More Light Shed on Accountability Act

Slowly but surely, information about the Alabama Accountability Act comes to light that raises more questions about the program. Questions that conjure up images of corporate board rooms, tax lawyers and accountants, campaign contributions and political payback–certainly not images of “kids stuck in failing schools by their zip code.” The kids are just the sizzle being used to sell the steak.

Directing the operation are some of the most powerful people in Alabama politics.

Senate Pro Term Del Marsh introduced an amendment to AAA as soon as the legislative session began in March. Two of the changes he was seeking was to raise the cap on contributions to scholarship granting organizations from $25 million to $35 million (In spite of the fact that all SGOs only raised 53 percent of the limit in 2014) and to make 2015 contributions eligible to be counted as tax breaks in 2014.

A document prepared by the Alabama Opportunity Scholarship Fund (the one created by former Governor Bob Riley and controlled by an organization in Florida) indicates that Marsh was getting his marching orders from Riley operatives. The document details the financial obligations AOSF needed to meet to keep the program afloat. For instance it states they need $15,448,105 “immediately” to renew scholarships for the 2015-16 school year.

But the fly in the ointment is that while the SGO says they handed out 2,851 scholarships at an average of $5,300 for the 2014-15 school year, they only raised about $641,000 last year. (Since the law states that all students who get a scholarship can keep it until they graduate or reach age 19 an SGO must raise enough money the following year as they awarded in scholarships the previous year.) This lack of success put AOSF in a definite bind entering 2015.

Records from the Alabama Department of Revenue show AOSF raised $17,825,594 in 2013, the first year of the program. Of this, the SGO is allowed to keep five percent for administrative fees. That would be $891,279 in this case. That leaves $16,934,315, of which AOSF says $15,110,300 went scholarships in 2014-15. That leaves only $1,824,014. Add the $641,000 collected in 2014 and you have only $2,465,015 to cover the 2,769 scholarships the Riley document says should be renewed.

In other words, we are between a rock and a hard place.

In such cases, we all turn to our friends. And financial records from the 2014 election show Senator Marsh had obligations to fill. Two of the major backers of vouchers, school choice and charter schools in Alabama are Bob Riley and Billy Canary, head of the Business Council of Alabama. In 2014 Riley had a PAC known as Alabama 2014 while Canary had BCA’s Progress PAC. Canary’s group contributed $116,000 to Marsh’s 2014 re-election, while the Riley PAC chipped in $15,980. Riley also made a personal donation of $2,500 to Marsh.   In addition, the senator from Anniston got $20,408 from StudentsFirst, the California based “education reform” group, and $15,495 from the Alabama Federation for Children, the group that got all of its funding from out-of-state millionaires.

So it comes as no surprise that the AOSF document (which surfaced back in early March) shows the SGO cap on contributions would be raised from $25 million to $35 million and there would be an additional $12 million available through retroactive tax credits.

And lo and behold, when Senator Marsh introduced SB 71, the amendment to the accountability act, there was language to raise the cap by $10 million and to make donations made to an SGO in 2015 eligible to be counted as a 2014 credit. Right on cue.

The AOSF document that spelled out what Marsh needed to do also states that the SGO needed $15,448,105 by May 1, 2015 so scholarships for 2015-16 could be renewed. Marsh emphasized this point in hearings on the amendment in both the House and Senate.

However, while Marsh hoped to move SB 71quickly into law, he hit a snag. Too many legislators had too many questions–and got too few answers. Marsh agreed to decrease the cap expansion from $35 million to $30 million and despite all the alarms about a May 1 deadline, the amendment did not go to governor Bentley for his signature until June 3 with only two days left in the session.

So why did the Riley SGO fund-raising drop from $17.8 million one year to only $641,000 the next? Let’s check the document again where the decrease is blamed on the fact that AAA was in litigation from May 28, 2014 to March 2, 2015. But figures don’t support this claim. There are presently nine SGOs in the state. And while AOSF fund-raising went in the tank, the amount raised by the other SGOs nearly doubled in 2014. Apparently the AAA law suit did not bother them.

Why?

More numbers may give us a clue. The Riley group needed only 25 donors to raise $17.8 million, an average of $713,023 each. And the audit of June 30, 2014 of Step Up For Students (the Florida group that controls the Alabama Opportunity Scholarship Fund) tells us that 81.4 percent of the $17.8 million came from only two donors. By comparison, in 2013 all other SGOs raised $6,922,985 from 853 donors. This was an average of $8,103. So the Riley group plays in an entirely different league that other similar groups.

It is easy to imagine that someone donating $8,000 is driven by a conviction that they are truly concerned about improving the well-being of certain children.  But when checks are for millions of dollars, common sense tells us those decisions are driven more by the corporate bottom line than anything else.

In fact, in 2014 Governor Riley told a reporter that all of his 25 donors were businesses and most were companies he recruited while governor. The fact that Riley lists Airbus Americas and Austal USA as clients for his lobbying firm gives credence to this statement.

It’s now been three months since the state Supreme Court ruled that AAA was not unconstitutional. Given the dire picture AOSF drew for Senator Marsh as to why they needed the law amended, one would think that SGO fund-raising has soared since, especially considering the supposed deadline of May 1. But this is not the case. As of June 3, only $10,841,745 has been contributed to all SGOs.  And it is most unusual that $10,007,500 of this came over one weekend in mid-April. Which means that when this is deducted, only $834,245 has been donated during the last five months.

The 2015-16 school year begins in 75 days. How many children who got scholarships last year will have them renewed by then?

Just another of the many questions about a law that has been murky and misrepresented since its passage in 2013.

 

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