Alabama Accountability Act.

 

John Archibald On Alabama Accountability Act

John Archibald, who writes for AL.com, may well be the most widely read columnist in Alabama.  If not, he is very near the top of the heap.

Never one for beating around the bush, Archibald will call an ugly baby “ugly.”

And in this column he sets his sights squarely on the infamous Alabama Accountability Act.

Among his highlights:

“Think of the moments that changed Alabama politics.

That night in the spring of 2013 when Republicans in the Alabama Legislature’s supermajority realized they had the power and will and audacity to do whatever they wanted to do.

They took an eight-page bill on “school flexibility” into conference committee – a six-member body that was supposed to work out differences between versions of the bills passed in the House and Senate – and came out with a 27-page beast called the Alabama Accountability Act.

It wasn’t school flexibility. It was a scheme to take money from public schools and use it to pay for children zoned for failing schools to go to private schools instead.

To heck with the rules. To heck with traditions and protocol.

The masterminds came right out and admitted it. They did it because they could. Stooping to never-seen-before tactics was the only way to win.

“I have no apologies (for) keeping them in the dark,” Senate President Pro Tempore Del Marsh said at the time. Them meaning … everybody.

It has been four and a half years since the Alabama Accountability Act went into effect. It was challenged but the Alabama Supreme Court decided the Legislature can do what it wants because the Legislature makes its own rules.

Since that time, students have been incentivized to leave troubled public schools, and every student departing leaves that school with less tax money to invest in improvement.

In that time, close to $90 million of completely deductible donations have gone to scholarship programs for students moving from public to private schools, and to many who were already there.

And in the name of “accountability,” many of those students who do leave, subsidized by the state, go to schools with no accountability at all.

It is time – it is past time – to reassess this … program.”

We need many other voices joining with Archibald’s on the need to take a long, hard look at the Alabama Accountability Act.

 

 

Alabama Accountability Act. By The Numbers.

Now that we have several years of experience with the Alabama Accountability Act, let’s look as closely as possible at the numbers available to see what’s been done.

The legislation creating AAA was passed early in 2013 under rather mysterious conditions.  Basically one bill went into a conference committee and a radically different one emerged a few hours later.  It was as if you went to pick up your prom date, she met you at the door of her house all cute and bubbly and told you to wait a moment while she got her coat.  And minutes later her mother shows up, wrinkles and all, and says “let’s go have fun.”

It was legislative sleight of hand from the beginning.  Nothing was ever as it was promised to be and studying the numbers since 2013 proves the point.

As is often the case, the bill’s mantra from Day One was about “helping poor kids stuck in failing schools by their zip codes.”  But at the Alabama Statehouse, stated intentions and reality are sometimes very different.

The bill called for the creation of Scholarship Granting Organizations (SGOs) that would accept donations to be distributed as payment for students to attend private schools.  Contributors would be allowed to claim a dollar for dollar tax deduction against their Alabama income tax liability.

Since such taxes are used to fund the Educational Trust Fund, a dollar given to an SGO is a dollar diverted from ETF.

Initially, donations were capped at $25 million annually.  This has since been increased to $30 million.  However, this cap has never been reached.

In 2013 seven SGOs collected $24,787,079.  In 2014 eight SGOs got $13,413,510.  The next year five SGOs took in $11,815,131.  Five also got $16,088,342 in 2016, while six collected $21,010,580 in 2017.

(Originally contributions were reported on a calendar year, however, this has now changed to a fiscal year of July 1-June 30.)

Figures available on the State Department of Revenue web site show more than $87 million has gone to SGOs through June 30, 2017.  However, additional info from the state indicates the actual to-date number is $93 million.

A total of 12 SGOs have participated.  Five have been discontinued and only three (Alabama Opportunity Scholarship Fund, Scholarships for Kids and AAA Scholarship Foundation) that began in 2013 are still in operation.

Here are total scholarships given each year:

2013–20

2014–5,792

2015–851

2016–4,132

2017–4,119

Since the legislation says that a scholarship recipient is eligible to continue to receive it until they finish school, many of those who got scholarships in recent years were already enrolled in the program.

Private schools seeking scholarship students must apply to the state Department of Revenue for approval.  As of Sept. 20, 2017 there were 203 schools on this list.  Of these, 77 (37.9 percent) were non-accredited.

By far the two major scholarship granting organizations are the Alabama Opportunity Scholarship Fund and Scholarships for Kids, both headquartered in Birmingham.  AOSF has received $43.6 million in donations, SFK, $39.5.  It is noteworthy that the average contribution to AOSF is $66,527 as compared to $11,277 for SFK.

Of course, those who have been major proponents of AAA from the outset, such as Senate Majority Leader Del Marsh and the Business Council of Alabama, have insisted this bill was always about helping kids in failing schools.  But the numbers do not support this contention.

For instance, records show that AOSF and SFK gave 3,849 scholarships in 2017.  Of these, only 1,279 (33.2 percent) went to students “zoned” for failing schools.  And this designation is very misleading as a student already attending a private school may actually be “zoned” for a failing public school.  A much better measurement would be “attending” a failing school.

For instance, of the 5,690 scholarships awarded in 2014, 1,709 went to students “zoned” for failing schools, but at the same time 1,067 went to students who were already attending a private school.  Since there were only 11 total scholarships given the year before, very few of these 1,067 could have been students getting one for the second time.

I have checked, re-checked and re-re-checked numbers.  Still, because info is sketchy at best, reporting forms have changed, reporting periods have changed, etc. I am never 100 percent convinced that my numbers are totally accurate.

Because of this, the taxpayers of Alabama deserve a complete and full accounting of the AAA.  A legislative committee needs to dig deep into records and gather testimony from public school educators, private school administrators, parents, etc.

Why is the state of Alabama administering a program that diverts tax dollars from potentially helping public schools to non-accredited private schools?  Are scholarships truly being used to help students succeed academically, or to boost athletic programs at certain private schools?

We continue to have far more questions about the Alabama Accountability Act than we have answers.

 

 

In The Beginning Politicians Created The Alabama Accountability Act

It has now been nearly five years since a handful of legislators, without consulting any educators, gave birth to the infamous Alabama Accountability Act.  Last time I checked, I’ve posted 59 times about the legislation and it’s shortcomings.  I thought it was bad in the beginning, and nothing has changed my mind.

Basically there is not much accountability in the Accountability Act.  And like far too much legislation, once it is passed, no one ever pays much attention  to see if it was all it was promised to be.

It’s important that we continue to visit the legislation, which has now diverted more than $70 million from our Education Trust Fund, and not forget those who were behind it.

So for background, here is the very first article I posted about AAA in February 2013.

School kids make a poor rope in a political tug of war.

Anyone in Alabama who doesn’t believe this should’ve been in Montgomery Feb. 28 when the Republican controlled legislature voted to approve what some reporters called “a legislative bombshell.” The Senate approved what is officially known as the Alabama Accountability Act of 2013 on a vote of 22-11. The House of Representatives’ vote was 51-26.

It’s hard to tell if opponents were more upset about the contents of the bill or the tactics used to get it approved.

But one thing is certain, in spite of protestations by those on the prevailing side; this battle was not about school kids. If it was about education, why did Dr. Tommy Bice, the state’s superintendent of education, not know about it? After all he is the one person most accountable for the education of 735,000 public school students.

Why did the State Board of Education, with six elected Republican members and two elected Democratic members not know about it? After all, they are the only elected body in the state whose sole responsibility is overseeing education policy.

If this was really about education, why did the Republican leader of the Senate, who says he’d worked on this for a week, tell reporters that he worked hard to keep what he was doing a secret from even those who had signed on in good faith to support the original bill?

“We knew they would oppose what we were trying to do,” he said.

Interpretation: Since we had hatched up a scheme to fundamentally change public education in this state, the last thing we wanted was input from professional educators.

Yep, makes sense to me. Maybe next time the legislature will tackle a healthcare issue. I sure hope they make sure no doctors or nurses know what they are doing.

What was the scheme used to pass the bill?

Go to a conference committee composed of three House members and three Senators (Four Republicans and two Democrats) where each body is supposed to iron out their differences and report the compromises back to their respective bodies. But instead of doing this, an eight page bill went into the committee and morphed into one of 28 pages that was much different from the original bill.

This is when the fur hit the fan because the rules of both bodies prevent a conference committee from reporting out a bill that is substantially different from the original one. But obviously when you are doing something for school kids, why pay attention to rules? After all, isn’t that what we all teach our own kids to do, just ignore the rules you don’t like.

As I think of all of this I keep thinking back to the night of Feb. 19 when the State Department of Education recognized 20 high-poverty schools (the very kind of schools the backers of this legislation say they are so concerned about) as Torchbearer Schools.

All 140 members of the House and Senate were invited to attend this event by Governor Bentley. Only one Senator came. It was not the majority leader. Maybe he was hidden away somewhere working on legislation to benefit education and didn’t have time to visit with 20 of the top principals in Alabama and ask for their input.

Time after time we hear legislative leaders talk about “Alabama values.” Is this what we saw in practice this week? I was born in Alabama. Mother and Daddy were born in Alabama. Grandma and Grandpa were born in Alabama. So I’m about as qualified to know our “values” as anyone. And what was on display in Montgomery Feb. 28 bore no resemblance to the Alabama values I was taught.

But the only value any of us really need to heed is on page 1,414 of my King James Version of the Bible. Matthew 7:12—Therefore all things whatsoever ye would that men should do to you, do ye even so to them.

It’s a sad day for all of us when our political leadership tramples on such a simple truth.

 

 

Committee Needs To Look At Accountability Act

Speaker Mac McCutcheon has appointed a new House standing committee on Fiscal Responsibility.  In making the announcement, he said the committee “is tasked with giving taxpayers the maximum return on dollars they send to Montgomery.”

I hope the committee will also consider dollars NOT sent to Montgomery.  In other words, tax breaks that shortchange public education.  And the biggest offender is the Alabama Accountability Act.

Since being rushed through the legislature in 2013, AAA has diverted at least $74 million from the Education Trust Fund to fund vouchers used to send students to private schools.

Here’s how it works.  Company A gives $5 million to a scholarship granting organization (SGO) and fill out paperwork with the Alabama  Department of Revenue that allows them to count this as $5 million paid against their state tax liability.  Which means these dollars never get to the Education Trust Fund.

(Technically this money was never in the possession of the state, which gets us around the prohibition of using public money for private schools.)

AAA has been very controversial from the beginning.  Click on “Accountability Act” on the right menu of this page and you will find more than 50 articles.)  It was initially sold under the guise of “helping poor children stuck in struggling schools by their zip code.”  This was never the truth.

In 2016 the University of Alabama did a report that concluded that students receiving vouchers under  AAA did not outperform their cohorts in public schools.

And if ever a piece of legislation needs a long, hard look at what it does–and does not–do, this is it.

Representative Chris Pringle of Mobile chairs this committee.  Other members are: Rod Scott of Fairfield; Reed Ingram of Montgomery; Chris Sells of Greenville; Matt Fridy of Montevallo; Danny Garrett of Trussville; Corley Ellis of Columbiana; A. J. McCampbell of Livingston and Patricia Todd of Birmingham.

I have written each of them, plus the Speaker, encouraging them to examine AAA.  I encourage you to as well.

Speaker Mac McCutcheon–c.mac.mccutcheon@gmail.com

Chris Pringle–chrispringle@southerntimberlands.com

Reed Ingram–reedingram75@gmail.com

Chris Sells–csea@CenturyTel.net

A. J. McCampbell–ajmc1@bellsouth.net

Rod Scott–rodhscott@gmail.com

Patricia Todd–reptodd@gmail.com

Corley Ellis–corley.ellis@alhouse.gov

Matt Fridy–mdfridy@gmail.com

Danny Garrett–dannygarrett44@gmail.com

 

 

 

Is Accountability Act About Educating Kids Or Tax Breaks?

From the moment we passed the Alabama Accountability Act in 2013 to create Alabama’s version of a school voucher program, proponents have shouted from the rooftops that it has been “All about helping kids.”  And they were quick to add that this especially meant kids from low-income families.

But as we have watched this program unfold, it has become harder and harder to believe that it was ever about the education of poor children and not about tax breaks.

Here is a good example of what I am referring to.  The Bradley law firm is one of the state’s largest.  They have attorneys who are experts in helping clients maximize profits by taking advantage of tax breaks.  Here is part of a recent alert they prepared about the accountability act:

Department of Revenue Issues Favorable Ruling for Tax Credit Scholarship Donors

Since the landmark Alabama Accountability Act was enacted in 2013, allowing individual and corporate donors to provide scholarship funds for underprivileged children in our state who are zoned for underperforming public schools, there has been some confusion regarding how those donations interact with the estimated tax penalty rules. Many donors and their tax advisers interpreted the Alabama Department of Revenue’s position to mean that they could only donate money to a qualified scholarship granting organization (SGO) in the fourth quarter of the year if they wanted to avoid the risk of estimated tax penalties — in effect, leaving SGO’s unable to make long-term scholarship commitments.

Thankfully, new Commissioner of Revenue Vernon Barnett and his staff issued Revenue Procedure 2017-01 on August 3 at the request of the Alabama Opportunity Scholarship Fund (AOSF), one of the state’s two largest SGOs. AOSF’s newest board member, Page Stalcup, a senior partner at Wilkins Miller CPAs in Mobile, assisted in the effort along with his tax partner, Frank Brown. “Frank and I were glad to help out on this. Hopefully, it will result in more donations and credits that will help a child get a better education. After all, it’s about the kids,” said Stalcup. The Revenue Procedure was followed by an email clarification to all SGOs from Deputy Commissioner Curtis Stewart on August 14.

The Revenue Procedure provides a safe harbor that allows donors to minimize the risk of quarterly estimated tax penalties. The Revenue Procedure confirms that no penalty will be assessed if the amount of estimated tax payments made to the ADOR by the quarterly due date, plus the amount of creditable donations made to SGOs during that quarter, exceed the total amount of estimated tax payments otherwise required to be made for that quarter. Please consult your CPA for assistance. The good news for 2017 and beyond is that qualified donors may in some cases choose to direct their entire third and fourth quarter Alabama estimated tax payments to an SGO without penalty – a win-win resolution for all concerned, especially the students.

Not only do donations to qualified SGOs provide a dollar-for-dollar Alabama tax credit (up to 50 percent of the donor’s annual income tax liability), but donors should be eligible for a charitable contribution deduction on their federal income tax return. Also, individuals who are subject to the federal Alternative Minimum Tax (AMT) could actually receive a net cash benefit when they donate to an SGO. The procedure for making these donations and donor qualifications are available on the AOSF website and on the ADOR’s helpful website.

While I am sure the info distributed by the law firm is accurate, it is simply hard to believe that for the kids is what is uppermost in their mind.  Especially when they point out some people “could actually receive a net cash benefit when they donate to an SGO.”

Take the Alabama Opportunity Scholarship Fund, the scholarship granting organization that is mentioned.  The most recent info available from the organization on the Alabama Department of Revenue web site shows that on June 30, 2017, they had scholarship recipients in 129 schools in Alabama.  However, 45 of these schools are non-accreditied.  If AAA was really all about the kids, would we be diverting money from public schools to send children to non-accreditied schools?